GOING TO SCHOOL

It’s September. Students are back in school. Let’s hope they are studying geology and petroleum engineering. Up in Williston, leaves are turning while drillbits move to the right, boosting the Bakken beyond 640,000 barrels a day.

In this industry we talk a lot about the all-important decline curve, but it’s time to talk about the learning curve. The American people are on it. In the past two years they’ve learned more than they ever knew before about where oil and gas comes from and how producing it helps the economy.

One lesson: maybe all the publicity and all the TV ads are getting through. A new poll by Harris Interactive shows that 73% of those surveyed support more offshore drilling, and 90% of the public now thinks oil and gas development is a good job creator.

It is, as numerous surveys have shown, from Pennsylvania to South Texas. Just recently the Associated Press told us that oilfield truck drivers in western Oklahoma are getting $28 an hour, siphoning people away from traditional entry-level jobs. The AP cites the manager of a local Dairy Queen, who will pay a $200 bonus if a new employee stays on for three months.

John Christmann, Apache’s manager of the booming Permian, confirms that yes, Subway also pays a signing bonus now out in Midland.

When I told a landman friend of mine about this, he said, don’t interrupt me, I’m looking for an application online.

The learning keeps coming. International oilmen, students and members of the press keep coming here to see for themselves this phenomenon that has already reduced U.S. oil imports and longer term, may add yet more liquefied natural gas to the world market. Some 36,000 shale wells are producing now in the U.S., according to a study by Gene Powell and the Powell Shale Digest.

In August, Powell and the U.S. State Department hosted a delegation of international journalists in Fort Worth. They learned how the shale plays have developed, the fracing process and other matters, prior to visiting a rig in the Barnett.

Technical and financial learning is critical if you ever want to start your own E&P company. But you have to have a goal, directionality in behavior and the right relationships too, according to Rusty Shepherd, chief executive officer of Momentum Oil & Gas LLC. Speaking at a recent IPAA/Tipro luncheon in Houston, he outlined the steps he took on his march toward being independent. He was initially funded by Kayne Anderson Energy Fund V with a $50-million commitment. He started the company in January 2011 and made his first acquisition in June of that year, Fashing Field in South Texas—Eagle Ford, Edwards and Pearsall country.

“My friends asked me, how did a guy like you build a private-equity-backed company?”

Shepherd says you need a destination, a timeline and a route. It takes time—in his case 17 years. First he was employed by Anadarko Petroleum, and eventually worked in its A&D group. Then he spent several years at Houston Exploration, a smaller public company where he could hone his transaction skills and develop relationships in the banking community. Lastly he spent two years at Crimson Exploration, whose major shareholder is a private-equity firm, giving him valuable exposure to the thinking in the PE world.

“You need to match your assets to the right people. We waited until after we had bought the assets and then hired the right people. Otherwise, it’s a train wreck. You need problem-solvers with a diverse skill set. They have to be team-oriented, yet self-sufficient. And, no prima donnas—they have to be the PR guy and the fire marshal and everything else.”

We are pleased to announce some wonderful new additions to our editorial team. Christopher Sheehan, CFA, joins us as senior financial editor. A 10-year veteran of Petrie Parkman & Co., he most recently co-managed a hedge fund in Denver. Chris’ column, On the Money, debuts in this issue.

Also joining our team is Keefe Borden, who is now the editor of A-Dcenter.com ? and A&D Watch newsletter. And, you may have noticed that Richard Mason now writes the E&P Momentum column that was so ably written by Peggy Williams for many years. A witty analyst and Hart Energy’s Director of Technology, Upstream, Richard will contribute other content as well, including this month’s cover story.

Is the Eagle Ford shale going to produce more oil per well than the Bakken? Some people now say so. Find out for yourself at our third annual DUG-Eagle Ford Conference & Exhibition next month in San Antonio. And, has the Utica begun to come into its own next to the mighty Marcellus? Learn more about how these great plays will unfold at the third annual DUG-East event in Pittsburgh in November. Finally, we’ll round out the year with our first Rockies Midstream event in Denver in early December.

Learn more about our speakers and the agendas at Hartenergyconferences.com? .