I graduated with a degree in petroleum engineering in June 1986. During reading week (February), I thought I would be proactive and walk the streets of Calgary with my résumé seeking a job, rather than heading to the mountains and skiing like most of my classmates. I failed miserably!
Why? Oil was somewhere around USD 9.50/bbl, and every manager that I met simply threw the daily newspaper at me, showing how bad things were. I heard the same chorus from everyone: “How can I possibly hire a new grad when I’m going to be laying off?” and “I might lose my own job,” and on and on.
I should have gone skiing. 1986 was about the worst I had ever seen or imagined, until now.
Over the years, I have been a typical guy toiling at a service company or a small independent company wondering what the future will bring. My best view is gazing into the rear view mirror, where things seem to make sense. Take heart, young professional, and welcome to the industry. If you can learn to prosper in the good times and be frugal in the bad times, you will do just fine.
For this article, I have been asked to reflect on my career and give you advice and methodology, especially pertaining to budgeting while also creating game-changing technology. I’ll get there eventually, but first a little history.
Having served as the chief executive officer (CEO) of a small public company, I realize that the market has far more influence than you do on drilling your favorite prospects. I have been sales manager of large and independent service companies and realized that although you can hustle and promote the best and most innovative technologies, if the market is not right, you may just have to wait. I have been the darling of a new region when the energy industry moves in, only to have it all reversed in anti-whatever campaigns by the same people, vilifying me in the process.
I cannot give much great advice, but I have learned a few things that I can pass on. Maybe they will work for you—budgets and technology aside.
I firmly believe that if you follow these six rules and develop a passion for budgets and methodology, you will survive in any market cycle. Oftentimes downturns create innovation that is not realized until the next upturn. Of course, that innovation may become overused or require perfecting in the next upturn (case in point: multistage hydraulic fracturing in horizontal wells).
We—as an industry—are tremendously innovative, but we—as individuals—often have no control, so consistency and sound technical knowledge are the best ways to achieve innovative budget success.
Here’s an example: In 2008, I was CEO of a small public company, and we raised a significant amount of “bought deal” financing—the largest amount in company history. That capital was specifically raised to do large fracturing treatments in an area where I strongly felt that we were running ahead of our research on the rock. I had no choice; I took the money and performed the unsuccessful stimulations but kept enough in reserve to pull off one drilling AFE [authorization for expenditures] that allowed me to delineate a current reservoir. Both parties ended up getting what they wanted. Know what you want and keep grinding toward the target.
Learn how your capital or budget decisions are being structured and work to that end. It is generally futile to buck the system rather than work with it. If you understand the “why” in the budgeting process, you will be able to work toward an acceptable result. Whether the budget or financing is internal or external, there will be parameters, and once you can align with those goals (I did not say agree, I said align) you will find you have the budget for technical innovation.
I strongly believe that if you truly give your best effort at working with the six key learnings, your chances of success will improve. Good luck and remember Lesson #1: The cycle will always change.
Darcy W. Spady, managing director of Broadview Energy Asset Management, is 2018 SPE president. He is the first Canadian elected as president of SPE. An active SPE member since his graduation in petroleum engineering in 1986, Spady previously served on the SPE International Board as regional director for Canada. He has held officer positions in the Calgary, Illinois Basin, and Appalachian sections. In 2012, he won the SPE Regional Service Award for his work in the Canada region.
Spady has an extensive background in the natural gas, oil, and heavy oil segments of the industry, having worked a decade for Schlumberger across North America in its wireline and pressure pumping segments, as well as with the Columbia Natural Resources/Triana Energy Group in the Appalachians, Atlantic Canada, and internationally. He has also served as the chief executive officer of Contact Exploration, and more recently as head of sales for Sanjel Corporation. His expertise of 3 decades in both the independent producer and service segments of the industry greatly enhances his role at SPE.