Recent Experiences With Drilling Companies - I Can't Make This Stuff Up

I am taking a bit of a deviation from my usual posts with numbers and statistics to write about some experiences that I recently had that continues to support my thoughts that there are problems with the Western Canadian Basin.

Since I am part owner of a consulting company that works with oil and gas companies and also companies that service the oil and gas industry, I have to continually be trying to find sales. Just to give a bit of a background, my company, Argentis Group, provides operational audits in oil and gas companies to identify areas to reduce costs and/or increase revenues. One of the processes that we run in oil and gas companies typically identifies missed reserves, which can have can have a significant impact on reducing capital spend associated with reserves replacement, not to mention reducing DD&A costs and find and develop costs. In addition, we run an offset well report that shows were wells are draining un-drilled land holdings. We also use public data to identify potential drilling prospects for oil and gas companies.

Since Argentis Group can run reports on un-drilled lands to spot potential drainage and we can identify significant cost savings that can be deployed to potential new drills, I thought I would call drilling companies to see if they would be interested in learning about an innovative way to identify drilling prospect for their clients and show them a way to potentially self-fund their projects out of Capital Cost Savings. I thought that since the majority of drilling companies have seen their business reduced 43% in the last year, they might be interested in understanding how to potentially increase their utilization rates on their rigs all while helping their clients out by finding reserves and potentially increasing their client's net asset value. Just a hunch, but I think that drilling companies might want figure out ways to help increase their rig utilization rates.

So, I called the top 7 drilling companies in Canada. I called either a VP of Sales, Sales Manager or a Senior VP who would be in charge of conventional drilling for Canada. I managed to get through to one VP (title and company to remain nameless) and left messaged for 5 and missed one who didn't have voicemail. I have to say, not having a voicemail for the VP responsible for sales for a large drilling company is a little crazy, what if someone wanted to, I don't know, maybe use their services and now can't leave a message to ask this drilling company to do business with them. I wonder how many sales this company has missed because of this?

The VP that I did actually get through to was actually very nice to me, considering that I was actually cold calling him and interrupting his day. Now that said, I was pretty shocked by what I was told. I went through a bit of a spiel about what Argentis Group does, the applicability of our services as it relates to a drilling company and I also mentioned the fact that based on an analysis of what we typically find, that I felt we might be able to have the impact of increasing their rig utilization rate by up to 15%. What I heard in response makes me thank my lucky stars that I do not have any stock in the publicly traded company. I was told that they had heard this type of pitch a couple of times (which I would assume they hadn't since no other company does what we do) and that they were comfortable with their rig utilization rate where it was and were not looking for ways to increase it at this time. WHAT???? If I were an investor in this company and a senior VP told me this, I would be shocked. I would be calling my broker to unload the shares ASAP. Who in their right mind, whether they use my solutions or not, would not be looking for ways to grow their business. I think that this person may not have been familiar with Shareholder Value.

The other shocking part of this is that I have yet to hear back from even one of the companies I called. I am guessing that since the rig utilization rate is 23% this year (January to September, down from an average of 40% in 2008) that they too might be satisfied with these sort of low utilization rates. I sure am glad that they have understanding shareholders that know that senior management is doing all they can to ensure that the company's continued success is first and foremost.

To me, this just highlights yet another problem in the Western Canadian Basin.

Then again, perhaps I did a bad job sell these people on my concepts, I certainly hope so for all the investors in these companies sake.

These opinions are mine and may not reflect your view. If you would like to contact me, then please feel free to do so at info@argentis-group.com. Argentis Group assists oil and gas companies with operational audits to identify areas to reduce costs, increase revenues and increase the overall asset value of an oil and gas company. PS. If you are a drilling company and you would like to talk to me about growing your business, then by all means contact me via email.