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By Joe Carroll & Harry Weber at Bloomberg
Mark Papa, the former EOG Resources Inc. chief executive officer who helped create the shale industry more than a decade ago, said drillers are “grievously wounded” as crashing crude prices exact their toll.
Shale explorers will be “decimated” in coming months amid a wave of restructurings and bankruptcies, fallout from the 70 percent drop in oil prices since mid-2014, Papa, who is now a partner at private-equity firm Riverstone Holdings LLC, said during a panel discussion at the IHS CERAWeek event in Houston on Tuesday. Low prices probably will linger for another 16 to 24 months before supply cuts cause a rebound, he said.
“From those ashes, you will see the companies that survive, a lot of them will be grievously wounded financially, and the management teams that come out of it will be a lot more conservative going forward,” Papa said.
During his 14-year tenure leading EOG, Papa oversaw its transition away from shale gas production to the then-untested use of hydraulic fracturing and horizontal drilling to extract crude from shale. EOG’s reputation for innovation and efficiency earned it the sobriquet “the Apple of oil.”
Over the long-term, Papa said U.S. shale drillers could become the dominant producers in global markets.
“The future is pretty bright for U.S. production, and I could envision the U.S. could be producing 13 to 14 million barrels a day of crude oil,” by 2022, he said. “The future could be a lot brighter than people think.”