Second helpings

USA

TOGY talks to Matt McCarroll, president and CEO of Fieldwood Energy. Fieldwood develops on- and offshore conventional resources and is one of the largest operators in the Gulf of Mexico Shelf.

Fieldwood was established in 2013 and entered the market by acquiring Apache’s Gulf of Mexico assets using private financial backing. A purchase of SandRidge Energy’s Gulf of Mexico and Gulf Coast operations the next year, combined with the Apache assets, gave the company the operational footprint it retains to this day. Fieldwood now has interests in nearly 500 offshore blocks in the Gulf of Mexico covering over 8,000 gross square kilometres.

• On the industry’s relationship with Washington: “The US Gulf of Mexico is the second-largest provider of revenue to the federal government, after the Internal Revenue Service. We create a lot of jobs, pay a lot of taxes and generate revenue through royalties and lease bonuses for the government. On top of that, we ensure that the country is energy self-sufficient. Hopefully, with the new [US presidential] administration, we are going to see the government and regulatory agencies as partners, rather than adversaries.”

• On well recompletions: “Recompletions are the cheapest, most efficient way to boost production volume.”

Besides touching on these topics, TOGY talked at length to Matt McCarroll about future relations with Mexico and opportunities onshore. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Matt McCarroll below.

How did Fieldwood Energy get started?
Fieldwood was established in the spring of 2013, and we were considering several opportunities. In May, we were suddenly contacted by Apache, which was looking to sell its business in the Gulf of Mexico. It was a great fit for us, because we had capital but no assets. They had great assets and a great group of people, but had outgrown that business. Within 90 days we had secured a deal and raised USD 3.5 billion in committed financing. The transaction was closed within about 120 days.
With that, we went from having no assets and six employees to having a production of 100,000 boepd and 600 employees. In February 2014, we bought our old assets back from SandRidge Energy for USD 750 million. Those two acquisitions are the linchpin of our assets today.

How have your drilling activities been affected by the decline in oil prices?
In 2014, we probably had eight or nine drilling rigs in operation. Today we have one. There were about 40 jackup rigs in operation in the Gulf of Mexico in 2014, and today there are five. The pricing environment has been very problematic for drilling contractors.
However, as a private company we don’t have to grow the business, and we’ve been able to maintain relatively flat production for the past three years while spending very little capital. We’ve essentially done this by performing recompletions of existing wells, rather than drilling new ones. We’ve also cut back on drilling, because we haven’t had to rely on it to maintain or grow production.
We are still generating prospects, and we won’t pass up opportunities to drill. Once prices recover, we will start drilling again.

What are the advantages of performing recompletions?
Recompletions have kept our production relatively flat for the past couple of years. We plan to do more than 500 of these in the next three to five years and will be able to keep production flat for the foreseeable future.
Each recompletion costs anywhere from USD 250,000 to USD 4 million, depending on the operation and the type of equipment needed. The cost of converting these non-producing wells at less than USD 5 per boe is low; recompletions are the cheapest, most efficient way to boost production volume.

What progress has been made in onshore exploration?
With some partners, we just shot a three-dimensional survey covering 400 square miles [1,036 square kilometres] in southern Louisiana. Three-dimensional seismic data had never before been acquired in the area. We have more than 100,000 acres [400 square kilometres] tied up in leases and options, and we hope to start drilling for deeper targets in the next year or so.
We also have a lot of prospects in the Gulf of Mexico. While we’re not planning to drill in them this year, we’ll hopefully begin a big campaign in the next few years, as prices continue to increase.

How important is the relationship between the USA and Mexico in regards to the oil and gas industry?
I was in Mexico last week talking with the minister of energy, his staff and others in the government.The energy initiative between the US and Mexico benefits both countries and should not be a subject of disagreement. Mexico needs natural gas from the USA, and the USA needs Mexican oil.
Though it has taken longer than anticipated, Mexico is encouraging foreign investment through reform. The energy reform and the fact that American companies are now investing in Mexico are positive developments.
In the US, companies from many different industries are looking for a business-friendly administration and an ease on the regulatory burdens that we have experienced over the past eight years. The US Gulf of Mexico is the second-largest provider of revenue to the federal government, after the Internal Revenue Service. We create a lot of jobs, pay a lot of taxes and generate revenue through royalties and lease bonuses for the government. On top of that, we ensure that the country is energy self-sufficient.
Hopefully, with the new [US presidential] administration, we are going to see the government and regulatory agencies as partners, rather than adversaries.

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