President's Lessons Learned
May 2007
Not going to an office everyday in retirement(retired from oil and gas exploration and management- February 2005)I miss Barbara. I miss Laura. I miss Amy. I miss our geotechs. I took for granted the supply cabinet. I took for granted that my mail appeared everyday in my Inbox and that my mail disappeared every day from the Outbox. I took for granted that my phone calls were screened. I miss calling Nixon’s to send something over. I miss the filing system. I miss the electric pencil sharpener. I miss getting airline reservations done for me. I miss the fax and Xerox machines. I miss the computer guys who will come over on very short notice to fix something. I miss seeing my colleague’s everyday. I miss going to Luciano’s every Monday for our board meetings. Appreciate where you are and your staff and colleagues. I can tell that I must miss the excitement of generating a new idea and the heart pounding thrill of deadlines and meetings and wells logging because I am approaching my CCGS Educational Program like an oil deal. My own, self imposed goals and deadlines have been putting, possibly, undue stress on me. That is how I have learned to attack projects--spend some time assessing if the project is needed, then forge a plan and blaze ahead to completion. But unlike oil/gas prospects, I do not have to wait until we have all the leases. Getting away from a workaday office does not necessarily alleviate stress and anxiety. I am so proud of our Corpus Christi Geological Society. I am proud of our members who stepped up to donate money, to donate time, to advise me, to come to the luncheons, to help on developing my education plan. I learned not to burn bridges in front of me. I plan to stay involved as Past President and to work with future administrations to move forward on our Three Prong Educational Attack 2006-2010. And I have other ideas that will be forthcoming: Saxet Field, Ingleside Faunal pit, new science emphasis library in Tuloso/Midway area, CC Museum of Science, and more. Owen Hopkins April 16, 2007 rev. |
April 2007
Working for a Private Company(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.
Owen Hopkins March 12, 2007 |
March 2007
Working for a Small Independent Company(Harkins & Company February 1987 to December 1989)Bill Maxwell*, Exploration VP, hired me to open a Corpus Christi district office for Harkins and Company—they had offices in Alice, Midland, Fort Smith, Oklahoma City and Jackson. He wanted more exploration projects in south Texas. And he had a seismic budget—get any line or lines you need! And the technique was to put the best prospects together in a trend. Harkins supported a regional mapping approach—map a trend, get to know it, get to know what works, get to know who is successful. Don’t put the first closure you see together that you run across—put the best prospect together first. And like Chevron and Win Sexton, he liked larger, higher potential prospects—minimum 25 BCF. Harkins allowed geologists time to do the regional work. That time often came when the oil and gas prices were low. My approach was to work steady freddy – don’t be concerned with the current oil and gas prices, they will always be going up and down, but concentrate on the mapping and the science. Slow times are great opportunity times to do mapping, phones don’t ring and the library is quiet. Take advantage of slow times to get your mapping done. Harkins & Company always took 25% working interest in any project approved by Bill and then by Burt Harkins. But I always had to be ready for the question that Burt always wanted to know about any prospect we presented to him—If this prospect is so good, why didn’t Shell drill it? Good question, Burt. Don’t be frustrated with a question like this, sometimes we get so close to our deals that the answer to this question will actually be a selling point of the prospect. Run your ideas across others in your company—consider any and all comments—you may hear them again when presenting to outside investors. The great advantage at Harkins & Company was that they were spending their own money up front just like a potential investor would—this made it so much easier and better and faster to sell a prospect. Make sure your company owns some working interest And Bill and I began to trust each other—he did what he was supposed to do, I did what I was supposed to do—we each could concentrate on our own areas and depend on each other to get the job done. Don’t take on the entire exploration effort yourself, depend on the team. Owen Hopkins |
February 2007
Working for an Independent GeologistWin Sexton June 1980-January 1987In June 1980, I had two job offers: Hamilton Brothers, a Denver based mid-sized independent, offered me a job in Corpus Christi and Chevron wanted me back to be on a computer SWAT team based out of La Habra, California to travel and use computers to solve company-wide geology problems around the globe. While weighing those options, both exciting and with great potential, Win Sexton (a local, well known, very successful independent geologist) called me up and said “meet me down in the Valhalla*, I want to talk to you.” He wanted to put me on a yearly retainer and give me a 2% Overriding Royalty on any prospect that I generated. He said he was an ‘equal opportunity geologist’—because good prospects will sell no matter where they were, and he could sell any good prospect that I generated. If Win liked the prospect, then it was a go. Although I had the right to take a rejected prospect and sell it own my own, I never did because I relied on his experience. Win liked large prospects saying “it is just as much trouble to lease a small one as a large potential one—the big ones don’t always work, but when they do, it is significant.” But big prospects usually have minimal well control. That is “what majors were for—to drill deep dry holes in the middle of nowhere” and in the process their logs showed the deeper stratigraphy that we needed to decrease the risk of our wildcats. The experience working for Win taught me not to be discouraged when working an area by the surface, land or lease situation. Do your work, do the science, and then let the merits of the prospect better define the economics of it—Be positive from the beginning. We were so proud when we sold a downthrown fault prospect in Louisiana to Davis Oil for $1000 per acre. They proceeded to drill on the highside of the fault even though downthrown traps were working on trend and drilled a deep dry hole. We learned from that--when you sell a deal you should retain some control of your prospect. Another deal was returned to us after the buying company shot 4 seismic lines and told us there was no prospect on the acreage we sold them. The contract terms required them to return the deal to us (including the seismic) if they were not going to drill within a certain time frame. Then, with the new seismic and some remapping, we ultimately sold 22 hundred acres to Exxon for $1000 per acre (with a 25% BackIn After Payout and 72% net leases!)—it drilled out to be a tremendous discovery in February 1986. Lessons learned here were: have a good landman, don’t be discouraged by others, believe in your own work and don’t give up. Owen Hopkins |
