Energy Workforce’s Permian Basin Chapter hosted a luncheon on August 23, with more than 80 Member Company employees attending to hear from Patrick Cohorn, Operations Manager, Henry Resources. Lex Hochner, Managing Director, Pickering Energy Partners, gave a market outlook.
Hochner said OFS operations are as challenging as they’ve ever been. While commodity prices have recovered, the market is calling for more Permian volumes. A combination of global supply chain issues, inflationary pressure and capital constraints have made for an extraordinarily difficult OFS operating landscape.
“We do think we’re going to see some relief,” Hochner said. “But it may be years, not months.”
In closing, Hochner shared that in the near-term, easing supply chain pressures should bring some relief to recent OFS challenges, and that the longer term forecast appears tight, due to capital limitations and reluctance to add significantly to OFS capacity.
Cohorn discussed the life cycle of an asset from an operator’s perspective and provided context around how decisions are made and how those decisions impact the services sector.
“It takes time and effort to put together a drillable piece of acreage, especially for a smaller company like Henry,” Cohorn said. “We had to be very patient with those times when you just want to go drill with what you’ve got, but we’re very happy that we waited and consolidated this position.”
Henry is driven to stay cashflow neutral with their development pace, Cohorn said.
“That limits the amount of wells that we can go drill at once because we’re only throwing off so much cash flow, where other companies are happy to take on leverage to do something like that. So it’s kind of company specific, but that is a very iterative process to try to lay out your development pace.”
Cohorn said there is a lot of collaboration with other operators for reservoir modeling and operational logistics, but many companies are suffering from pain points around water acquisition and usage, sand costs, and power production that lacks infrastructure and ends up with operators competing with crypto mining for power. Long-term issues such as pressure pumping price increases, artificial lifting and regulations from the Texas Railroad Commission also factor into decision-making.
“Get ready for crews that are in high demand,” Cohorn said. “Especially really good crews that have worked together for a while.”
When collaborating with the service sector, Cohorn said partnership beats price every time.
“If you do what you say — show up on time, have really good service and are willing to work with me when I’ve got a unique set of conditions that I worked through? That’s going to earn my business eight days a week over somebody that comes in with the lowest bid. That’s way more important to us. Might not be the best short-term strategy but we never think about things in the short-term. Everything that we think about is long-term relationships.”
Patrick Cohorn, Henry Resources
Roni Ashley, Director Operations, writes about the Energy Workforce’s membership, workforce development and more. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.