This past week we spent two days in West Texas studying the oil and gas business. Our goal was to learn more about the operations of energy companies who explore, produce and distribute petroleum and natural gas. We also wanted to understand the current economics and market conditions influencing energy related investments. Our areas of focus were the “upstream” (drilling) and “midstream” (processing and transporting) operations.
West Texas is an area where the advent of horizontal drilling and multi-stage hydraulic fracturing has opened up large reserves for commercial production. This area is now the largest crude oil producing region in the United States, and accounted for 18% of total U.S. crude oil production in 2013s.