RigUp attended the Wharton Energy Conference in late October 2016, and we noted a few key insights that will undoubtedly follow the industry into 2017.
RigUp's CEO and Co-Founder, Xuan Yong led an Upstream Panel that included David Keyte, Founder of Caerus Oil & Gas; James Obulaney, Vice President at Denham Capital; Vidisha Prasad, Managing Director of Guggenheim Securities' Energy Investment Group; Jerry Schretter, Managing Director and Co-Head of Upstream at Citi; Tom Tyree, Co-Founder, President, and CFO of Vantage.
A few questions from this panel included: What opportunities exist for mergers and acquisitions in the Upstream space? What assets are economic at $40 a barrel? When do non-core areas of U.S. shale gas come back to play? What’s the outlook for International shale, deepwater, oil sands? What are the ramifications for spending deferral in E&P?
Here are our 5 Key TakeAways from the Wharton Energy Conference:
#1) The current down cycle has separated winners from losers. Independent E&Ps with quality acreage alongside best in class technologies have grown stronger. While culturally backwards E&Ps have become weaker.
This had made it extremely hard for super-majors to act as consolidators in the down-cycle. Leading independents have used their premium valuations in the public market to capitalize on further acquisitions strengthening their positions.
No one drills "dry-holes" anymore. Binary outcomes made winners and losers in a "conventional" E&P world historically. Winners and losers are now made by running leaner and more sophisticated with operating leverage built into an E&P company's business model.
#4) More distributed teams operating closer to the field. Where as Houston, Texas has historically been the center of E&P headquarters, we are observing a resurgence of E&Ps locating key engineering managers to locales closer to the asset base. Pittsburgh, Denver, and Midland are becoming more relevant than ever.
#5) L48 and North America in general are becoming the swing producer of hydro-carbons. It's more than just energy independence, it's energy prowess in the global world.
In summary, it should be no secret that the next up cycle will be dominated by a new class of nimble and sophisticated independent E&Ps.
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