Jack McClendon on Why It's So Hard to Create a New American Oil Boom
Jack McClendon, CEO of Sienna Natural Resources, discusses the challenges facing U.S. oil production, including rising costs, capital discipline, and the tension between the Trump administration's desire for more drilling and lower oil prices. He explains why a sustained price above $80 per barrel would be needed to trigger a meaningful supply response, and why the industry remains cautious after multiple boom-bust cycles in the past decade.
Summary
Jack McClendon, CEO of small independent oil and gas company Sienna Natural Resources, joined the Odd Lots podcast on April 17th — a day when WTI oil prices were dropping on news of potential ceasefire progress in the Middle East. The conversation covers the structure of the U.S. oil industry, the economics of small independent producers, capital dynamics, political tensions, and the barriers to a new American oil boom.
McClendon clarifies that Sienna Natural Resources is not a shale company but a conventional oil and gas producer. Conventional reservoirs have higher porosity and permeability than shale (unconventional) reservoirs and were historically easier to exploit. Sienna's model is to acquire undercapitalized or underappreciated older conventional assets that are too small to matter to large shale operators, then optimize their production. He notes that the shale revolution — in which his father Aubrey McClendon played a significant role — transformed the U.S. from producing ~5 million barrels per day to becoming the world's largest oil and gas producer at ~13 million barrels per day.
On costs, McClendon explains that since COVID, his company's operating expenses have risen approximately 25-30%, driven by higher personnel costs, chemicals, electricity, and capital equipment including steel affected by tariffs. He notes that oil service providers raise their prices in tandem with oil prices, eroding the benefit of price spikes. Recently, however, there has been some softening in service costs as lower oil prices around $55-65 per barrel have reduced drilling activity and created slack in the rig and frack fleet markets.
McClendon discusses how the industry has undergone a significant cultural and structural shift away from production-growth-at-all-costs toward capital discipline and shareholder returns, driven largely by investor pressure following multiple bust cycles. Consolidation has dramatically reduced the number of meaningful publicly traded oil companies from roughly 70-80 to about 10, with Exxon and Chevron dominating the shale space. Smaller companies like his rely on family offices and alternative investment vehicles rather than large private equity firms.
On the question of what it would take to trigger a new U.S. oil boom, McClendon argues that a sustained WTI price above $80 for four to eight months would likely generate a supply response, though not on the scale of the historic shale growth years. He notes the industry's response time is still four to six months even for 'short cycle' shale, and that the industry has been burned badly enough in recent bust cycles — 2015-16, COVID, and the post-Ukraine war price fizzle — that it is in a cautious 'wait and see' mode.
On the political dimension, McClendon acknowledges that oil country overwhelmingly supports Trump but notes significant private frustration within the industry over the administration's active efforts to push oil prices down. He describes an inherent contradiction in wanting both more drilling and lower prices. He also offers an industry saying that Democrats are good for oil prices (by restricting supply) but bad for the industry politically, while Republicans are pro-industry rhetorically but often produce lower prices. He argues that price and input costs are exponentially more important drivers of drilling activity than regulatory changes.
McClendon also touches on the psychological profile of oil industry participants, describing them as having high pain tolerance and deep belief in the essential nature of their work. He argues the shale revolution has prevented geopolitical conflicts by enabling resource abundance, and expresses pride in the industry's contribution to modern civilization. He closes by noting that drilling efficiency has dramatically improved — wells that took 25-35 days to drill a decade ago now take under 10 days — meaning the rig count is a less complete indicator of production capacity than it once was.
About this episode
<p>The White House wants gasoline prices to be lower, and it wants to see American oil companies drill for more oil. But of course, these ideas are in tension. If prices are going lower, why drill more? This tension has only grown sharper since the shale busts of the mid-2010s, as American producers got burned multiple times by prioritizing production over profits. So what now? How do US producers think about the recent oil price spike? How are they thinking about the rising costs of their own production, due to higher energy, labor, and steel costs? On this episode, we speak with Jack McClendon, the founder and CEO of Siena Natural Resources, an independent oil and gas company that primary buys odd lots of wells from other companies. We talk about the long-term economics of the industry, including the central role of capital markets in determining how the industry moves. He also tells us whether the show Landman is realistic.</p> <p>Read more:<br /><a href="https://www.bloomberg.com/news/articles/2026-04-17/oil-tankers-hauling-us-crude-via-panama-approaching-4-year-high?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article">Oil Tankers Hauling US Crude Via Panama Approaching 4-Year High</a><br /><a href="https://www.bloomberg.com/news/articles/2026-04-16/oil-producers-in-the-us-see-little-upside-from-iran-war?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article">The US Oil Industry Doesn’t Want the Iran War Either</a></p> <p>Only <a href="http://Bloomberg.com">http://Bloomberg.com</a> subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at <a href="https://www.bloomberg.com/subscriptions/oddlots?in_source=oddlotspodcast">bloomberg.com/subscriptions/oddlots</a></p> <p><a href="http://bloomberg.com/subscriptions/oddlots">Subscribe to the Odd Lots Newsletter</a><br /><strong>Join the conversation:</strong> <a href="https://discord.gg/oddlots">discord.gg/oddlots</a></p><p>See <a href="https://omnystudio.com/listener">omnystudio.com/listener</a> for privacy information.</p>
Key Insights
- McClendon argues that oil service providers immediately raise their prices when oil prices spike — because they can see commodity prices just like operators — which compresses the profit margin gains that producers would otherwise capture from higher prices.
- McClendon claims that a sustained WTI price above $80 for four to eight months would be required to generate a meaningful U.S. supply response, and that even 'short cycle' shale still has a four to six month production lag from decision to first output.
- McClendon argues that Trump's desire for more U.S. oil production is fundamentally in conflict with his stated goal of keeping oil prices low, and that the industry is privately frustrated with the administration's rhetoric even though it overwhelmingly supports Trump politically.
- McClendon contends that regulatory liberalization — such as opening new federal acreage — matters far less to drilling decisions than oil price and input costs, which he describes as 'exponentially more important' drivers.
- McClendon describes how executive compensation reform — shifting incentives away from production growth toward shareholder returns — is a key structural reason why U.S. oil production has become less responsive to price signals than it was during the 2010s shale boom.
- McClendon notes that drilling efficiency has improved so dramatically that wells in the Permian Basin that took 25-35 days to drill in 2015-16 now take under 10 days, meaning the Baker Hughes rig count is less indicative of production capacity than it was a decade ago.
- McClendon says his company's operating costs have risen approximately 25-30% since COVID, driven primarily by personnel costs, chemicals, and electricity, and that salary increases are particularly sticky because they are nearly impossible to reverse once granted.
- McClendon claims that the shale revolution — which took U.S. production from roughly 5 million barrels per day in 2004-2005 to making America the world's largest oil producer — has likely prevented geopolitical conflicts by creating resource abundance that reduced global energy scarcity pressures.
Topics
Transcript
Hey Fidelity, what's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs. Hmm, that's music to my ears. I can only talk. Investing involves risk, including risk of loss. Zero account fees apply to retail brokerage accounts only. Sell order assessment fee not included. A limited number of ETFs are subject to a transaction-based service fee of $100. See full list at fidelity.com slash commissions. Fidelity Brokerage Services LLC. Member NYSE SIPC. Bloomberg Audio Studios. Podcasts, radio, news. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Allaway. Tracy, recording this April 17th. Big drop…
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