I spent the last weekend watching much of The Masters Tournament, the one weekend a year where it seems all of my work and personal priorities seem to fade away. I am not sure what it is about this particular tournament, but it seems to capture my attention each and every year.
Being an avid golfer for many years, I often compare the oil and gas industry to the PGA Golf Tour, and this was reinforced in spades as I relaxed in front of the TV over the weekend. Pro golfers are much like exploration and production companies. They surround themselves with contracted resources to help them out with every aspect of their game. A swing coach, putting coach, personal manager, therapists, sports physiologists, and of course, their trusted caddie who is at their side every step of the way. Each of these individuals has been hired to help the pro maintain or improve every aspect of his physical and mental game. Yet, in the final analysis, it is the raw talent and mental discipline of the pro, who battles his own demons, weather conditions, and the course laid out in front of him, to either achieve success or miss the weekend cut! The pro is not playing against the competition, he is always playing against himself to shoot the lowest possible score, and hopefully, crest above all of the other competitors to win the tournament or at least to make a few bucks. Then onto the next tournament with his entourage in tow.
But, what does this have to do with the oil and gas industry? First, E&P companies are unique in that they donâ€™t have customers or any competition to speak of! Like the pro golfer, they are actually competing against themselves. They focus their attention on locating that next lucrative reserve, and then surround themselves with contracted resources for every aspect of the well lifecycle to provide the services, supplies, and rentals to help them bring it home. E&P companies rely heavily on these companies and individual contractors to drill a well as cost-effectively and safely as possible. Sometimes, they drill a duster and miss the cut! Other times, based on their experience and talent, along with the service and supply companies at their side, they strike the pocket and up comes the bubbling crude, or at least that is what Hollywood would like us all to believe. But, their game doesnâ€™t end there. There is still the back 9 to get the well through completion and into production. Only then can they sit in the scorerâ€™s tent to sign their card and collect their cheques. Then onto the next well with their service companies and contractors in tow.
So how do the pro golfers who arenâ€™t regularly on the leader board make ends meet? â€¦â€¦ Endorsements! They rely on this cash to support their ambitions, not only to get onto the tour, but also to support their families and hired help to keep them there. Much like E&P companies who are constantly looking to bankers, investors, and capital markets to fund their next drilling program. Itâ€™s funny, because no one really thinks about or feels sorry for the poor struggling pro golfer, as we have plenty of examples of the money and opulence that ensues for the elite group who actually make it to Sunday each and every tournament. What we donâ€™t see are the dozens fighting to qualify, or the hundreds of golf pros that came before them who just didnâ€™t have what it takes to make it onto the PGA Golf Tour. Sound familiar!? The news media is ripe with all of the mighty success stories in the oil and gas industry, but just sit down with your local oil and gas banker or grey-haired investor and they will tell you plenty of stories of long gone E&P companies who hit those dusters, while another company hits a gusher a mere 3 kilometers away!
Yet, we all want a piece of that E&P company action, regardless of the associated risk! There are thousands of service and supply companies constantly vying for the attention of hundreds of E&P companies. We want to be part of their story, as their success breeds our success. E&P companies come and go, as do the multitude of service and supply companies that support them. But in the end, whether youâ€™re that famous golf professional or a high handicapper like myself, we all hit the 19th hole to tell our war stories about how we could have shot a few strokes better. Not dissimilar to our many E&P clients who are prepared to invest real time and significant dollars to find that next barrel of oil while constantly asking what tools, techniques, processes, and contractors they could have used to complete the project a bit better and more cost-effectively.