Listen carefully to Core Labs
Posted: Fri Oct 27, 2017 6:29 pm
Core Labs is on the cutting edge of what is really going on in upstream oil and gas.
On of the SMU professors (and an EPG member) listened carefully to the Core Labs' conference call. Here are his notes.
Core laboratories announced some interesting industry developments in their earnings conference call this week:
1. * More companies are concentrating on maximizing the return on invested capital and free cash flow versus focusing on expanding production at any cost. Technology will play a major role in enhancing capital returns.
2. * There is an increase in demand for phase behavior studies of reservoir fluids in unconventional reservoirs. Pressure, volume and temperature studies. This data can be used to predict reservoir performance and ultimate recoveries and ties back in to the return on investment theme.
3. * There is increasing focus on measuring cluster fracking performance, trying to design the frac to optimize reservoir stimulation. The number of factors involved which impact stimulation is substantial, but offer the ability to substantially increase returns if the optimal technology can be identified and economically applied.
4. * Core Labs is conducting an industry sponsored study of enhanced oil recovery (EOR) technology in the Eagle Ford formation. They are also working to commence a similar study for the Wolfcamp formation. If the gas cycling EOR program can increase recoveries from 9% of the oil in place to the mid-teens or higher as projected, at a cost of $3 million, the incremental returns on capital will be substantial - and possibly a game changer. Field testing of EOR cycled gas projects in unconventional formations begin next summer.
5. * Studies continue with regard to proppant use and fracture systems. To be successful primary, secondary, and tertiary fracture systems need to remain open. Different size mesh sands are being investigated to maximize the amount of reservoir surface area exposed, with the goal of maximizing the ultimate recovery from the unconventional rock.
6. * And probably the most startling statement: A “year and a half ago we consistently said that the production in the Middle East was at unsustainable levels.” Many fields in the area are on EOR systems, or will be soon if they are not. As a result technology will play a larger and larger role in this area to maximize recoveries and returns. Bodes well for global supply and demand trends if you are bullish in my opinion.
Technology appears to be playing a larger and larger role in the development of unconventional reserves. This should help drive cash flow and return on investment upward. Management did an excellent job explaining the big picture, and how technology fits into the scheme.
On of the SMU professors (and an EPG member) listened carefully to the Core Labs' conference call. Here are his notes.
Core laboratories announced some interesting industry developments in their earnings conference call this week:
1. * More companies are concentrating on maximizing the return on invested capital and free cash flow versus focusing on expanding production at any cost. Technology will play a major role in enhancing capital returns.
2. * There is an increase in demand for phase behavior studies of reservoir fluids in unconventional reservoirs. Pressure, volume and temperature studies. This data can be used to predict reservoir performance and ultimate recoveries and ties back in to the return on investment theme.
3. * There is increasing focus on measuring cluster fracking performance, trying to design the frac to optimize reservoir stimulation. The number of factors involved which impact stimulation is substantial, but offer the ability to substantially increase returns if the optimal technology can be identified and economically applied.
4. * Core Labs is conducting an industry sponsored study of enhanced oil recovery (EOR) technology in the Eagle Ford formation. They are also working to commence a similar study for the Wolfcamp formation. If the gas cycling EOR program can increase recoveries from 9% of the oil in place to the mid-teens or higher as projected, at a cost of $3 million, the incremental returns on capital will be substantial - and possibly a game changer. Field testing of EOR cycled gas projects in unconventional formations begin next summer.
5. * Studies continue with regard to proppant use and fracture systems. To be successful primary, secondary, and tertiary fracture systems need to remain open. Different size mesh sands are being investigated to maximize the amount of reservoir surface area exposed, with the goal of maximizing the ultimate recovery from the unconventional rock.
6. * And probably the most startling statement: A “year and a half ago we consistently said that the production in the Middle East was at unsustainable levels.” Many fields in the area are on EOR systems, or will be soon if they are not. As a result technology will play a larger and larger role in this area to maximize recoveries and returns. Bodes well for global supply and demand trends if you are bullish in my opinion.
Technology appears to be playing a larger and larger role in the development of unconventional reserves. This should help drive cash flow and return on investment upward. Management did an excellent job explaining the big picture, and how technology fits into the scheme.