Amid the consolidation phase in shale E&Ps, companies strategically merge and acquire to boost acreage profiles, optimize costs, and enhance Return-On-Invested-Capital, leading to a revitalized and more stable shale drilling industry.
Shale E&Ps are undergoing a significant consolidation phase since late 2020, with major players like Devon Energy making strategic acquisitions for superior acreage.
There’s more to this “Drill on Wall Street” strategy than just getting the best acreage before someone else beats you to it. Scaling up is at the heart of every commodity business. It drives Return-On-Invested-Capital-, which is what attracts investor dollars. So if ROIC matters, and it does, the companies that are the first movers scoop up the best assets early in the consolidation phase, leaving the dregs for those desperate to make a deal as their production nose-dives.
In the boom era, there was very little emphasis on controlling costs. As the bust deepened, there was only one focus for the management of the surviving companies. Ruthlessly cut costs in the merged entity through non-core asset sales, layoffs of personnel, closing facilities and offices, renegotiation of contracts, redesigning wells to be more capital efficient, and using technology to extract more resources than before.
Belgique Dernières Nouvelles, Belgique Actualités
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