Yesterday, I had a broad ranging discussion on the Powder River Basin (PRB) with Joe DeDominic of Anschutz Exploration. For as long as I’ve been in Denver, the PRB has been the basin of the future, but when the future would arrive, the PRB remained… the basin of the future.

In the podcast, which will be released later today, we do a deeper dive into spacing, target zones, completion techniques, the evolution of the play since 2014 and what to expect in the coming few years. Here were my takeaways:

1. The key to “the hockey stick” of growth is in the Niobrara, with (or without) which M&A interest from publics and privates alike will be driven.
2. With publics in particular living quarter to quarter, new play exploration will have to be driven by longer timeline privates (Hilcorp, Kalnin, Anschutz). On point, it also contextualizes the question “Should E&Ps be public if they get no benefit from it?” and will new and expanded private companies balance the “acquire and exploit” model with more “innovate and explore”?
3. ESG works when it’s driven by “the right thing to do for the business” instead of “a nice slide to try to win investors back.”
4. Lookbacks are really easy when you are the one writing and receiving the checks…

With the help of ShaleProfile Analytics, here are some companion graphics for the podcast.

Below, the top 8 operators in the PRB and a map depicting the horizontal wells drilled in the basin. Of note, 5 of the 8 are private companies, which certainly makes the PRB unique and implies any M&A would be from new basin entrants rather than bolt-on acquirers.

With respect to well performance by year, normalized for lateral length, data graphic shows a pretty tight dispersion of well performance as compared to other basins and interestingly, 2012 is effectively the same as 2017 and 2018. To me, and in line with Joe’s comments on well spacing, it suggests that the basin went through an exploratory phase from 2013 – 2016 testing both tighter spacing and Tier 2 zones, but has highgraded and upspaced to improve economics.

On the horizon, private companies with PE money (time limits) will have to start considering in basin consolidation to extend their runway. For Anschutz, with time on their side, they can sit back, learn, optimize and pick their spots, which is an enviable place to be.