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How to Thrive When Oil & Gas Prices Are Low


When you observe competitors closely, you learn a lot from their failures and mistakes. According to Princeton University, we are biologically inclined to feel good when competitors fail, so do not feel guilty. Instead, try to learn something from the competition that can help your business. Digesting competitive information and acting on it is the next best thing to predicting the future. Here are some examples of how others made the most of someone else’s misfortune:

International Competition

oil & gas prices

Even on the international scene, smart competitors are constantly evaluating the competition for opportunities. Drillinginfo’s CEO Allen Gilmer explored China’s investment in Venezuela and what it means for both countries over the long-term. Even with a decreasing well inventory, China determined that Venezuela is a good investment and an ideal place to increase its presence in South America. It already controls 33% of Venezuelan crude oil and will keep expanding.

Tip: Study how your competitors are failing, then see how you can benefit. The right software can work wonders for this. In fact, one Drillinginfo customer used DI Analytics to benchmark competitors’ productivity in a certain area, and then used that information to develop a better engineering plan that improved production.

Next Door Neighbor and Competitor

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Speed matters in the search for acreage Source: (Paul Chessare)

What would you do if your competitor was also your neighbor? For one land team, an ideal area of interest turned into a complicated opportunity thanks to nearby competing wells. Since the team subscribed to DI Plus, it had plenty of data to analyze. The team leveraged the LandTrac feature to find permits filed with the RRC. Then, it quickly identified open acreage and contacted mineral owners before the competition could act.

Tip: Stay positive by looking for opportunities near the competition. You never know what might turn up and how quickly you have to work in the face of a nearby nemesis.

Competing on Price

When oil & gas prices are low, operators get worried─but should they? There is a surprising range of break even points for operators in certain plays, such as Bakken and Eagle Ford. The chart below shows a wide range of break even prices and after-tax IRR by play:

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Even when prices get really low, unconventional plays break even Source: (Allen Gilmer)

As you can see, an operator using the right practices can still make money in many plays.

Tip: Analyze as much as data as possible to improve production. Many oil and gas companies avoid working with Big Data, and their loss is your gain. For example, finding better well completion parameters provides a big boost to your bottom line. Analyzing factors such as percentage of ceramic proppant and lateral length of the well makes a big difference in completion parameters, which leads to better production models and a higher return on investment.

Competitive situations differ so much that you must develop different strategies to address them. Whether you face competitors that are nearby or far away, rethink how you approach these challenges if you want to thrive in tough times.

Your Turn

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Joanna Ebizie

Joanna Ebizie is a Product Marketing Manager. She develops go-to-market plans and other marketing content. She has worked for technology, engineering, and publishing companies in different writing and marketing roles. She earned a bachelor’s degree from the University of Texas at Austin and an MBA from St. Edward’s University.