(Suemaur Exploration, Inc. & Suemaur Exploration & Production, LLC 1990-Present)
The concept that evolved for funding our exploration effort most closely resembled a cooperative–to enlist industry partners to back a multi-year exploration effort. Each partner, including Suemaur, would bear their proportionate share of all expenditures including overhead, seismic, land, drilling and completion costs. The concept, I thought, was a unique and tremendous idea because it allowed participating companies to share exploration costs rather than duplicating them. Also it meant that Suemaur would have built-in partners that wanted to be involved in the trends we wanted to explore, to be involved with our explorationists and to be involved with the prospects from conception to seismic acquisition to leasing to drilling.
What was so important to our explorationists was that our venture partners flew to Corpus Christi for exploration meetings—our exploration time was maximized by not having to travel to sell the prospects. We had seismic budgets, drilling budgets, partners and money for one or two year commitments – all we had to do was generate good exploration projects. Suemaur has been able to drill prospects consistently through the years because we have had built-in Partners who wanted to explore for oil and gas with us. We did not have to travel to sell our prospects.
A few years into the venture, J.M. Smith recommended that we sell some of our production. Once we had a made a new field discovery, our explorationists were spending time and energy and our engineers were spending time and energy on developing these fields. If we were truly an exploration company, selling started to make sense. We decided to sell our fields before they were completely developed – cash them out and spend our time and energy on exploration and let others spend the money and effort on development drilling. We found that others were willing to buy our partially developed fields and we had cash to spend on other exploration projects. We are in the business to make money.
In order to get more than just an overriding royalty, the original employees began buying an interest in Suemaur with the cash generated from the sales. The owners were willing to allow the employees to become owners in the company and have more of a financial stake in the company—this was good for all the parties.
Some of our past Partners had cherry picked our prospects and elected to participate in only the ‘better’ ones in a year and managed to drill dry holes and miss the discoveries in the prospects they declined to participate. So the lesson here is-in an exploration effort, join in all of the generated prospects. If you have good explorationists working in good trends with good support and backing, then the discoveries will follow.
|“The A prospects are apparent, but we can’t always predict the producers.”
“The mudlog giveth and the e-log taketh away”
“Oil is where it finds you”
“You’re never going to find some oil until you drill a well”
“The odds are 50-50—it will be gas or a dry hole”
“Owen, we have to have a lease before we can drill”
“Do you want to drill some wells or make some money?”
Owen Hopkins March 12, 2007