Good morning; here's what the Oilman has for you today:

• Surprise! Shale Wells Produce More Than Expected.

• Billionaire of the Week: Aubrey McClendon Part 1: The Rise

• Upcoming Oil and Gas Events

• Tweet of the Day

Surprise! Shale Wells Produce More Than Expected.

Shale wells are surprising operators with greater than expected productivity.

The reports come months after some executives declared the end of the shale boom.

From bust to boom

Pioneer Natural Resources Scott Sheffield was the most vocal “worrier” in the industry last year.

Sheffield spoke about falling well productivity in the patch as an indicator of natural depletion.

And, well, data supported him.

Now, the decline has reversed, and wells are yielding more than expected.

As a result, some of the biggest players in the shale field are revising their annual output projections.

Funnily enough, Pioneer has seen one of the best productivity gains.

The company saw its stock jump when it said it will produce more oil with lower capex this year.

Chevron, meanwhile, said it expected a 10% rise in Permian output.

Others are revising their output forecasts more modestly but still up.

There’s still space for tech advancements

The improved productivity is not some fluke.

Shale producers have never stopped working on improving flows while keeping costs low.

This is paying off yet again.

And it proves that the shale boom is not really over… yet again.

It also means that falling rig counts don’t really mean anything.

The rig count has been falling this year, but production hasn’t.

So much for a direct link between rig numbers and future production.

It’s about efficiency, and there’s more of that to be gained in the shale patch.

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Billionaire of the Week: Aubrey McClendon Part 1: The Rise

A $50,000 Company

One of the most controversial figures in U.S. oil and gas, Aubrey McClendon, set up the company that made him a billionaire in 1989.

Chesapeake started with a capital of just $50,000, supplied by McClendon and his partner Tom Ward.

Four years later, when it went public, the company was valued at $23 million.

All this was thanks to fracking.

It was fracking that turned Chesapeake into the gas major it is today.

It was fracking that made McClendon one of the richest in the industry.

And it was fracking that ultimately brought him down.

The Haynesville play

In the mid-2000s, smack in the middle of the 2008 crisis, Chesapeake Energy tapped a new play in the South.

Spanning east Texas and northwestern Louisiana, with a piece of Arkansas, the Haynesville shale is one of the largest gas-producing regions in the country.

Chesapeake is one of the largest operators there, with some 370,000 acres.

Earlier this year, Haynesville’s gas output reached a record of 14.5 billion cu ft daily.

Back in the 2000s, McClendon bought assets on the cheap before anyone else was aware of their potential.

He also used an unconventional way of funding well-drilling: volumetric production payments.

The sinister-sounding VPP actually means something very simple.

You sell part of a well’s production in advance to fund the drilling of that well.

Small drillers who can’t afford bank loans do it.

Large drillers don’t normally do it.

Unless they’re “America’s most reckless billionaire,” as Forbes called McClendon.

And that’s how, with some help from a friend named Ralph Eades, McClendon turned Chesapeake into a giant.

He died before its fall, which may have been a small mercy.

Upcoming Oil & Gas Events

• August 13-15: GO-WV Summer meeting, The Greenbrier, White Suplhur Springs WV

• August 13-16: EnerCom Denver, The Westin Denver Downtown Denver

• August 16-17: Petroleum Alliance of Oklahoma Flycatcher Fly Fishing Tournament Beavers Bend, OK

Around the Global Patch

🇩🇪 German energy giant: Europe's crisis warning.
🇨🇳 PetroChina achieves net zero in the largest cluster.
🇷🇺 Oil majors count $44B losses post-Russia exit.

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