SPE can help small companies navigate financial understanding
Half of my career has been in the producer side of the business and the other half with a service company. The service experience has been with large organizations. It’s rather a nice place to be. My producer experience has been primarily with tiny, small, and intermediate companies.
The experience quite literally has highs and lows. Imagine a cartoon character jumping off a cliff—at first, you feel like a bird but as the ground approaches you are terrified and shortly thereafter you are quite compact, so to speak. I have had moments of pure euphoria as a small producer (usually the 15 minutes after a capital raise or a sale event), but more often it is panic, terror, and a lot of out-of-control times when you wished you had a finance degree or two.
It may not seem intuitive, but engineers need to understand financial matters, and that’s where SPE comes in, with connection opportunities to places other than your technical discipline. There are a lot of us technical types trapped or living in the small cap producer world or technical innovator space. We don’t get much support at technical conferences. We don’t get much time to do technical things. Little producers are very often forgotten. Small technology providers rarely get love, and often they have little time allotted to pitch their idea. I’m going to pay some attention to that group in this column. I’m going to promise some good things in the future.
Early in my career—when the local price of oil was less than $10/bbl and the future was extremely bleak—I was fortunate enough to encounter people who held very lofty positions and took the time to care about this lonely new grad. In the early 1980s, Gerry Maier O.C. (the Order of Canada) was president and CEO of TransCanada Pipelines, a large public company located in an office towering above Toronto’s financial district. I was a struggling new grad working on the periphery of the industry, but Maier took me under his wing. He gave me all the attention I needed to discuss establishing a petroleum engineering chair at the University of Alberta, our alma mater. Even after all these years, Maier has not forgotten that meeting. He has met with other CEOs, Canadian prime ministers, and even royalty, yet Maier remembers that meeting with me.
He has no idea how it kept me going at one of the darkest moments of my career. He remembered the little guy. To this day, I try to pay back that generosity by modeling that behavior.
For example, I hope that Tarun Kumar from UPES in Dehradun, India, is encouraged for life because I took the time to encourage him, after disagreeing strongly with a technical point he made in a student paper competition. Maybe someday he will be involved in a small cap Indian producer listed on the Mumbai exchange.
Little acts of kindness, mentoring a young engineer, or helping a member who may not understand financial jargon—these things really make a difference. I’m often moved by the pleasant surprises in unexpected places, such as in the old Louis Armstrong tune, What a Wonderful World. I realize we experience hardships in the world, but we need to remember that in many cases, while we can’t do much about the negative, we can always appreciate the positive.
Look for the good and the noteworthy and then pass on those learnings or methods. We can help the small cap producer or innovator. One of the best ways, in my opinion, is to collaborate during events where we are all in the same room. Promoters, promisers, and providers, all together in dialogue. What a wonderful world.
For instance, promoters are a smart and focused group, very concerned about how they can market you for the next capital raise. They listen intently, and repeat accurately, every technical nuance that you describe. They can give a steam-assisted gravity drainage (SAGD) description to an amazing technical detail or at least enough to sell some shares. This is a lonely space for our members, knowing technical details but having to translate them into financial speak and then trust that the promoter is getting the facts straight.
This is why it is so important to me to see the success of conferences and workshops for the small cap producers and providers in the SPE world. The SPE London Annual Conference and the Norwegian events are very dear to me, partly because these are near to some of the more utilized small-cap exchanges. This is an important place to be. I want to see a financial stream in more SPE events. My goal is to create a comfort zone for both our members and the financial community. Maybe it’s just selfishness; maybe it’s just the space I live in.
This brings me to the next thought, that of corporate directors. All of the above-mentioned small cap companies need corporate directors, and all too many of those seats are filled with financial or legal people, many of whom come with the capital and only see things through the lens of financial analysis. I dream of a day when SPE qualifications, such serving on committees or participating on international/regional boards or advisory councils, would qualify for strong, technical, and independent board service. We know our industry best, and why should we not represent shareholders as equally as capital providers?
One of the people who taught me the most about being a good board member was the late Irving Schwartz O.C., who chaired the Green Imaging Technology board when I joined some 11 years ago. He was a very senior person in the Canadian corporate scene. He was the governance master but was also very vocal while representing shareholders. Many of the skills I use to chair the SPE international board I learned from Irving. Engineers can learn a lot from finance types, but the opposite also is true.
That is why I believe that one of the most important things that the SPE can do for our members in the small cap, junior, or independent sector is to carry out our mission of collecting, exchanging, and disseminating technical information in a room where there are financial people present. One of the leaders in this space, and an awesome representative of the financial side of our business, is Basak Kurtoglu.
Early in my SPE presidential cycle, I shared the podium with her in Lima, Peru, at the Latin America and Caribbean Heavy and Extra Heavy Oil Conference. I quickly realized that although she held a doctorate in reservoir engineering from the prestigious Colorado School of Mines, Kurtoglu is one of those rare engineers living large in the financial community as a senior vice president of a private equity firm in Houston. She has been an SPE Distinguished Lecturer, a longstanding member of the SPE forum series committee, and a very willing volunteer. She is chairing our 2018 SPE London Conference in October. She is ensuring a solid program of M&A topics, including access to capital, volatile price environment, as well as panels on resources, commodities, technology, innovation, and efficiency. There is a massive intersection of capital providers and independent producers/providers, and SPE needs to be in that space because many of our members are. Thanks, Basak, for believing in my crazy little scheme of financial events for SPE members.
Someday, I want to see not just London, but also Oslo, Zurich, Houston, Mumbai, Dubai, New York, Sydney, and Toronto hosting SPE financial conferences led by SPE members, with robust technical discussions and participation by engineers and bankers. Better understanding, tighter technical governance, independent board skills, and responsible capital deployment go hand in hand with collecting, disseminating, and exchanging technical information. Doing all this for the little guy, the independent producer, the small tech provider. Rewarding shareholders with good technical decisions. Supporting the small service or technology provider. Doing it for the right reasons.
It’s all about promises, promoters, and the role of the little guy in the wonderful world of SPE.
