The Frackers - Gregory Zuckerman

[Cunninghamew]

[amazonsearch]The Frackers[/amazonsearch]

 

Just finished reading this book and it is a fun / slightly informative read. Great beach book

 

Profiles various players in the O&G industry over time - Harold Hamm, Mclendon & Ward, Mitchell, Papa, etc

 

Can't help but think every E&P exec is a pretty big gambler after reading

 

 

[frugalchief]

[amazonsearch]The Frackers[/amazonsearch]

 

Just finished reading this book and it is a fun / slightly informative read. Great beach book

 

Profiles various players in the O&G industry over time - Harold Hamm, Mclendon & Ward, Mitchell, Papa, etc

 

Can't help but think every E&P exec is a pretty big gambler after reading

 

I bought this on the iPad and couldn't make it too far....I'm a paper reader, might have to re-buy.  Zuckerman is a good storyteller.

 

I love the O&G industry (live in a boom area), and know some exec's of independent companies.  They are very high-risk people, gambler types like you said.  Too scary for me.  They've made big bucks, no doubt, but out of those names mentioned, how many others have financially ruined their lives b/c of these high risk bets and we will never know their names?  A large multiple to who has been successful probably.

 

Was reading an article over on ESPN.com this weekend about Jerry Jones....highly leveraged, $50mm in debt at one point, bunch of dry holes, then hit 17 gushers in a row.  Eeekk...I cringe just reading about this riskiness, and Jerry could've been a different person than we know today.

 

Thanks for posting, will have to re-read/ finish the book this time!  :P

 

Link to ESPN article

[Liberty]

Started reading this recently. About 85 pages in. Good, but I dislike how Zuckerman repeats a lot of things 3-4 times... Hopefully that tendency doesn't last through the whole book.

[Liberty]

Still progressing slowly through the book. Less exciting than I expected, but maybe it'll get better...

 

Wrote some thoughts about it on Twitter. I'll just cut & paste them here, sorry about the reverse chronological order (start at the bottom):

 

http://i.imgur.com/qlXeFuj.png

 

 

 

 

 

[odin]

Frackers is a good candidate for audiobook.  Listen while commuting or exercising

[Liberty]

I did finish the book a little while back. The second half is better than the first, possibly because the events were taking place as Zuckerman was writing the book. It also gets less redundant as the book goes on.

[DavidVY]

Yea, O/G guys are pure gamblers to the MAX!

 

Makes the natural gas imbalance and oversupply more cause and effect. Contracts linked to retaining leases specify a certain amount of drilling and extraction for lease to remain viable.

 

I think the next big push is the petrochemical companies coming into the supply glut ala internal combustion engine coming into the gas glut in the Rockefeller era.

 

 

[Larry]

Finished this book today.

 

I'm not familiar with energy sector at all and have never invested in oil/gas companies so reading this book gave me some very good insight. I got the same feeling as well that these guys are pretty much gamblers and there is a significant risk of these companies getting bust. I especially enjoyed the parts about Aubrey McClendon and Tom Ward, as I didn't know anything about them before this book. Although reading this book confirmed me that investing in O&G companies isn't my thing, it will be interesting to see what happens with some of the companies portrayed in this book going forward.

[tede02]

I was just blown away reading the part where McLendon lost most of his CHK stock in a margin call during 2008.  Unreal. 

[Larry]

I was just blown away reading the part where McLendon lost most of his CHK stock in a margin call during 2008.  Unreal.

 

Yea and I just dont get it that he took so much risk with Chesapeake and even took margin loan just to buy more CHK stock.. Reading that part kind of reminded me of Mike Pearson of Valeant who also borrowed against his VRX holdings even though he didn't use the proceeds to buy more stock I guess.

[Pelagic]

Just finished reading this and really enjoyed it. The author makes a persuasive argument that the growth in US O&G production thanks to fracking and horizontal drilling is a tech revolution. I never thought about it quite in those terms but there were decades worth of learning and perfecting the process until it all finally clicked in the late 90s early 2000s. I thought the portrayal of the major oil companies at the time was also interesting how the "smart money" had pretty much given up on the US and here you have these scrappy independent drillers trying to make it big in formations that were very intensive in terms of the tech and know how needed.

 

I also have to say the book made me rethink the way I look at leverage. McClendon and Ward seemed to only be content when levered up to their eyeballs. They took the approach that they had to be first into a field with the most acreage and leverage allowed them to get there before anyone else. They looked at leverage as a tool to gain relative advantage over their competitors rather than in the more absolute terms of financial stability I'm accustomed to looking at it in. While I don't plan on taking on using massive amounts of leverage myself anytime soon, I can see it's utility when you have to beat the competition quickly.

[Tompety03]

I liked the comparison of Tom Ward and Harold Hamm's views on leverage:

 

“I didn’t have much to start out with in life, so without leverage I wouldn’t have anything” – Tom Ward

“I don’t like using other people’s money, it changes you. You believe your own bull, it distorts you” – Harold Hamm

 

My detailed notes and summary are below.

 

Chris 

 

http://www.boardofbooks.com/the-frackers-the-outrageous-inside-story-of-the-new-billionaire-wildcatters/review-and-notes/

 

http://www.boardofbooks.com/the-frackers-the-outrageous-inside-story-of-the-new-billionaire-wildcatters/