Viking Oilfield Services: First in Turkey, and Beyond

Somebody has to be first.

In Turkey, Viking International was the first company to employ hydraulic fracture stimulation, according to Noah Malone Mitchell IV, CEO of Viking Oilfield Services, who spoke to Natural Gas Europe at Shale Gas World 2011 in Warsaw, Poland. 

Mr. Mitchell admitted that there were challenges in doing that - the fraccing, that is, in Turkey.

“I think there are different challenges in every country you go to, especially bureaucracy. Turkey has been a very favorable environment: they have excellent fiscal terms, we have very good relations with officials, and haven’t reached any material barriers to our operations.”

Turkey is going to be in need of more energy. Mr. Mitchell explained where the country stood in terms of its energy security, that Taner Yildiz, the Minister of Energy for Turkey had recently been quoted as telling Russia that it would either have to renegotiate its contract by this December or Turkey would shut off the ‘take or pay’ tap coming from Russia.

“That means one of two things,” explained Mitchell, “they’re going to have to find a lot more natural gas or it’s going to be a really cold winter. Turkey is still very much dependent on the Near East for their electrical supply, but I think it’s inevitable that the CIS countries, notably the former Ottoman Empire, will have to become less dependent on Russia and continue to be suppliers to western Europe.”

Headquartered in Istanbul, Viking International and Viking Oilfield Services offer integrated oilfield services, doing seismic acquisition, drilling, cased hole wireline logging, fraccing, coil tubing and other ancillary services. “And everything in between.”

“We currently have about 700 people employed in Turkey alone, so it’s where we run most of our service out of.”

Viking, Mitchell said, is present in Morocco, Romania, Bulgaria, Poland and Northern Iraq.

He remarked, “We just got into Poland doing a 2200 kilometer 2D regional seismic shoot with Ion as our partners. It’s a spec shoot.”

Viking International, he said, was a wholly-owned subsidiary of Transatlantic Petroleum, chaired by Mr. Mitchell’s father, N. Malone Mitchell III.

“We are trying to employ the same methods we used in the Permian Basin of west Texas, which was acquiring vast sums of acreage at a low cost,” explained the younger Mr. Mitchell, “and we did that here (Turkey), and we have great resource potential, but the infrastructure for oilfield services was greatly lacking, so we decided to carry a vertically integrated model on the public company’s (TAT) budget and develop Viking International.”

“And alongside that, off the public balance sheet, to develop Viking Oilfield Services, to not only provide some other oilfield services in Turkey that the public company was not looking to invest more out of their budget into, but also to attack some of the emerging markets, such as Northern Iraq, the FSU and CIS.”

Regarding Viking’s capabilities, he said Transatlantic was divesting away from services, so currently they were marketing that to the public and would have a decision in hand by the end of the first quarter of 2012 in which Viking International would raise additional capital from the public markets. 

Mitchell commented: “That new capital will be employed to further develop our businesses in Turkey, but primarily to reach out and develop unconventional plays in Europe and continue to aggressively grow in the Northern Iraq region.”

As an American, Mr. Mitchell offered his views on the development of the unconventional gas industry in Europe.

“I think that in Europe, as in America, you face an enormous amount of political obstacles to exploring unconventional plays, primarily as it relates to propaganda against hydraulic fracture stimulation,” he explained. “It’s a very common misperception that will be smoothed out over time as it has in America with education, but I think that Europe is very much in a primitive state; there are a lot of countries that are under political strongholds, which presents enormous hurdles. So until that ends, this will continue to be a thorn for any NOC or IOC as far as direct and foreign direct investment goes, respectively.”

“Europe has enormous shale oil and gas potential, as does Turkey,” Mitchell continued, “so I think as long as the uneducated can become educated, see the long term benefits, and realize that this is where their social welfare funds will come from, we’ll get it done and there should be an enormous amount of economic prosperity because of it.”