The job of petroleum engineer in the fast-paced world of A&D and investment banking suits Ryan Keys, a vice president in Jefferies LLC’s energy investment banking group in Houston. Most satisfying to him is identifying value early in an asset’s development cycle. Since joining Jefferies in 2012, he has worked on more than $11 billion in upstream transactions, from the Permian to the Eagle Ford, Marcellus, Utica and Tuscaloosa Marine Shale.
Keys majored in mechanical engineering at the University of Texas in his hometown of Austin, where in 2004, as a senior, he worked with Schlumberger on a design project. When the project ended before reaching a final conclusion, he asked the company if he could be hired to finish and expand on it. On the job, he observed that petroleum engineers seemed to be having the most fun and traveled frequently—his passion. He entered the master’s in petroleum engineering program at Texas A&M, graduating in 2008 into a job market fueled by the epic run-up in commodity prices.
Keys joined the tech-focused start-up Object Reservoir and headed for Argentina as the company’s liaison with YPF on a series of tight gas pilot projects. In 2009 he returned stateside to work on consortiums in the Marcellus and other shales, with the goal of accelerating the learning curve. This experience proved to be “perfect training” for his eventual position with Jefferies.
In 2011 he joined a private-equity-backed operator, focusing on its Eagle Ford, Piceance, and Uinta assets. In 2012, he met with Jefferies, and the chance to broaden his experience proved irresistible.
Outside of work, Keys supports several charitable organizations and loves to travel—he has visited more than 40 countries across six continents.
Ryan Keys
Investor: What do you like most about your job?
Keys: It’s always exciting. I enjoy talking with clients, working on assets in various basins—sometimes several in a single day—and seeing how senior officers at E&Ps make decisions. It’s a very different world than just doing reservoir engineering and running economics. There is a lot more nuance necessary to get a deal done, and at Jefferies, I am learning from the best.
Investor: What have you learned?
Keys: You can have the best acreage and people in the world, but without access to capital and the right structure, it’s worthless. And, vice versa.
I’ve also gained exposure to how different assets and structures fit different clients, the personalities involved, how assets are marketed. It’s an on-the-job education.
Investor: How has your work changed?
Keys: When I arrived, it was on the tailwind of the large shale acreage deals, with not much in the way of well results. With the vast increase in well count and the deluge of data, especially in the past year, we have to add value with our ability to analyze and mine the data. It is a huge challenge to keep up—we can’t stop to catch our breath.
Investor: What about the recent fall in crude prices?
Keys: Up until the last couple months, commodity prices had been stable, so this recent drop represents a paradigm shift in the way we have to view every basin. There may be less deal flow initially as prices stabilize, so we have to go back in and assess what lower prices do to marginal as well as core acreage, all while incorporating how things continue to change from a technical perspective. An asset may be profitable down to $40, but how does the drop in prices affect the ability to drill out of cash flow? Will a different completion work? Are there any drilling obligations? How will it all be financed?
There are other changes underway. With the move toward more oily areas, artificial lift has become increasingly important, particularly when recent well results are critical in the marketing of an asset. With these bigger fracture stimulations, there’s a lot of fluid to move early on, and the more oily areas are generally shallower and have less reservoir energy from a pressure and fluid perspective. So we’re seeing artificial lift earlier in the well’s life, and that has a bigger impact on type curves and economics.
The addition of reserves and value via downspacing is a recurring theme in resource plays. The more aggressive operators took the risk and committed the capital to establish tighter spacing as the paradigm, and they’re reaping the benefits: more reserves, larger drilling inventory and more value. Similarly, in the Permian, Eagle Ford and elsewhere, we’re starting to see tighter spacing from a vertical perspective with stacked laterals.
In the Wolfcamp, operators are drilling laterals in three or four benches. But if we’re only stimulating 150 feet vertically, there’s potential for more than one well per bench. The resource is huge. The operators that continue to commit capital to these pilot projects will expose themselves to even more upside.
This industry is constantly evolving, so one of our jobs is to identify, articulate, explain and quantify these changes to the buyer universe.
Investor: Your next trip?
Keys: I like to just get lost. Maybe a multicountry motorcycle ride through East Africa.
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