That’s a title many petroleum geologists have taken on in the past few years – sometimes with careful planning, sometimes unwittingly.
Three successful geologist entrepreneurs will share their experiences, advice and wisdom, along with ten other speakers in a special session at AAPG’s 2018 Annual Conference and Exhibition in Salt Lake City.
Co-chairs for the May 22 session, “The Business of Oil and Gas: The Many Pathways to Success,” are Rick Fritz, CEO of Council Oak Resources LLC in Tulsa, and Susan Nash, AAPG director of innovation and emerging science and technology.
Session speakers will include representatives from industry, finance and government. Geologists at all levels should benefit from the shared stories offered by these small or independent specialists:
“We geologists typically find ourselves with our head down trying to generate that next prospect, the next drilling opportunity. And we let the engineers run the economics,” noted Don Burdick, CEO of Olifant Energy LLC in Tulsa.
“The mindset we need is, ‘I’m in the business of oil and gas and I use my specialty to create value,’” he said.
Growing Into a Smaller Operation
Burdick worked at Marathon Oil from 1984-94, where his career “started off with a large multinational. After 10 years in that environment, he said, “Slowly and surely, I’ve worked my way down in size,” he said.
His later career path took him to independents of all sizes, then to one successful start-up company, then to
When he moved to Samson Energy in Tulsa after Marathon, Burdick said, he joined a special project group composed of a geologist, engineer, landman and attorney. That job involved appearances in legal proceedings at the Oklahoma Corporation Commission, “serving as essentially an expert witness,” according to Burdick.
“When I went into it I thought, ‘Well, it’s either going to make me a stronger person or it’s going to turn me into a carpenter,’” he recalled.
“In a court of law, you become extremely aware of the areas in which you are making assessments, and the veracity of those assessments. And you find out about your weaknesses,” he said.
His other experience included a worldwide prospects-and-acquisitions portfolio at Vintage Petroleum, work at Cimarex Energy and a stint at Questar/QEP Resources as manager of the company’s geology group.
“For me, that was the first time to put on a manager’s hat, to lead and to steer the boat a little bit,” Burdick said.
Burdick said when he became manager of A&D at Laredo Petroleum he gained a much wider perspective on the industry and how it works.
“Through the Laredo experience, I had the deepest immersion in the business side of oil and gas. As I learned more about that, I thought, “Hmmm… There’s really something to this,’” he explained.
That experience led him to a role as vice president of geology and a partner in Panther Energy II, and eventually to co-founder of Olifant Energy. The company, with only a baker’s dozen employees, began drilling its second well this year.
“When you’re 13 people, every one of those folks influences the culture of the whole enterprise. There’s no place to hide,” Burdick observed. “On the financial side, when you’re a small group and you aren’t drilling a lot of wells, rarely do we get the A-plus contractors or services.”
“One bad decision or one poor performance, one mistake, can run up your costs tremendously. It’s one thing to go out and hire 13 people for your company. It’s another to evaluate 130 contractors,” he said.
Beware the Hamster Wheel
Steven Tedesco is CEO and president of independent operator Running Foxes Petroleum Inc., focused mainly on conventional plays in Kansas and Utah, and founding president of Atoka Geochemical Services Corp. in Centennial, Colo.
He’s also chief science officer for XLS Energy Inc., which he described as a start-up green power generation company that’s working on generating electricity from stranded natural gas and other sources.
Tedesco emphasized the need for good business knowledge in addition to geoscience expertise for the geologist entrepreneur.
“Find a good source of funding,” he said. “Be diligent. Know how to assess a play – I find that a lot of geologists out there don’t use all the tools at hand.”
Geological analysis helped his company take one water-flooded Kansas field from five barrels of oil production a day to 120 barrels/day, Tedesco said.
“That came from recognizing that the field was never properly developed – the field was actually discovered in 1944,” he explained. “When you have eight companies flooding a field there’s a lot of inefficiency. Some of them will be doing it wrong.”
Given today’s realities in the oil and gas industry, Tedesco worries that exploration expertise is being sacrificed.
“I hear this from a lot of my friends, that the number of exploration geologists is dropping dramatically,” he said.
Layoffs and cutbacks in exploration spending during the recent downturn certainly caused part of the problem, but Tedesco sees another trend eroding exploration experience.
“I think the industry’s too focused on shale plays. There’s a large contingent of people who say they aren’t economic,” he said. “Shale plays are like a hamster in a wheel. As soon as they stop, they stop.”
When companies chase the shortest-cycle payouts possible, they overlook the benefits of long-life, long-producing conventional wells.
“Up in the Williston Basin a lot of companies have conventional targets below the shale but they will not drill them. Just like down in the Permian Basin, they have a lot of conventional targets. There, financing will not allow them to drill.” Tedesco said.
Burdensome regulations remain a problem for everyone from large independents to stripper-well owners, he observed, to the point where he sees some small operators leaving the industry entirely.
“At some point the regulations will have to be set up to help the independents instead of hurting them. I do see a time when some people will just walk away from production,” Tedesco said. “A lot of the technologies the EPA and some of the states want to implement aren’t cost effective.”
Expectations and Capital
Shane Matson, director of geology for Jericho Oil Corp. in Tulsa, comes from a family with a long history in oil and gas.
He’s a descendant of George C. Matson, president of AAPG in 1921. The Association confers the Matson Memorial Award annually in recognition of the best paper presented at the previous year’s annual AAPG convention.
“We’ve been at it here for a long time, as independents, mostly,” he said.
Matson founded BlueJacket Energy LLC in Tulsa with two partners during the recent industry slump. He said the company evolved into primarily a consulting firm.
“One of the things we found is that in the downturn the geological staff was gutted and a lot of assets were bought,” he said.
As a result, Matson said, operators were caught without enough staff to analyze and assess their new holdings, and they called on BlueJacket for expertise. Jericho Oil ended up bringing him on board as an employee.
“My first advice is, we understand that money has expectations. Every dollar deployed has expectations for making more than that dollar,” Matson said.
“It took me 10 years to grasp that capital has expectations, and not all capital has the same expectations,” he added.
Matson recalled working for a manager who gave him some unvarnished advice about the oil and gas industry: As a geologist, you’re likely to get fired or laid off. At least once in your career, maybe more.
“You have to be prepared for that. You’ll need more than a nest egg,” Matson said. “You have to be prepared for the storm and you have to be able to invest in yourself.”
And despite the industry’s economic swings, “keep your skill set sharp. It sounds cliché, but it’s absolutely necessary,” he added.
A previous employer told him to volunteer in the geoscience community, and Matson said that has helped him immensely.
He began volunteering with the Tulsa Geological Society and his AAPG section. After serving as co-chair of the technical program for the AAPG Midcontinent Section meeting in 2009, Matson was general chair of the 2015 meeting.
“That was just a brutal fall to have a section meeting, but we ended up doing quite well,” he said.
“You have to have a network. That’s kind of lost in these bigger companies. It’s in volunteering that you get out of the world of your own company,” he noted.
“Integrate yourself into those societies. You’re lucky to have them. And then look at what it would be like to go out on your own,” Matson said. “And here’s the reality: It’s not going to be what you think it will be.”
Burdick, an industry veteran, said his journey through companies and start-ups did not come without trepidation, and the same will be true for any geologist entrepreneur setting out on his or her own path.
“If you aren’t afraid, you probably haven’t assessed the risk you’re about to take,” he said.