In the post-dinner scene, players retire to the lounge to sip a leisurely glass of wine. In the post-war era, peace settles in, nations rebuild and citizens return to their daily routines. But what do we expect to see in the post-probables era? Some observers say, fasten your seatbelts. Industry consolidation on a much bigger scale could be coming next. We’ve entered a transitional time.

First, what do we mean by the post-probable era? This term was used recently by Jefferies & Co. E&P analyst Subash Chandra. After attending this year’s Winter NAPE, he said, “Dollars are harder to come by when the focus is on cash-on-cash returns instead of 3P (proved, probables and possibles) capture. In effect, the 2013 NAPE echoes what some E&P stocks have yet to reflect, the end of the shale rally and beginning of the ‘post-probable’ market. Crowds gathered mostly around conventional opportunities with a renewed focus on cash-on-cash returns.”

Bernstein Research analyst Bob Brackett also sees the industry in transition. He makes two key points in recent reports. One, he says the battle for resource-play acreage is largely over, as major positions one can acquire organically are gone (so, it must be M&A time). Two, as plays mature and producers get smarter from the more wells they drill, the incremental estimated ultimate recovery improvement per well starts to flatten out, if not wane. In some plays he thinks we are at that point. It becomes a manufacturing process.

North American E&Ps are turning their swords into ploughshares, Brackett says, and few emerging resource plays are on the radar. “Consolidation will become necessary, in our view, because the pace of discovery (and potential for first-mover advantages) is coming to an end, and the overall opportunity set of emerging resource plays is diminishing,” he says.

Truly, it is more exciting to drill in the sweet spot than on the mediocre flanks of a play. It is more fun to capture the beast than to haul it back to camp and skin it.

His analysis couples this trend with the fact that the biggest buyers are fully loaded, whether private-equity players like KKR that can pay $7 billion for an E&P firm, or majors that collectively have $100 billion on their balance sheets. That’s not to even mention national oil companies like CNOOC Ltd., which just paid $15 billion to acquire Nexen.

By the way, international buyers are savvy, noted Maynard Holt of Tudor, Pickering, Holt & Co., speaking at IHS CERAWeek. “We were in South Korea recently…and their guy on the other side of the table said, ‘Do you mean northern Lycoming County or southern Lycoming County?’ I thought, Wow, this is sophisticated money!”

Already we are seeing the end of the shale leasing frenzy, when companies had merely to mention getting a new swath of acreage under the Barnett or Haynesville and their stock would rocket. It was an exciting time, as one play after another was unveiled: the Haynesville, the Fayetteville, the Eagle Ford, the Marcellus. Wow, where could this all lead? As the rig count rose steadily, no one in 2007 thought the shales would cause a natural gas glut that would prompt talk of liquefied natural gas exports. No one suspected U.S. oil production would rise to such a level that we could speak of “Saudi America.”

The thrill may be gone as mature shale plays transition to full development, and yet, more meaningful activity is at hand. Now in harvest mode, companies will be steadily adding oil and gas supply to the U.S. Finally, they may actually start generating positive cash flow, instead of just outspending cash flow for years.

Technology is accommodating the shift to harvest mode. Rigs and drilling practices are getting more efficient; it takes fewer days from spud to spud and costs are dropping. Pad drilling is more pervasive than ever before.

As for the A&D resulting from the shift to development, this past month, China overtook the U.S. in the amount of oil it imports each day. Until it can create an oil-and-gas shale movement that blossoms into full development mode, look for it to continue to acquire reserves and companies abroad.

“We have transformed CNOOC into an international company with a mandate of meeting tomorrow’s energy demand,” said Fanrong Li, chief executive and president, during his keynote address at IHS CERAWeek in Houston. “Some 40% of our reserves are now outside China. The energy market is global and interconnected. CNOOC intends to become an integral part of the solution to global supply. We believe our best response is collaboration…CNOOC is willing to work with all of you and be your partner of choice.”

What is the true potential of the Mississippi Lime, and how can producers improve its economics? How does it stack up to the Granite Wash and other key plays? Come to the first annual DUG Midcontinent in Tulsa, April 23 and 24, to learn more. See you there!