APPEX Provides Efficient Market

Buyers, Sellers to Gather

The current shortage of drilling rigs, skilled personnel and drilling prospects serves to focus the spotlight once again on the cyclicity of the E&P business. As usual, however, the oil finders are devising creative solutions to their problems, particularly when it comes to buying and selling high quality drilling prospects.

Once upon a time, it was often possible for prospectors to sketch maps on the backs of their hands and sell drilling deals on the spot, especially during those periods when the industry was on a roll. In fact, such transactions were not unusual as recently as the late 1980s and early 1990s, when the rush was on to stake a claim in the Austin Chalk during the horizontal drilling "boomlet."

Striking a deal today is a lot more tedious, with buyers ordinarily demanding prospects that are generated based on some serious hi-tech data, such as 3-D seismic. Marketing has become an arduous endeavor.

Generally, there are two formats used when marketing a drilling prospect, according to Houston independent Mike Barnes.

"There's the shotgun approach, where you call everyone, and the rifle approach where you qualify the people you're calling," Barnes said. "As many as 30 presentations are not that unusual," he noted, "and when you talk about doing brochures and all the time and money you spend, it adds up in a hurry."

The solution du jour to this time-consuming, costly process is the prospect expo.

After all, how better for prospectors to market their deals than to have the buyers come to the sellers?

And for buyers, how better to zero in on what's available than a single venue where numerous prospectors congregate to market their wares?

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The current shortage of drilling rigs, skilled personnel and drilling prospects serves to focus the spotlight once again on the cyclicity of the E&P business. As usual, however, the oil finders are devising creative solutions to their problems, particularly when it comes to buying and selling high quality drilling prospects.

Once upon a time, it was often possible for prospectors to sketch maps on the backs of their hands and sell drilling deals on the spot, especially during those periods when the industry was on a roll. In fact, such transactions were not unusual as recently as the late 1980s and early 1990s, when the rush was on to stake a claim in the Austin Chalk during the horizontal drilling "boomlet."

Striking a deal today is a lot more tedious, with buyers ordinarily demanding prospects that are generated based on some serious hi-tech data, such as 3-D seismic. Marketing has become an arduous endeavor.

Generally, there are two formats used when marketing a drilling prospect, according to Houston independent Mike Barnes.

"There's the shotgun approach, where you call everyone, and the rifle approach where you qualify the people you're calling," Barnes said. "As many as 30 presentations are not that unusual," he noted, "and when you talk about doing brochures and all the time and money you spend, it adds up in a hurry."

The solution du jour to this time-consuming, costly process is the prospect expo.

After all, how better for prospectors to market their deals than to have the buyers come to the sellers?

And for buyers, how better to zero in on what's available than a single venue where numerous prospectors congregate to market their wares?

Offering Opportunities

There's a whole new expo scheduled to debut August 27 for a three-day run in Houston, backed by a cast of thousands -- literally.

It's called APPEX, which stands for the AAPG Prospect and Property Exposition, and it's sponsored by some heavy hitters among the petroleum industry professional associations: AAPG, the Houston Geological Society and SIPES.

"AAPG is a worldwide organization, and this is a world-class expo," said Barnes, exhibits/marketing co-chair of the event. "While not just for Houston, it does give the large Houston community the opportunity to take advantage of something AAPG is doing for its members at a very grassroots level."

Probably the most well-known prospect marketplace is the North American Prospect Expo (NAPE), held early each year in Houston. It has evolved into a major event, pulling in more than $1.5 million last year for the sponsoring landman's organization, said APPEX general chair Chuck Noll.

It was a change in the tax laws that spawned the concept, according to Dan L. Smith, APPEX steering committee member and AAPG president-elect.

"The reason why NAPE began was because it was almost impossible to sell prospects with the tax laws change in 1986," he said. "The money went away, and it was a natural thing that NAPE came along and provided a venue for geologists to more efficiently sell their deals."

The concept has become so popular, expos of all sizes are being held in various locales. This raises the question: Can there be too much of a good thing?

"I think the demand is here to have two major shows in Houston," Barnes said. "Many companies try to spend the major part of their budget in the first six months of the year, and they may get a supplemental budget at mid-year.

"There's opportunity here for those with a budget to participate in some good deals that can possibly be drilled by year-end."

Smith concurs.

"All the companies are coming up with prospects that need to be sold more than once a year at NAPE," he said. "This needs to be spread out over the year, and having these local events really helps the industry."

It Works Like This

 APPEX itself represents some consolidation in the expo business. It replaces and expands upon the former Torch/PLS Dealmakers meeting, which focused more on the property business than prospects.

"We bought out their territorial rights, or basically the Houston meeting," Noll said. "They had a base from which we could start, a time slot and a contract with the Adam's Mark Hotel, so it was a natural. And PLS jumped at the idea."

Here's the blueprint.

Day one (Monday, Aug. 27) will be taken up with the business of the E&P business. This will include forums and talks dealing with such issues as money sourcing, exploration drilling on- and offshore, innovative exploration trends, and more. Several case studies will be included.

John Seitz, chief operating officer and president of Anadarko, will provide the featured presentation and Scott Tinker, director of the Texas Bureau of Economic Geology and state geologist of Texas, is the luncheon speaker.

A Monday-evening Icebreaker will be held in the prospect booth area at the meeting venue.

Prospect viewing/selling will fill the following day and a half (Aug. 28-29). Meeting space allows for 275 booths, and Noll said the objective is to sell 200 or more.

An international night that includes dinner at the nearby Hilton hotel promises to be a crowd pleaser Tuesday. Paul Hoffman, HGS president and APPEX vice general chair, said there was a groundswell movement to hold this event, which will be hosted by the HGS international committee.

Alfredo Guzman, exploration manager for Pemex, has been inked as the featured dinner speaker, Tinker said. He'll share the dais with a trio of independent geologists who will provide information about how they progressed successfully from domestic exploration to the international arena, not necessarily with a flush budget (see related story, page 14).

Barnes emphasized that the international focus is a definite advantage of APPEX. He noted there are many international efforts under way by entrepreneurs in various countries who will have the opportunity to market their prospects at APPEX.

The plan is to make APPEX an ongoing effort, and the sights are high. Noll said they already have the George R. Brown convention center in Houston reserved for the same time slot next year. This will allow room for 600 booths.

"We're in this for the long haul," he said, "and we're already working on the APPEX concept in London for 2002, or at the latest for 2003."

Meanwhile, anyone who wants to save time and, in most instances, travel dollars involved in marketing and/or buying prospects that are ready to go right now can take advantage of the inaugural APPEX 2001.

As for a Houston venue in August: "Well, it is indoors," Barnes said, "and we want to assure everyone we'll have the air-conditioning cranked up."

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