From Fortune · Jordan Blum · · 2m
U.S. oil companies hunt for the next big strike overseas
After two decades focused on domestic shale, American oil giants are returning to international exploration with proven techniques and fresh urgency.
In brief
After two decades focused on domestic shale, American oil giants are returning to international exploration with proven techniques and fresh urgency. U.S. oil companies are shifting from mature domestic shale plays to international frontier exploration, particularly in the Middle East, South America, and Alaska…
Shale boom is maturing, not dying
U.S. shale has transformed oil production for 20 years, but the industry is now in mature consolidation mode. The big discoveries that once thrilled operators are largely gone.
Oil companies eye the Middle East again
EOG Resources, led by CEO Ezra Yacob, is now drilling in the United Arab Emirates and Bahrain using shale techniques proven in Texas. The wells are already outperforming expectations.
“It's outperforming our expectations right now.”
War in Iran pushes countries to drill
Despite ongoing conflict, Middle Eastern nations are increasingly eager to develop their own oil and gas reserves. The Iran war is actually accelerating demand for American shale expertise.
Big oil majors are increasing overseas budgets
ExxonMobil and Chevron, which never fully left international work, are now dramatically increasing capital spending on Middle East and Africa projects. Exxon transformed Guyana into an oil power, while Chevron leads in Kazakhstan.
Shale specialists are going global too
ConocoPhillips, Occidental Petroleum, APA Corp., and Murphy Oil are all returning to overseas exploration after years focused on U.S. shale. Harold Hamm's Continental Resources is expanding in Argentina and Venezuela.
Industry has lost its exploration skills
After two decades of reduced overseas exploration, many oil workers have never drilled a dry hole or done real wildcatting. The industry's exploration expertise has been severely hollowed out and must be rebuilt.
“The exploration muscle memory of the U.S. got hollowed out and it got hollowed out pretty badly during the shale revolution.”
Alaska's wildcatter sees huge potential
Bill Armstrong, a geologist and true wildcatter, is drilling new wells in Alaska's North Slope and eyeing Venezuela and offshore Aruba. He calls the seismic imagery geo-porn and says Alaska has barely been fracked.
“It's like geo-porn. There are tons of opportunities.”
The thrill of discovery still drives the hunt
For industry leaders like Ezra Yacob, the appeal of international exploration is the same as it was in 2005 when he joined EOG. The challenge of testing ideas miles beneath the earth's surface remains the most thrilling part of the business.
“It's the most thrilling industry I could ever imagine.”
Here's the gist
U.S. oil companies are shifting from mature domestic shale plays to international frontier exploration, particularly in the Middle East, South America, and Alaska, seeking the thrill and profit of major new discoveries.
