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

• Is Peak Shale On the Way?

• Billionaire of the Week: Aubrey McClendon Part 2: The Fall

• Upcoming Oil and Gas Event

• Tweet of the Day

Is Peak Shale On the Way?

Production decline rates across shale wells are accelerating.

Wells are getting depleted faster than before, according to a study by Enverus.

A regular dose of shale doomerism or a natural process

Actually, it could be both.

Many have predicted the demise of shale for years, and yet it has kept surprising with continued growth.

Sure, growth has gone down the priority list of E&Ps recently, but it’s still on the list.

And just weeks ago, industry exec said their shale wells were surprising them…

…with higher, not lower, productivity.

What Enverus reported, on the other hand, was a longer-term process.

First, production growth is slowing down.

Second, production is declining faster over time as wells are drilled more and more densely.

“Summed up, the industry’s treadmill is speeding up, and this will make production growth more difficult than it was in the past,” per report author Dane Gregoris.

More surprises on the way?

Okay, what Enverus is talking about is a natural process.

We’re all familiar with it: shale wells are great because they can start producing in months.

Problem is, they also start getting depleted faster than conventional wells.

But there’s the whole thing with the increased well productivity that those executives were talking about recently.

They’re saying it’s a result of tech improvements.

The whole shale revolution has been about tech improvements.

Who said the time for these improvements is over?

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Billionaire of the Week: Aubrey McClendon Part 2: The Fall

The Indictment

On March 1, 2016, the Department of Justice indicted Aubrey McClendon for “conspiring to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma.”

Per the indictment, McClendon had “orchestrated a conspiracy” involving Chesapeake and another company.

The conspiracy came down to the two agreeing in advance which one of them would submit the winning bid for any leases in a lease round.

The other cleared the way by not trying to outbid the agreed winner and withdrawing its own bid.

Then, once the leases were awarded, the two distributed the assets leased between themselves.

A day later, McClendon died in a car accident.

The Overextending

In the following years, it emerged that besides the anti-trust violations, McClendon had been overextending the finances of Chesapeake.

He had invested heavily in new gas production as well as oil assets in the belief that prices will rise continually.

The belief was proven wrong in 2008 when gas prices dived from $13 per 1,000 cu ft to less than $2.

It was the equivalent of the 2020 price crash in oil.

It was a death sentence for Chesapeake Energy.

The gas price crash prompted a sharp drop for the company.

That share drop prompted what was practically a takeover by activist investors.

These sent McClendon packing in 2012.

Yet they were too late to save the company.

The Bankruptcy and Beyond

Chesapeake Energy filed for bankruptcy protection in June 2020.

It emerged from the restructuring following that filing a year later.

And it declared it would return to its original business: natural gas.

Since then, the company has managed to return into the black and become one of the big winners of last year’s gas price spike.

It has also entered the LNG game.

Aubrey McClendon would have been proud of his creation. Or maybe he’d found its new management lacking in adventurousness.

The kind that can be very dangerous but also very lucrative.

Upcoming Oil & Gas Events

• August 17: 26th Annual PIOGA Divot Diggers Golf Outing and Steak Fry Hermitage PA

• August 20-22: Kansas Independent Oil Association 86th Annual Convention and Expo, Hyatt Regency, Wichita KS

• August 21-22: The Energy Summit, History Colorado, Denver

Around the Global Patch

🇮🇩 Indonesia postpones $20B climate plan.
🇨🇳 China's August oil imports from Iran reach decade-high.
🇬🇧 UK government backs green AI innovations.

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