[John_A]

An interesting analysis on who is doing well for their shareholders, and who is not. These pesky shales....

EOG Resources Inc. (EOG), Pioneer Natural Resources Co. (PXD) and Continental Resources Inc. are poised to reap bigger returns for investors than energy titans 15 times their market values as they devote almost all their drilling capital to higher-margin, domestic crude wells, said Gianna Bern, founder of Brookshire Advisory and Research Inc. in Chicago. Houston-based EOG is estimated to more than triple profit in 2013 to $1.92 billion.

http://www.bloomberg.com/news/2013-08-0 ... cmpid=yhoo

[rockdoc123]

I don't see this as being a big surprise. The shale business is all about margins....costs have to be continually managed down, land that is proven to not be the best needs to be sold or leveraged out to others. Exxon and Shell do not have "cost management" in their play books. Their view from so many years of being involved in very expensive developments around the world is "it costs what it costs" and they have no problem in gold plating operations. The chain of command in these big companies is quite long which makes it even more difficult for cost management to occur. Interestingly enough Exxon's way into the shale business was to purchase XTO a few years back with a view to not only purchasing good acreage but also talented staff. My understanding from talking to a few former XTO people is that most of them have left Exxon, disillusioned by the manner in which large companies operate.

[John_A]

Interestingly enough Exxon's way into the shale business was to purchase XTO a few years back with a view to not only purchasing good acreage but also talented staff. My understanding from talking to a few former XTO people is that most of them have left Exxon, disillusioned by the manner in which large companies operate.

The few I have talked to have....interesting... stories to tell.

[ROCKMAN]

John – Yes…just like God XOM moves in mysterious ways. LOL. Years ago I geosteered a number of horizontal wells for XOM in Hartzog Draw Fld in WY. They were expecting 50 - 60 bopd. Wells came in at 350 - 400 bopd. The field production hands came up with 70+ new locations. XOM Houston said no…those 4 wells and no more. This is a 25,000 acre oil field with 550 wells making about 5,000 bopd total. Those 4 wells, vs. the 550, increased fld production by over 15%. And not only did they not drill any more wells they sold it to XTO a year later. And then a few years later XOM bought XTO. And then in 2012 XOM gave Denbury $1.6 billion and Hartzog Draw Fld in exchange for some of Denbury’s Bakken assets. Denbury apparently plans to CO2 flood the field. And, of course, will use some CO2 they purchase from XOM’s giant LaBarge CO2 Fld.

Makes perfect sense to me. LOL.

[rockdoc123]

The large independents suffer to a large extent due to a lack of accountability. The man at the top has 10 layers or so below him, lots of room for finger pointing. Information transfer upwards in such companies is poor at best and often people near the bottom who are closer to the well bore don't even bother attempting to do so in order to avoid continual frustration. Bungie cord managers are common (look that one up in the Dilbert archive) so it is no surprise at all that companies such as XOM could sell an asset, buy it back at a premium and then sell it at a loss....so many different management involved it is hard to find someone to blame.
In comparison the small independents are run largely by entrepreneurs who take calculated risks but also are forced to take all of the accountability simply because there are generally nothing more than one or two layers of management, everyone knows who made/makes the decisions and are usually happy that they have had a bit of say in what goes on.
I always find it interesting to reread the chapters in The Prize that talk about the history of some of the big companies. The individuals who were instrumental in starting those companies Anthony Lucas (Spindletop which created Gulf Oil Corp), Rockefeller (Standard oil), William D'arcy (Burmah Oil the forerunner to BP) seemed to have been cut from a different cloth than the current batch of big company CEOs. I think you still see that spirit in some of the smaller independents Brian Maxted at Kosmos and Gene Van Dyke at Vanco as examples.