Guest Review


Special Review (Guest Foreword): 2011 World Assembly Written by James Elston, Director, Palladian Energy and Former CEO, Realm Energy


I have been lucky enough to attend The Oil Council in London several times and met my most recent business partner – to start Realm Energy – at one of their previous events. A very profitable encounter.


The Oil Council is a veritable who’s who of the international independent oil sector, key investors and their advisors and therefore a must on any calendar.


As a long time analyst and recent CEO it represents a unique opportunity to keep up with the Jones’ and to network. Having been immersed in the unconventionals silo for some time I got to catch up with what’s happening across the broader sector and gain some insights on leadership and technology. I found the company lead updates on the UK North Sea, Kurdistan and across Africa most fascinating.


I was unaware of the parlous state of the UK North Sea where almost all small players have left and looming closure of infrastructure will incur massive abandonment costs whilst leaving untold riches untapped unless HMG acts over tax and pipeline access. The rise in service costs has I believe made the offshore a challenging place for small caps.


With Kurdistan the numbers are enormous and it seems likely that the Iraqi central government will have to move towards the Kurd’s sensible PSC structures rather than the other way round.


The African voyage from the Transform Margin offshore west through the Rift Valley basins to the gas plays offshore East Africa showed the tremendous opportunities being successfully pursued sometimes with startling new technology like Full Tensor Gradiometry (FTG). FTG appears to correlate very well with 3D seismic defined prospectivity but is a fraction of the cost to acquire and use and sees through volcanics and salt. The new magic bullet?


I found the panel on Leadership most interesting. The panel were asked whether CEOs were born or made? Brian O’Cathain CEO of Petroceltic was able to reflect on former colleagues Aidan Heavey, CEO of FTSE 100 Tullow Oil and Sir Graham Hearne formerly of fellow FTSE 100 member Enterprise Oil. He suggested they exhibited three key behaviours; “They surround themselves with people smarter than them”; “They are great communicators”; and “They are likeable characters”.


James McCallum CEO of Senergy also made three interesting points on CEOs; “They must be approachable” to ensure important ideas and information flow to the top and backdown; “That there are different CEOs for different times in a company’s development” (I have some experience of this myself!); and “That they must be inspirational and have no bad days”


These all seem great targets. Some reflections on leadership were also to be found at the Buy-Side/Sell-Side panel where analyst Simon Hawkins formerly of MF Global and Ambrian Capital, suggested that investors should look for “lucky management” with luck being “a combination of preparation and opportunity”. (I am forming a new start up and believe I have both of these).


Andy Brough of Schroders a famously plain speaking and successful investor said he favoured “repeat guys” and not those seeking “lifestyle”. Indeed good people go round again people and again in the US some on their 4th or 5th start-up; a target hopefully some of the younger stars in the international firmament achieve. John Bookout at KKR the private equity firm gave a stunning exposition of what the US resource players (and KKR itself) are achieving in making the US more oil self-sufficient.


My other key takeaway from the finance side was that the troubles at the big French banks are causing serious problems in the oil and gas related debt markets; something that I believe may cause more US resource players to merge given their insatiable appetite for capital.


All in all two days well spent; who knows it may change your life too…….


About James Elston: James Elston has 20 years of broad ranging oil and gas experience in industry, banking and consulting. He is a director of Fallingwater Energy and Palladian Energy Limited, where he advises investment banks, private equity firms and energy companies on a variety of issues largely relating to equity capital markets, M&A and equity research. Mr Elston was until recently CEO of Realm Energy International Corp a TSX-V listed Shale explorer in Europe.


Drillers and Dealers :::


::: December 2011 Edition


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