Low prices, warm weather and abundant production are forcing natural gas companies to refocus on oil.
This is an important shift for Oklahoma, an epicenter of the natural gas industry. The Oklahoman ran a great profile of how Oklahoma natural gas companies are trying to reinvent themselves as oil outfits.
In many ways, natural gas companies have been “their own worst enemies,” Adam Wilmoth writes:
New technology and improved drilling techniques quickly allowed the industry to tap vast natural gas supplies throughout the county, flooding the market and destroying prices.
Low natural gas prices have forced executives at energy companies around the country to focus on oil and petroleum liquids. This is happening across the U.S. and here in Oklahoma. The Oklahoman story explores operational shifts at SandRidge Energy, Chesapeake Energy, Devon Energy and Continental Resources.
One of the earliest and “most radical” transformations has been seen at SandRidge, The Oklahoman reports. Just two years after being founded as a natural gas company, executives there started transitioning focus to oil.
To make the transition, SandRidge sold off natural gas producing assets, gobbled up oil companies and oil and natural gas liquids-rich properties and piled on billions of dollars in debt, the paper reports.
Revenues at SandRidge are up now that it’s largely an oil company, according to The Oklahoman. Chesapeake is making the switch, too. And, like SandRidge, has piled on debt during the gas-to-liquids transition.
The shift has been less dramatic for low-debt Devon and Continental, The Oklahoman reports. Devon has long balanced a mix of both natural gas and oil properties, and Continental has had oil interests “for decades” and didn’t take on debt to make the switch.