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Amid the most prolonged downturn in oil and gas industry history, San Antonio-based Millennium Exploration Co. quietly turned 10 years old this summer.
But instead of holding an elaborate celebration, the independent exploration and production company went drilling for oil in Matagorda County
Earlier this week, Millennium completed drilling on its Runnells lease near Bay City, where it hopes to put an 8,000-foot deep vertical well into production next month.
Despite crude oil prices being stubbornly stuck in the mid-$40 per barrel range, Millennium’s founder, president and CEO Richard Monroy, told the Business Journal that his company is using the downturn to its advantage.
“I’ve created this hybrid that’s got the geological, intellectual muscle, the money-raising muscle and the operational muscle to get it done,” Monroy said.
After picking and choosing from “ground-floor” prospects, Monroy said he can make the projects profitable due to lower drilling costs, contractors being willing to negotiate on their prices and consultants being “at your beckon call.”
“I think that our strong relationships with our clients has given us the flexibility of big and quick cash when we need it, so we can buy these ground floor deals,” Monroy said.
Originally founded in 2006 as a cash-raising development company, Millennium started drilling its own wells in 2011.
“We started off by being the development company, now we’re the architects, the engineers, the development company, the bank, the general contractor and we’re also the management company after the wells go into production,” Monroy said.
Drilling permits show that Millennium has found a niche in drilling deep vertical wells at a time when the shale revolution brought a wave of hydraulically fractured horizontal wells across the Lone Star State.
Vertical wells can also be fracked but Monroy said they produce a reliable and steady flow of oil over the life time of the well compared to horizontal wells, which see huge initial production figures that sharply decline months later.
“Even these deep drills that we’re talking about, they’re also still being drilled into sandstone formations,” Monroy said. “And that’s the fun part. You hit an 11,000-foot deep porous, permeable sandstone – that thing is going to scream like a fractured shale or resource play but without the disparity that you see from the initial production.”
Three company diesel trucks are the only debt to the bank for Millennium, Monroy said. The company currently has two wells in production, its Lake Alaska lease in Brazoria County and its Roadrunner lease in Refugio County. Monroy said the company plans to take advantage of the downturn to drill more wells later this year.
“It’s not going to last forever but it’s nice right now,” Monroy said.
Sergio Chapa covers manufacturing and the energy industry