We headed to Houston a week later for a meeting with the company’s top management. As the men in the room watched the different stages of a frac job unfold in front of them, I could see their eyes getting bigger. We were in... Negotiations started immediately. Six months later, EOG and Seneca reached an exploration agreement that covered all 1 million acres in the Marcellus Shale. We would pay the cost to drill and complete the exploratory wells on Seneca’s land. Once the development-drilling phase began, the two companies would participate and share the costs evenly. It’s exactly what Mark had in mind when he leaned back in his chair more than a year earlier and made that initial deal with me. By staying one step ahead of the competition, we were able to score a major victory in an money follows technology and innovation... Companies that can develop, deploy, and monetize new technologies have an advantage. This premise helped me achieve an important victory during my early years at EOG. And it’s an easy way for you to identify which companies will thrive across the oil and gas sector... look for the ones leading the way with technological breakthroughs in oil and gas... Remember, commodity prices follow a cyclical pattern. What goes down will eventually come back up. We’re going to get to a point when demand from countries that are evolving – like China and India – will completely overwhelm our emerging hotbed of shale exploration. The point is, I’ve always believed that
ability to meet their needs with existing supply. This is the long-term trend that we’re interested in... It’s a supercycle . It’s something I’m calling “Oil $500.” We’re approaching the next bottom, but when demand for oil ramps up, the need for services in the oil and gas E&P sector will kick into top gear. Here’s what drives it... Every year, the management teams of E&P companies huddle and set their capital budgets. As with all companies, these decisions can go a long way in shaping the path of the business. Operations, profitability, and overall investor perception are all at stake. Through the budget process for E&P firms, many questions must be addressed... How will oil and gas prices move throughout the coming year? How many wells will the companies drill – and at what cost? Who will drill and complete the wells for the companies? E&P companies must also decide which acreage to focus on. They need to try to SETTING THE STAGE
I'm talking about worldwide oil and gas producers that combined to spend
more than $500 billion at the last peak in 2014 and will get close to that again by 2021.
American Consequences | 51
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