Refracking -- May 28, 2015

This is a huge story; we've been talking about it for quite some time. Investopedia is reporting:

There was an interesting theme running through the conference calls of energy giants and oilfield service companies this past quarter. From Chesapeake Energy to Halliburton to Schlumberger, the one theme that kept coming up, other than oil prices, was the potential for refracking. It's a trend that could have enormous potential for Chesapeake Energy in the years ahead.

I have a tag for refracking. It began with MRO.

From the linked article:

Jason Pigott, Chesapeake's EVP of its Southern Division, noted the company's refracking potential on its first-quarter conference call:

Within our retained portfolio, Chesapeake has drilled 6,750 horizontal wells since 2004. Of these wells, nearly 4,600 were drilled prior to 2012, and we consider these wells understimulated, compared to our current designs, and based on their vintage.

In other words, 68% of the company's wells could be refracked because they were drilled before 2012 and therefore aren't using the latest technology and techniques that have really driven the company's operations over the past few years.

EOG says it's cheaper to simply drill a new well (to include fracking) rather than go back in and re-frack.

It really doesn't matter to Schlumberger or Halliburton whether one re-fracks or drills a new well (in fact, it would be better for SLB and HAL if new wells were drilled, rather than just refracking old wells).