Permian Basin is Producing Incredible Numbers

Newsletter No. 28

Good evening!


Hope you are all doing well and staying out of the heat as best as you can. There’s a lot to talk about this week, so let’s get to it. 

Today’s Headlines

  • Success Story: Energy Transfer’s Kelcy Warren and Ray Davis 

  • Oil and Gas News

  • King Operating News from the Field

  • Ask Jay …

  • On a Personal Note …

Success Story: Energy Transfer’s Kelcy Warren and Ray Davis 

One of the greatest stories in the news this week isn’t necessarily in print. It is the back story behind Energy Transfer. 

There were two guys, Kelcy Warren and Ray Davis, who had tremendous success with mid-stream assets (pipelines to transport oil and gas).

Kelcy was looking for the next deal in the early 1990s. Ray was retired and living in Sherman, TX and was pretty content, so to speak. I don’t know what their exact net worth(s) were, but from what I have been told, combined, they were less than $25 million before they started Energy Transfer. 

As I’ve heard the story, Kelcy calls Ray and tells him about some assets he feels certain he can purchase, but he will need Ray’s help. Ray brings a set of immense talents that Kelcy is certain he will need. The two of them kick around ideas and decide to start the new company known as Energy Transfer. 

Financially, it was a great decision for Ray to come off the “ranch” in Sherman.  Within 10 years, they are both billionaires and they weren’t done. Ray stepped down as Co-CEO in 2007 but stayed on the board and decided to go in with other investors and purchase the Texas Rangers.  

Kelcy stayed on with Energy Transfer and has had one success after another on his way to a net worth of $5 billion.  

This is one of my favorite success stories. Knowing the backgrounds of these two small town country boys having made it big in the oil and gas space, gives me hope for everyone. Keep your head on the target and never give up! 

Oil and Gas News 

Speaking of Energy Transfer, the company is the focus of the first oil and gas news item. 

In a bold move, Energy Transfer has announced its plan to acquire Crestwood Equity Partners, a major player in the midstream sector. 

This means Energy Transfer will be adding Crestwood’s skills in gathering, processing, and transporting natural gas and crude oil to its own impressive portfolio. 

This move isn’t just about combining two big names – it’s about making things even better. Energy Transfer’s expertise in the energy field will mesh with Crestwood’s strengths to create a supercharged team. 

This is all happening because both companies believe that by working together, they can be even smarter and more efficient. 

Also, in oil and gas news, Chesapeake Energy, a prominent player in the energy sector, is making headlines by selling its Eagle Ford assets located in Houston with a $700 million divestiture. 

SilverBow Resources is the buyer as they purchase existing wells, acreage and even greater scale in the Eagle Ford.  

This strategic move is set to reshape the industry landscape, as Chesapeake restructures its focus. 

The sale highlights the dynamic nature of the energy business, where companies adjust their strategies to align with evolving market trends.   

In other news, it was announced that Earthstone Energy and Northern Oil and Gas (NOG) have successfully finalized the acquisition of Novo Oil & Gas assets. 

This strategic move strengthens Earthstone and NOG’s position in the industry, adding valuable assets to their portfolios. 

This is happening while Earthstone is also marketing their Eagle Ford production and acreage as they want to divest non-core assets and get back to the Permian. 

According to a piece in Hart Energy, Earthstone has scaled down its presence in the Eagle Ford region in recent years. By the end of 2022, the company’s net leasehold acreage in Eagle Ford stood at around 3,000 acres, a significant decrease from the 12,700 acres it held by the close of 2021.  

The Permian Basin continues to recreate itself as the most prolific and productive oilfield in the world with over 5 million barrels of oil per day.  It seemed like yesterday when production was around 1 million barrels of oil per day before horizontal drilling took affect and started producing incredible amounts of oil.  

A recent Wall Street Journal article discusses the hard choices that oil and gas firms are facing. Wall Street investors are saying to give back returns to investors and Washington has told firms we need more oil to lower gasoline prices at the pump.  

This will be heavily debated in the upcoming elections as firms seem content with their returns and not spending unprecedented amounts of capital to increase rig count. 

And yes, rigs drill longer laterals today than ever and you don’t have to drill 10-20 vertical wells for one horizontal well, but companies are making billions of dollars in profits.   

King Operating News from the Field

Speaking of the Permian Basin, we are excited about putting our Borden County wells online in August and September. Most importantly, we look forward to drilling wells in Borden County and in Wyoming. Both of these oil fields are world class with a lot of oil and gas in place.  

It has taken us some time to put wells online and study our science. This is all part of the effort to make our investors proud. It takes time, but we feel like we are turning the corner with our drilling program. 

Ask Jay …

I receive oil and gas questions quite often, so I thought I would start adding them to the newsletter along with a video answer. 

So, if you have any questions, please reply to this newsletter. I will do my best to answer them in a timely manner and to the best of my ability. 

The first question I’m answering is: What is an ESP and what does it do? Watch the video here.

On a Personal Note …

I’m off next week to watch my daughter, Mikala, in the famous Volleypalooza volleyball tournament in Austin next week. The competition will be tough, but watch for our Prestonwood Christian Academy team to get into the Finals. That’s certainly who I will be rooting for to win it all. 

I will also be stopping by to see some clients and old friends while I am down there so stay tuned. I might have a few good stories to tell.  

Hope you all have a safe and wonderful week.  

Recommended Reads

BofA Global Research Reveals Latest Oil Price Forecasts

Interior secretary accused of ‘apparent ethical breaches’ over oil and gas drilling ban

The oil business is booming in Utah’s Uinta Basin

Lastly, if you have a subject you would like me to discuss, please do not hesitate to reply to this email.  I will do my best to include it as soon as I can. 

 All the best,