Alpine High: Spotting the Shadows of Black Swans
Monday October 3, 2016
Schwarzschwan. Cygne noir. Cisne negro.
Translation??
Black swan.
When Nassim Nicholas Taleb popularized the term Black Swan after the 2008 market crash, just about every CEO and business strategist pretzelled their brains trying to anticipate—and thus get ahead—of the next Black Swan event.
A Black Swan event is something totally unexpected, nearly impossible to predict, has unknown implications and which can have major ramifications for a widely disparate set of interest groups.
Most folks usually think of them as events that bring destruction, chaos, uncertainty, and maybe even ruin.
But sometimes, a Black Swan event can announce the arrival of something really great!
In that spirit, we’re going to label Apache’s recent discovery/announcement of their opportunities along the Alpine High in Reeves County, TX as a Black Swan event.
It was not predictable because the industry had written off Apache’s area of leasehold interest as:
1. Too complex to effectively exploit
2. Limited to dry gas production
3. Too clay rich , and therefore presumably too ductile to support resource play type hydraulic fracturing operations.
Apparently “conventional wisdom” ain’t so wise.
But we’ve seen this before in geology and in the oil and gas business.
The most dramatic examples?
• The adoption of plate tectonics as a hypothesis that explained basin formation, clastic deposition, and trap formation models.
• George Mitchell’s breakthrough perseverance in proving that shale could be all the things that classic exploration petroleum geology looked for—source, reservoir, trap and seal—and that it covered hundreds of square miles—- Mother Nature’s gift that keeps on giving.
So when a company is true to its vision and perseveres through to massive success, it’s a groundbreaking achievement.
Making the comparison
Given that Apache compares the stratigraphy and environment of deposition of the Alpine High area to the SCOOP STACK plays in OK, we thought that we would compare some of the Play Assessment mapping that we’ve done in the SCOOPT/STACK plays to the limited data for the Alpine high area..
