OGFJ: Do you see private equity continuing in the space in
Clark: Definitely. Unless private equity finds a better place for
its investment, it will remain the principal capital provider to the
industry in 2018. It used to be that the banks could dictate terms
of credit agreements, but we’ve seen situations where private
equity has gone to a bank and said, “we’ll let you loan money to
our management teams, but here’s the credit agreement you’re
going to use.” You would have thought that after the crash in
commodity prices that the private equity sponsors would not
have been as aggressive, but it really hasn’t slowed down their
view of the world. That’s an over generalization, of course, but
they command a large piece of the market.
OGFJ: What else should we look for going into 2018?
Clark: I think technological advancements are guaranteed.
Probably more so if prices stay low than if prices go up because
when prices are low you have to find a new way to pinch pennies
and make money. I think there’ll be more consolidation in oilfield
services. Many of the Mom and Pops can’t continue to operate
on a loss. Going forward, from a capital perspective, you see the
same financial products with a new name trotted out every five
years or 10 years. For example, in the 1980s there were MLPs,
blind drilling funds and conventional farmouts. Today we’re seeing
MLPs, SPACs, and DrillCos. To me it’s the same product in a new
wrapper. The close relationship between the producer and the
capital provider started in this industry Day One. It continues to
this day because you can’t drill wells without men, rigs, pipe, …
and capital. You’ve always had to have capital. While things have
changed, in many ways they’ll remain the same.
OGFJ: Any final thoughts for our readers?
Clark: Former Saudi oil minister Sheikh Ahmed Zaki Yamani’s
comment that we didn’t exit the Stone Age because we ran out
of stones comes to mind. We’re not going to exit the Hydrocarbon
Age because we run out of hydrocarbons. There’s going to be a
lot left in the ground. What’s going to replace it? When is it going
to happen? If you look back at history, we’re seeing innovations
occur at a more rapid pace. Where is technology going to take
us? I don’t know the “how” and “when,” but I know based on this
industry and its history, it will be a very interesting ride.
OGFJ: It’s been a pleasure. Thank you very much for your time.
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