Industry leader John Walker says the abundance of capital available to oil and gas producers should be used wisely. "All of us are optimists. We buy into [that commodity prices are going] up, up, up. At times we need to reflect on where we are," he told more than 300 attendees at the fifth annual A&D Strategies and Opportunities conference in Dallas recently, hosted by Oil and Gas Investor and A&D Watch newsletter. Walker is president and chief executive of Houston-based producer EnerVest Management Partners Ltd., which operates 11,000 wells in 10 states, and he is past chairman of the U.S. industry's independent oil association, the IPAA. "It's been too easy," he said of accessing capital. "This is a hard business...We need to be making rational decisions right now." As retired Fed chairman Alan Greenspan said in the late 1990s that stock-market investors were experiencing "irrational exuberance," Walker said oil and gas leaders could succumb to the same. "I believe we are in a period of irrational exuberance," he said. He noted, however, that stock prices continued to rise after Greenspan's comments and today are higher overall than then. Caution should be exercised, Walker said. "We prayed for this boom. We got it. We're not going to screw it up this time." The industry is awash in capital now. "There is way too much capital chasing too few deals...Our costs are out of control." Engineers are being hired after one interview and being overcompensated. "I'm not even sure if they're checking their pulse." One example of uncareful spending: a producer amassed 100,000 acres in a shale play and discovered there is no shale under the acreage. "They're just south of the shale," Walker said. For more on this, see the October issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
Recommended Reading
CGG to Change Name to Viridien
2024-05-17 - The company’s new ticker symbol will be “VIRI” and listed on Euronext Paris, effective May 21.
Sector’s Appetite for Capital Remains Amid Consolidation Frenzy, Panelists Say
2024-05-17 - There’s still an appetite for capital in the oil and gas sector—companies just need to think creatively to find it, a number of panelists said during SUPER DUG in Fort Worth, Texas.
SilverBow Resets Shareholder Meeting After $2.1B Crescent Deal
2024-05-16 - SilverBow Resources said it will adjourn its May 21 shareholders’ meeting until May 29 following Crescent Energy’s agreement to buy the Eagle Ford operator.
Blue Racer Midstream Prices Senior Notes Offering
2024-05-15 - Net proceeds from the sale of senior notes will be used to pay off debt and other general corporate purposes.
Petrobras CEO Prates to Step Down
2024-05-15 - Brazil’s President Luiz Inácio Lula da Silva has requested that Petrobras CEO Jean Paul Prates resign following a dispute over dividend payments.