When the Asset Isn’t Tired, the Eyes Are

When I was working as a petroleum engineer in the early 80s, you could open a directional well log and see exactly the same thing two engineers in the same room were going to disagree about. One of them would call the pay the right way. The other one would miss it. Same log. Same paper. Different eyes.

It was not always the smarter engineer who got it right. It was the one who slowed down. Who knew the difference between true vertical depth and measure depth on a deviated well and bothered to check which one he was looking at. Who actually sat with the rock long enough to see it.

I have watched that play out for forty years now, in different forms. The cost of getting it wrong has only gotten higher.

That is the thing I kept hearing when I listened to Mike Richardson on the show.

Mike walked Kevin through the story of how Jetta acquired the Thompson Field, an old salt dome on the Texas Gulf Coast that had been producing since 1925. Chevron had owned half. Exxon had run the other half with a six-month rotating engineer who treated the asset like a training ground. Chevron tried to walk away. Exxon used a quirk in the 1925 JOA to block the sale, dropped the value of the asset to non-op pricing, and Jetta picked it up at a steal. Then they went to work.

The day Jetta closed, they had perforating trucks waiting outside the gate. The closing call came through. The trucks rolled in, drove out to the Davis 97, set a cast iron bridge plug on the F-4A, and perforated the F-3A right above it. They did the same thing on the Davis 96 next door.

That field had been making about 1,300 barrels a day when Jetta signed the deal. By the time those trucks left at the end of the day, it was making close to 3,000.

Two wells. One day. 1,700 incremental barrels.

Now I want to be clear what that number actually represents. It is not a brilliant completion job. It is not a new technology. Mike said it himself on the show. All you had to do was put holes in the pipe. The pumpability was ridiculous, the field is a natural water drive, there was plenty of pressure.

So why did 1,700 barrels a day sit there for years, waiting for somebody else to come along and get them?

The Phone Call That Tells You Everything

The detail that stuck with me was not the perforating trucks. It was a phone call Mike made well before the deal closed.

Mike was on the line with one of the Exxon engineers about a recompletion. Forty or fifty feet of beautiful sand in one of the Re-O sections. The Exxon engineer pulled up the log, took a look, and told Mike the sand was below the current oil-water contact. Mike knew right then that the engineer was reading a measure-depth log on a directional well instead of a TVD log. The pay was not below the contact. The engineer just could not see it from where he was sitting.

That is the whole story. Not the asset. The eyes.

I am not picking on the kid. I have been the kid. We have all pulled the wrong log out of the file cabinet at some point. The problem was not the engineer personally. The problem was a system that put a six-month rotation on a hundred-year-old asset and called it good. Exxon had decided the Thompson Field was finished. So they staffed it like it was finished. And when you staff an asset like it is finished, you make it finished. The data starts telling you what you have already decided.

That is how value gets quietly transferred from one operator to another.

What Total Stream Has Been Watching for Years

Bob and I have been building Total Stream Systems for a long time now, and the same pattern has been showing up the whole time, just in a different form.

Modern operators have more data than anyone in 1985 could have dreamed of. What they do not always have is somebody whose eyes are calibrated to see it. We watch engineers spend the bulk of their workweek chasing data, pulling it, cleaning it, checking it, second-guessing it, instead of doing the work they were actually hired to do.

That is not a software problem in the way most people mean it. It is a trust problem.

If you cannot trust the data in front of you, you cannot make a decision from it. You stall. You reach for the easiest answer. You tell the operator on the other end of the phone the sand is below the oil-water contact, because the alternative is staying up half the night double-checking what kind of log you are actually looking at. And nobody is paying you to do that.

The Exxon engineer was not lying. He was just stalling. The cost of his stall was 1,700 incremental barrels a day, on two wells, sitting there for years, waiting for somebody else to come along and notice.

See, the other guy did this and you did not, and look how much further he is than you. That is the part of the Thompson Field story that should keep operators up at night.

What Mike Was Really Buying

The thing I love about how Mike tells this story is that he does not take credit for the perforation. He takes credit for the persistence.

Greg Bird, the owner of Jetta at the time, kept walking into Mike’s office saying this is getting ridiculous, they want oil price guarantees now. Mike kept telling him: I do not care what they say. We have got to get this asset. There is too much upside.

Mike was not betting on the perforation. Anybody with the right tools can put holes in pipe. Mike was betting on what he and his geologist Gordon Roberts had already seen on the logs. In their own files. With their own eyes.

The perforation was just the moment everybody else got to see what they had been looking at all along.

Final Thought

Most of what gets lost in this industry does not get lost in dramatic ways. It gets lost in six-month rotations on tired assets. It gets lost in measure-depth logs being read as if they were TVD. It gets lost in organizations deciding something is finished and then staffing it like it is finished and then watching, years later, while somebody smaller and hungrier walks in and proves it was not.

I do not say that to throw stones at majors. Majors are running an enormous business and they have to make hard calls about where to put their best people. The Thompson Field probably did not deserve their best people. Fair enough.

The point is that what looks like a tired asset is almost never actually a tired asset. It is a tired set of eyes on the asset. And the day a fresh set of eyes shows up with the patience to read the logs the right way, the field stops being tired.

That is what happened on the Thompson Field. That is what is happening somewhere in the oilfield every single week. And that is the discipline I would tell any young engineer or young operator to build their career on. Be the one who actually reads the rock. Be the one who knows the difference between TVD and measure depth on a directional well, and who cares enough to check.

In this industry, 1,700 barrels a day rarely walks across the table because somebody invented something. It walks across because somebody bothered to read what was already there.

Mike Richardson is the President of Unconventional Strategy at Jetta Operating Company. He started his career with Mobil in the Delaware Basin in 1989 and has spent the last twenty-five years at Jetta acquiring and developing the assets other operators walked away from. On Wisdom at the Wellhead, Kevin Fischer and the team from New Tech Global sit down with him to talk about the Thompson Field, the four-year persistence behind reacquiring a Delaware asset from ConocoPhillips, and the Jetta philosophy of seeing what other operators stopped seeing.