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