Alameda鈥� A phone call to Brent Dunnigan, CEO of Epping Energy Inc., asking if he wanted to go for lunch, came with a surprising result.
鈥淪ure,鈥� he said. 鈥淚 was just out looking at some land.鈥�
And while Dunnigan is as much a farmer as he is an oilman, with chickpea samples in his office next to land maps, he wasn鈥檛 looking for a place to plant quinoa. No, what he would like, would have roots over a kilometre deep.
That鈥檚 right 鈥� when everyone else is ducking for cover, Epping Energy is on the hunt, looking for land. He sees the current conditions, with depressed oil prices, resulting in depressed land prices, as a time when smaller juniors can get back in the game.
鈥淚鈥檓 finally seeing the opportunity coming back for the smaller producers,鈥� he said on Feb. 4, citing reduced land, mineral and service costs.
But that doesn鈥檛 mean now is the time to start spudding new wells to bring on new production via the drill bit. A well鈥檚 best production is in its early days, and bringing one online during these times of very low prices would be almost giving it away.
鈥淲e鈥檒l try to hold back our production. We鈥檙e not going to give away our oil at this price,鈥� he said.
Dunnigan graced the front page of Pipeline News in March 2011 in our previous focus on junior producers. A few months later he was one of two people named 麻豆视频east Saskatchewan Oilman of the Year.
Five years ago in February, he had a rig drilling just north of Alameda. Not this time, however. Right now, the strategy is to get land in place, then drill when the time comes.
Epping鈥檚 last new well was drilled in the fall of 2014, near Pierson, Man.聽
Now is a good time to be looking for land to develop Dunnigan feels.
鈥淣ow is the time to be doing acquisitions, not drilling,鈥� he said, adding it鈥檚 cheaper to buy production than drill for it.
鈥淣ow is the time to be acquiring.鈥�
While in hot areas, like the Viewfield Bakken and Oungre area, land prices will still maintain some value; in other places, the price is more reasonable.
Thus, he鈥檚 been looking at the Crown land sales results, which happened to be announced earlier that day.
鈥淟arger players have made it really tough on us. We鈥檙e able to deal with them now,鈥� he said.
That change has only taken place in the past few months. As recently as last fall, when his daughters were on the swathers and combines, Dunnigan had expressed frustration over the inability to get larger oil companies to loosen their hold on some land.
鈥淲e saw a shift this fall, in October, November,鈥� he said. 鈥淭hey had been buying and holding.鈥�
What it all comes down to, however, is capital.
鈥淚t doesn鈥檛 matter unless you have the capital to deploy, develop and put in the infrastructure,鈥� he said.
Epping Energy Inc. is a joint venture with 70 to 80 investors between Alberta and Saskatchewan. Epping is headquartered in Alameda and Calgary.
Asked how the last 18 months of the downturn have been, he replied, 鈥淚 didn鈥檛 believe it would get this low. We鈥檙e prepared. We can survive in a downturn market. We鈥檝e had to do some different thinking 鈥� out of the box, non-conventional ways of doing things.鈥�
As an example, he said, 鈥淲e basically bought our own tank truck for hauling emulsion.鈥�
That truck, in turn, was bought from the Big Eagle bankruptcy auction.
Epping鈥檚 production (whose volume he is shy to disclose in print) has remained flat.
鈥淲e鈥檝e been fairly blessed. We鈥檝e remained fairly stable,鈥� Dunnigan said.
Dunnigan has spent the winter since October, preparing in earnest and looking for deals. They鈥檝e exercised a couple of private deals already with more in the works.
As for Epping鈥檚 position, he said, 鈥淲e鈥檙e holding our own. I would say healthy, making the right moves early.
鈥淚 think most of the people who have gone through this before are in good shape, but that鈥檚 10 to 20 per cent.
He noted the 2009 downturn was a little bit of a blip, and most were able to hold their own.
鈥淚 would say the critical time will be after spring breakup and the summer of 2016, both for producers and service companies. The service companies are going to be hurting sooner than the oil companies, by six months. Hopefully there鈥檚 an agreement worked out between the provincial and federal governments on an accelerated well cleanup program.鈥�
One of the factors, Dunnigan noted, was how old companies were. Newer ones are not as secure as older ones. 鈥淚 feel for the service companies, as I spent over 25 years in the service business myself, including during 1986.鈥�
Looking to the end of 2016, he said, 鈥淲e鈥檒l see higher oil prices, a slow recovery.鈥�
Does that mean we鈥檙e at the bottom of the market now?
鈥淚鈥檇 like to think so. We鈥檒l see some floaters, some bounces up and down. You鈥檝e got to have a minimum of confidence of three or four months at US$50 per barrel for WTI.鈥�
鈥淵ou would see probably workovers and production rejuvenation before consistent drilling,鈥� he forecasts. That would likely take place for three to six months before drilling picks up again.
When the Bakken boom hit southeast Saskatchewan, the region was, by-and-large a hodgepodge of small, junior oil companies. However, consolidation in recent years has dramatically reduced the number of those small oil companies.
鈥淚鈥檇 like to see a resurgence of small companies again. I really would. I think it would really help the environment of the Saskatchewan oilfield and economy. From (2008) until now, there鈥檚 a lot less of us left,鈥� Dunnigan concluded.
Why the focus on land? In recent years, smaller players like Epping have had a hard time finding land that鈥檚 available, as much of it had been locked up by larger players. The bigger oil companies weren鈥檛 inclined to let go of any of their properties.
