SynMax Research:
The higher cost of simul-fracking and tri-mulfracking is justified due to the significantly higher efficiency gains which come from these two completion techniques. Simul-fracking increases the completed lateral feet per day by nearly 50% compared to traditional zipper-fracking. Tri-mulfracking nearly doubles the completed feet per day compared to zipper-fracking.
The cost savings per well due to the higher production per lateral foot are well worth the higher overall capital costs for simul-fracking and tri-mulfracking. Savings per well range from $400K to $500K.
While simul-fracking and tri-mulfracking significantly increase productivity and generate cost savings per well, most small producers can’t afford the higher cost of water, sand, and proppant required to execute these techniques. Therefore, larger producers are better positioned to realize these lower operating costs and productivity gains, giving them a huge incentive to acquire smaller producers. As a result, much higher consolidation in the oil and gas industry is likely to occur over the next few years. This will be especially true in the Permian and DJ basins, where simul-fracking and tri-mulfracking are expanding in usage as large producers plan to complete a much higher percentage of wells using these two techniques.
The recent merger of SM Energy and Civitas Resources is one example where the two companies are expected to utilize more widespread usage of simul-fracking in the Permian. Civitas Resources is already using simul-fracking prominently in the Permian, but there hasn't been any direct indication of SM Energy using the technique.
Finally, we have the discussion of Oil & Gas producers looking to get into the data center craze by moving into the power space. Chevron is in exclusive negotiations with an unnamed, premier data center operator (often referred to as a "hyperscaler") to be the end user of the power. In order to facilitate such an endeavor, large volumes of gas production and substantial sums of capital will be needed. For the power capital component alone, a 4 GW facility targeted by Chevron will cost $8 billion (using a $2,000/kW CC cost) with daily gas production exceeding 0.5 bcf/d. When power price agreements are north of $120/MWh, this presents a great opportunity for a producer who can afford such a capital outlay. Large producers getting into the power generation business also allows them to naturally hedge their long natural gas exposure.