Saudi America: The Truth About Fracking and How It's Changing the World

Bethany McLean is a talented writer with books as The Smartest Guys in the Room and Shaky Ground. Both wereoutstanding and informative reads, with the Enron book (Smartest Guys) about the various personalities andcorporate malfeasance highlighted. Her current book, Saudi America, is somewhat brief, but an easy read.I have read several 'fracking' books (don't misread this term!) with Gregory Zuckerman's 'The Frackers' beinga detailed history of fracking. It reveals individuals as George Mitchell, Harold Hamm, Nicholas Steinsberger, Kent Bowker, Aubrey McClendon, Tom Ward, Charif Souki, Mark Papa and other pioneers in the hydraulic fracturingprocess development. Mrs. McLean concentrates on Aubrey McClendon, a most interesting and high profileoil and gas leader, who met an untimely end, March 2nd, 2016. Her Epilogue contains the reason for writingthe book and possible outcomes for American energy production. Energy production in the USA a few yearsago was heading down the 'Peak Oil' slope. OPEC and especially Saudi Arabia and Russia must wonder if the shalerevolution will continue with American ingenuity discovering more oil and natural gas.

Bethany McLean, the writer who may forever be cast as 'the reporter who broke the Enron story', takes us on a far more compelling and far-reaching journey here, and in a tightly compact 130 pages: that of how shale oil and natural gas are shifting global economics both more and less than we think.I hadn't realized that fracking (or fracturing, as the industry would prefer) is in many ways a short-term game, with unclear future supply, much more expensive and precarious than traditional vertical oil drilling, and that natural gas is truly where the U.S. can lead the game. If, of course, we ever get around to implementing a sensible, logical national energy policy that ensures our own future without destabilizing the world. Logic and sense are of course completely off the table with a President who seems focused on preserving coal, which could push other countries back into a reliance on this dirty, outdated form of energy, but happily this administration seems an increasingly temporary scenario.With Saudi America McLean expertly weaves a story of shale's first shady billionaires, a profitability model that is almost entirely reliant on close-to-zero interest rates, and how countries like China and even Saudi Arabia are opening up a huge lead over the U.S. when it comes to renewables. My only quibble is that very little mention is made of nuclear power, which in its fourth-generation model could provide a huge chunk of our energy with flawless safety, but which seems the red-haired stepchild for the foreseeable future. On the other hand, that's not McLean's focus here. What she has done is expertly problematized the upside and the downside of "Drill, baby, drill," even when the drilling is mostly horizontal.

Good book worth buying and reading. The actionable insight for investors: we still don't know whether fracking will turn out to have been profitable at historically normal interest rates -- and the evidence we do have suggests not.The book comes off as rushed, not quite ready for publication. The sections of the book don't quite follow logically, and the chronology is confused. There are a few dangling partial sentences and missing words. In the worst case, there are these two sentences, nearly identical but with facts that don't match, both containing grammatical errors, within one page of each other."In the years following its IPO, Chesapeake was one of the best-performing stock [sic] on Wall Street, climbing from $0.47 per share to $34.44 per share."And one page later:"In the years following its IPO, Chesapeake was one of the best-performing stocks on Wall Street, climbing from $1.33 a per [sic] share (split adjusted) to almost $27 per share."Careless for someone of McLean's stature. Presumably the fault is not with the author, but instead with whoever was supposed to be copy editing at Columbia Global Reports, the publisher.Despite this, the content is good and worth buying.

Maybe some experts in the field will quibble with Bethany McLean's analysis of the American Energy industry but, for a novice like myself, this was an engrossing read. It is amazing that so much wealth has been amassed in such a quiet manner. I had never heard the stories of Pegula, Hildebrand, the Wilks, Wilson and Flores but many of them are billionaire investors in the field.The industry's brashness is personified in Aubrey McClendon. What an amazing protagonist to have as the author weaves the violent swings in his personal fortunes with those of the expanding and collapsing energy industry. "Asking me what to do with extra cash is like asking a fraternity boy what to do with the beer." That swashbuckling braggadocio created an empire that has had trouble standing on foundations built on overly optimistic models.The book is littered with fascinating nuggets like:- unassuming Enron spin off EOG is valued more than what Enron was at its peak- Chesapeake had years where it pumped more gas than any American company not named Exxon Mobil- in 12 years, North Dakota went from ninth to second in oil production among states- Wells use 12 million pounds of sand, up from 4 million only a few years ago- Permian production alone produced more energy than 8 of 13 OPEC countriesI like the way McLean concludes the book. She seems pessimistic about the industry's future by citing, for instance that Bakken wells decline by 70% in the first year and quotes Einhorn on his analysis that from 2006-2014 the industry spent 80 billion more than it earned. She moderates this with analysis that gas will remain plentiful and perhaps a useful geopolitical tool. And that for every Chesapeake, there are conservative operators like EOG that can be profitable at considerably lower oil prices.

I found this mini book a very interesting and informative read. I would recommend it to anybody interested in learning more about the US shale revolution.

I'm happy I came across this book. It was suggested by one of our MBA professors as an unbiased and thorough perspective of the real economy and financial consequences behind the fracking boom. The author doesn't try to convince the reader, but rather offers a sober look and analysis for the reader to decide, as only time will judge if the fracking is a real THING or not.