Any of the old school LandmanLife readers know that I used to have a couple of guys that wrote posts for the site, all on their own prerogative, some were rants, others were stories, sometimes we got the serious shitpost that resulted in cease & desist letters (I did not remove that post, btw). The previous authors are all in different phases of life, mostly in other industries. We stay in touch and I wish them all the best. That being said, I have always maintained some “editorial oversight.” Anyone reading this that would like to contribute a story, rant/rave, whatever, please contact me. A couple of the #eft folks seem to like proprietary platforms for their content. I won’t put you behind a paywall. If you have something to say, I’d love to help put your voice out there.
This post is something I wrote the other night after a couple of (to-go) margaritas, and after a lengthy correspondence with @AandDBadBoy [ADBB] on Twitter I decided to get his input about the topic at hand. Both of us being (somewhat reformed) landmen, I knew he had some valuable insights. His commentary is highlighted and bolded throughout the post, and I fully intend on having this be a continuing topic because I have nowhere near covered everything I need to say, I hope that ADBB will continue to provide commentary as well. Hope everyone is staying safe and doing well.
It’s 2020, Coronavirus has caused global quarantines. Demand was already slowing
. (shale companies were screwed, but not this screwed). Saudi Arabia and Russia are producing more oil than ever before. First we hit $30 for WTI, today it was around $20. Everyone says single digits are likely, possibly in a week or less. The world is buying up oil and filling every possible storage tank they can get their hands on (got a swimming pool?). You could say OPEC has lost control of its members, or you could say Russia has went full Kamikaze.
Production curves are too steep, the shale wells are too expensive, and equity has all but vanished from the industry. When there is a momentary 5% uptick in the price of oil I hear about it. From everyone
. Even people, my neighbor, the mailman that are notknows I’m in the business.oil because I receive the most mail on the block(only industry still using snail mail), my kids teachers, our preacher, you name it. Like it’s something to celebrate. “Hey man, I heard we’re up pretty good today, right?” Well, ( we went from decently stable to I’m going to my lose my job in 3 months, so not great Greg but better than yesterday…) being up 5% on the day and 65% down on the year does not mean we are only 60% down for the year…so, no. Going from $20 per barrel to $23 is not going to get me to break out the good stuff.
The reason I’m drinking the good stuff is bittersweet, I am reminiscing of better days. Remember when Shale was the “technological revolution” that made previously unrecoverable reserves suddenly attainable? I think oil was around $100 per barrel back in those golden days, when so many of the “Shalennials” were born
We were always “the smart one” and usually also “the smartass” in the group. There was a distinct divide between the people who got hired because of life’s circumstances/random luck/natural talent to deal with people, and the college educated/well experienced/old school landmen. The “warm bodies” knew they were only hired so a broker could bill a day rate
,(some believed that they were good with people, they found out they weren’t in the first sniff of a downturn), but fuck it they were making more money than ever before…who cares if it lasted or not? They could always go back to whatever it was they did before. Some of us took our jobs seriously, a lot of us fucked around and had a good time (too often), and most of us got burned out. Once 2014 came around it was too late for some of us to back away…so we tried to bury our heads in the sand. Life’s a bitch, and it made sure everyone in the business understood that for the duration of 2015. Then, like a phoenix rising from the ashes…the mighty Shale returned to life! Private equity was the hot new thing, banks were lending again, the rig count was up every week…WE WERE BACK, BABY ! (DRILL BABY DRILL!)
Ever heard of the term “dead cat bounce?” Ok, so maybe it technically doesn’t qualify, but you get my point. We had another ~3 years of good times. Everyone knew a landman, or at least someone involved in the oil business, kind of like every family has someone in real estate. Too few of us questioned what had changed. We accepted that the price of oil (and the discovery of shale) was the sole determining factor, and
therefortherefore [ADBB showing off right there] our entire business must be generating more money than we spent, right? Otherwise, why would we be spending SO MUCH MONEY?! The OFS guys were squeezed hard in 2014 and 2015, but they even started seeing things pick up again. Everyone had work again. Life was good. I didn’t see the same hiring frenzies for landmen during this time, but I had also put myself in a position to be more…isolated from the masses (means I took my job as a serious career, instead of a way to work for my buddy and afford an F250 platinum). A couple of people I knew that had left landmanning in 2014 got back into the business, most of the ones that left didn’t come back though. They were the smart ones.
Boom and bust. That’s the way it’s always been. We all get that. It’s busted, and it’s going to get more busted. The question everyone (not just #EFT now) is asking…was shale ever profitable? If you have the prime acreage, a great management team, plenty of investor capital, good field personnel, and a bit of luck…did that ever actually happen (or just a delirious dream we chose to believe)? I can’t really come up with any examples. I can, however, start counting all the companies I have worked for that have gone bankrupt, been dissolved, or otherwise been dismantled for parts. Were we just that dumb? Maybe we just got left out of the cool kids club when they decided to pull a fast one…How did an entire industry decide to get on board with, what is now referred to by some, a complete fraud? Maybe because everyone was doing it? Might as well! I’m seriously wondering, how the fuck did this happen? If even half of the shit these #eft shitposters say is true…damn it makes me feel dumb.
The big point of #eft is that the management teams took all the money and burned the rest. Well…I wasn’t part of a management team, I certainly watched a lot of capital get destroyed. But I also took some home. In fact…it bought my house. And my truck. My wife’s wedding ring. A nice collection of firearms that Beto would love to get his hands on(Goodluck buddy!). You get the point. Could I have made more money? Sure. Would I have made more money in a different industry? No idea(for the majority of landmen, NO). Do I have skills that apply to other industries now that I did not possess before? Absolutely. Is my resume going to get me a job in another industry? Definitely not. I am not the only person that made money from the “shale revolution.” Most of the people in our industry did, at some point or another, either directly or indirectly. Was it sustainable? I think a lot of us knew it wasn’t, but it was too easy to disregard. Was it a massive, industry wide orchestrated fraud?
…I don’t think so.
Maybe I’m still just a dumb landman.
Big thanks to @AandDBadBoy, check him out on Twitter for more insight into the business. Again, if you’d like to say something…say it. The door is open.