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Laredo Petroleum CEO Randy Foutch.

Laredo's Foutch speaks to Wildcatters

November 03, 2016
Laredo Petroleum founder, chairman and CEO Randy A. Foutch spoke to the OIPA’s Wildcatters Wednesday Luncheon in Tulsa on Nov. 2.

Over more than 30 years in the industry, Foutch has founded and sold three other oil and gas companies, Colt Resources, Lariat Petroleum and Latigo Petroleum. He serves on the board of directors of Helmerich & Payne Inc. and is a member of the National Petroleum Council.

“Often, as a public company, we get asked why we stay in Tulsa, Oklahoma,” he said. “I’ll tell you, the ability to come to a meeting where you start off with a prayer matters. I think that’s one reason why many of us are excited about being in Oklahoma.”

“Many of you have weathered more than one storm,” he told the crowd. “This is one of the most cyclical businesses in all the commodity arena. But it’s never as bad as (people think) it is, and it’s never as good as people think it is.

U.S. oil and natural gas producers have used unconventional plays to transform the world’s energy position, he said.

“The entire world’s energy supply curve has been impacted by what we’re doing in North America. I don’t think very many people, certainly a lot of our politicians, realize how important the Permian, the Eagle Ford, the Bakken and some of the other plays really are on the world stage.”

U.S. shale oil production surpassed the total of every OPEC country except Saudi Arabia, he said.

“I don’t know this, but I suspect if I was in the Middle East or maybe in the former Soviet Union countries, I’d be spending some money talking about how bad hydraulic fracturing is in the United States. I’d be trying to impact this politically every way I could.”

Foutch said Laredo is improving every step of the drilling process, and its infrastructure investments are paying off.

Since the downturn in oil price, Laredo has focused on drilling only within four corridors where the company has pipelines in place.

“A large part of our crude oil never sees a truck,” he said. “Equally important to us, we can handle huge amounts of produced and fracked water. We don’t have to truck it.”

Foutch said Laredo averages one to one and a half barrels of water for every barrel of oil produced.

“We early on made the decision that we didn’t want to be a fresh water user any more than we had to be,” he said. “So we started building our production corridors, and we have a water recycling plant today, and we’re recycling and using as frack water somewhere around 40-plus percent of our produced water. And that number is growing every day, every quarter.

“We started off wanting to be good stewards and didn’t want to get into any regulatory problem, so we’ve been using non-fresh water, a lot of it, in our fracking and our completions, and recycling. Where we don’t recycle is where we don’t have it tied into a corridor — an individual well with a tank battery. And I think we’ll do more and more (recycling). We now know that we can treat the water and reuse it in fracks.”

Foutch said oil-producing countries around the world need higher oil prices, but a drop in supply was unlikely. He said the Permian alone has the ability to add 200,000 or even 300,000 barrels a day of additional supply.

“My view is there’s probably some upside on prices, but I don’t see it reverting to anything like we did have. I think we need to plan on a $55 price, maybe under that, for some time to come.”

 
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