American Oil and Gas Reporter - October 2015 - 126

ConventionCoverage: Colorado Oil & Gas Association
BP's Lawler emphasized the importance of technology. "I think you are
going to see traditional single-well horizontal development go away," he said,
suggesting capital would migrate to companies with the capability to drill and efficiently complete multiple laterals in
stacked pay formations.
"As painful as it is, the strongest balance sheets probably are going to win;
the best basins are going to win," he
concluded.

Claire S. Farley (left), energy and
infrastructure member at Kohlberg
Kravis Roberts in Houston; and
David Stover, chairman, president
and chief executive officer of Noble Energy Inc., provide perspective on thriving in a down market
during the Rocky Mountain Energy Summit's final-day executive
forum, Aug. 27 in Denver.

stream's capability to add production
quickly and efficiently.
He cited a report in the June 5 MidContinent Scout that highlighted a 10well test of a "W pattern" conducted by
Continental Resources on a 1.0- by 1.5mile rectangle in Oklahoma's Woodford
Shale. "The wells came on in total at 150
million cubic feet a day and 4,500 barrels
a day of condensate for 60 days," he
quoted the report.
"When you juxtapose that with some
of the mega-shale developments around
the country, there is a lot of gas that can
be turned on with an incremental price
improvement," he reasoned.
Lawler also mentioned that BP had
initiated a drilling program composed of
multilateral wellbores in the San Juan
Basin that "is going to generate attractive
returns, even in this market."
Lest anyone despair that the industry
cannot recover at a lower price, David
Stover, chairman, president and CEO of
Noble Energy Inc., recalled that he started
in the business in 1979 with Atlantic
Richfield Co. Since then, he said, "The
majority of the time, we have been in a
$40-$50 world.
"The problem," Stover suggested, "is
that for the past 10 years, we have been
at $70-$90. That is the only world a lot
of folks have seen. I think it is helpful to
remind them that from 1984 to 2004, in
today's dollars, we were in a $40-$50
price range and the industry still thrived.
We figured out how to make it work."

opportunities," he went on. "But you
need a clearly articulated plan and a team
with a track record and the skill sets to
execute.
"You don't want to be on the fringes
of plays," Thielemann delineated. "We
hear it a lot, but you want to live in the
core. Every opportunity we look at (needs
to be) in that top quartile.
"This is easier said than done," he acknowledged. "People have to be creative.
Maybe that sometimes looks like a drillto-earn deal, a carry, or finding an opportunity that may not be sitting in the
open market."
Success, seconded Farley, "is going
to be about the best teams in the best
spots, working on what margins they can
create."

Right Opportunities
Indeed, Brad Thielemann, a managing
director at EnCap Investments LP in
Houston, reported, "There probably is
$80 billion of private equity capital earmarked for the oil and gas space.
"There is a lot of capital for the right
126 THE AMERICAN OIL & GAS REPORTER

Natural Gas
On the natural gas side, both Bentek's
Diaz and Robert J. Gibb, associate director
for energy at Navigant in Austin, Tx.,
projected flat to moderately increasing
prices for the near to medium term.
Gibb presented a year-end 2014 chart
that graphed Henry Hub prices declining
from an average $4.75 an MMBtu in
2014 to a little below $4.50 in 2020,
before gradually rising to $5.25 in 2025.
Developments this year mean "the scale
on the left probably is off by $1.00 now,"
he said, although Navigant still stands
by the overall trajectory.
"The fact is, a lot of development is
economic at a $3.00-$3.50 price," he
maintained.
Bentek's price prediction is $4.50 by
2020, Diaz stated, commenting that improved efficiency enables the North American market "to react to changes in demand
quite rapidly."

From left, Javier Diaz, manager of energy analysis & consulting at Bentek Energy;
moderator David Posner, president of EnVent Energy; and Robert J. Gibb, associate
director for energy at Navigant, pause prior to their "midstream to markets" session at
the Rocky Mountain Energy Summit, Aug. 25-27 in Denver. Diaz and Gibb discussed
natural gas supply and demand drivers.

American Oil and Gas Reporter - October 2015

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