Shale is not broke, and will come back, said ConocoPhillips Chairman and Chief Executive Officer Ryan Lance as part of a CERAWeek by IHS Markit conversation. Lance talked about the outlook for US shale and the new value proposition to E&P investors.
Shale is not broke, and will come back, said ConocoPhillips Chairman and Chief Executive Officer Ryan Lance as part of a CERAWeek by IHS Markit conversation. Lance talked about the outlook for US shale and the new value proposition to E&P investors.
“There’s going to be some very low-cost to supply shale resource and they still exist in US. We have a lot of that in our own company as well—reserves and resource that we will come back to, putting rigs back to work, putting frack spreads back to work and investing in growth again in shale. So, it will come back.”
Source: Reuters
“But I do think it comes back slower because there’s going to be pressure on companies to confine their capital program, maybe not grow dramatically as they were before, because I don’t think the access to capital in the investor community, at least in the public side of the business, is going to be as robust as it was over the last decade.”
“If I were a betting man, today I would say it would be pretty difficult for us to return to 13 million b/d. But we’ll get back above 10 million b/d, back above 11 million b/d maybe encroaching on 12 million b /d as we go through. A lot of that depends on the shape of this recovery.”
“That’s just the value proposition conversation about how do we get value investors and energy investors back into this business. That’s going to be a function of giving money back to the investor, modifying your growth so don’t have to grow that fast, and a real heavy focus on return on capital employed. That what’s going to get the investors back and excited about the E&P space,” Lance said.
Lance also talked about the potential for consolidation in the industry. “The fundamental point is we got to put these assets in less hands, more rational hands, and run them for returns, not necessarily growth for growth’s sake. Doing that then cuts the fixed cost of the system, brings the cost of supply down, and makes the US energy system and the global energy system more competitive with a lot of the NOCs and the other people that are competing in this business.”
“There has to be some rational conversation amongst boards and management on what’s the right value proposition going forward for this business. And how do we participate with companies that can offer that kind of the value proposition. Those are important conversations that people need to have because that’s how we’re going to get more investors back into the business and that’s how we’re going to show good returns which is paramount to try and increase the valuation of your company.”
ConocoPhillips’ strategies
“We did a lot to the company in terms of re-identifying the portfolio that we thought could exist and what we felt like was going to be a lower mid-cycle price with a…
Read More: ConocoPhillips Chairman: US shale will come back – Oil & Gas 360