November 2006
Working for a Small Public CompanyHolly Energy 1977-1981I was recruited to work in Corpus Christi in one of the 7 district offices of Holly Energy, which was a small public company based out of Dallas whose main asset was a refinery in New Mexico that was generating a lot of cash flow. The owner and President was very aggressive in spending that money on oil/gas exploration. They offered a 50% salary increase, a car allowance and stock options. But the biggest carrot they offered was “you make us rich and we will make you rich”. The president and chairman of the board flew, in their private jet, to all of the district offices twice a month and expected to see new prospects. We presented them pencil contoured maps and logs and they took or rejected the deals on the conference room table. And the definition of a prospect was a drillable deal ready to drill. We had no partners in the deals—they did everything 100% Holly Energy. Every 3 months all the districts met in Dallas and the results of each district’s quarterly results were shown on bar charts displaying wells drilled, gas produced, oil produced and money generated. If you did not keep your numbers up, you were out and replaced by someone who could. Needless to say, this was a high pressure job and was considerably different from Chevron which had seven layers of management to approve a prospect and, of course, I never met the Chairman of Chevron. Well, to survive under this scenario took creativity and confidence. Our district manager had each geologist determine the trend we wanted to work and then he sent landmen to find open acreage that was available in each trend area. So we only worked on the geology of areas we knew had open and available acreage and we mainly ‘corner shot’ existing fields. We did not have the time to do field studies or regional exploration. This district office was very successful. We drilled a lot of wells--mostly development. We generated smaller sized prospects and we usually found less oil and gas than we thought we would. Small prospects find smaller reserves. There was a lot of effort, time and money spent –but we had to keep up the frantic pace to keep the numbers up. But one year our number of wells drilled was up, but our gas and oil reserves were down towards the end of the year. But, our district manager had gotten approval to drill two higher potential and riskier prospects and one of them actually was a discovery in the last quarter of the year. This one large potential prospect discovery put us way over our quotas and we all expected very large bonuses based on the original verbal formula that we were working under. But management changed the rules in midstream—they decided they did not want to give that much money to the employees for fear that they would quit. So the lesson learned here was to get your agreements in writing. Owen Hopkins |
September 2006
Working for a Major Oil CompanyChevron 1969-1977After graduating with a BS in Geology from the University of Oklahoma, I was hired as a well-site geologist with Chevron (at the time, “MS and PhD need only apply” for exploration geologist employment). In that capacity I had the opportunity to log many, many wells both onshore and offshore Louisiana from Chevron’s Lafayette office—we had to log, core and test these wells with little communication with the office. I was briefed on each log run by the development or exploration geologist responsible for the well. I spent many hours on the offshore rigs—for many hours, many times I was out there waiting for them ‘to get out of the hole’ or ‘to get unstuck’ or ‘to trip the hole’. I turned this ‘waste of time’ into a ‘gift of time’--I brought logging books and manuals out with me, and I coded programs for a computer to solve some our common problems that were worked out with slide rules and charts and equations at the time. Remember, calculators had just been invented and HP had one available for $495 (almost half a months salary!). After getting my MS degree from Tulane University night school, I was transferred to Offshore exploration in New Orleans. Those were exciting, hectic times getting ready for lease sales—getting maps prepared, approved by management and bids prepared and submitted for approval. Chevron was a large company--we had seven layers of management that had to approve our prospects. At one point, I became frustrated with the system, and decided to talk to someone. I visited with the Division Geologist and he explained the system to me—all prospects were annually risked and ranked within each district and each district had a budget, so the money was allocated from the top down— to get a prospect approved, it had to be bigger and better than others in your district. Also Chevron was in the habit of moving experienced geologists from district to district. What was this all about? As soon as we got familiar with a trend and what was working and what wasn’t, you got transferred to a new area. We farmed out a non-commercial offshore block to C&K Petroleum after we drilled a well and only found 30’ of gas at the bottom of a 100’ clean, wet sand at 15,000’. C&K discovered two 150’ thick gas sands that were mostly faulted out by a sealing fault in the Chevron well. Some of what I learned from my Chevron days: --get hired, get in the door, get in the system—then you can learn and move up the ranks --companies will help with continuing education—it helps the company and you --bigger prospects get funded and drilled --take advantage of your situation--turn negatives into positives --good, experienced geologists can work any trend—they may not be biased by years of working the same trend—“don’t you know there are no sands east of the Wall Fault” or “don’t you know there is no oil on the north flank of that dome” or the classic quote -- “I will drink all of the oil found west of the Mississippi” --there is a reason that water can be on gas in a thick, clean sand Owen Hopkins |