Regarding recent deals by Devon to acquire Validus Energy (Eagle Ford) and RimRock (the Bakken):
The assets Devon recently acquired are not exactly untapped reservoirs. These are mature assets that, under other circumstances, would not have been the first choice of buyers flush with cash from higher prices for their product.
Yet right now, the shale industry appears to be exclusively focused on value rather than production growth and is acting accordingly.
As has been the case in every previous oil boom anywhere in the world over the past 170 years, the formula for success in U.S. shale is constantly evolving. Many industry critics scoffed at the idea of refracs in the Eagle Ford just a decade ago, claiming they would be uneconomic and maybe even technically unfeasible for the formation. Today, the technique is becoming positively trendy, cash flow accretive and additive to shareholder value.
Indeed, re-fracs are on the rise in the shale patch. The reason: higher production and material costs, which make drilling an all new well more expensive than many drillers seem to be ready to pay. So they are turning to secondary fracking in already drilled wells to keep their costs low but expand production.
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