In this month’s roundup of news and views, the business of starting afresh strikes a common chord. These are the full versions of the “Drilling Deeper” news items that appeared as abbreviated versions in the print edition of PB Oil and Gas Magazine’s March 2019 issue.

IAC Opens In-Basin Facility

For Resin Coating

Industrial Accessories Company (IAC) has completed construction of what it terms the first in-basin resin coating facility. Situated in Monahans, Texas, the facility offers its users a chance for enhanced oil recovery while significantly reducing the historically high costs of transportation.

In building this in-basin resin coating facility, IAC charged its team of experts to address relevant issues of resin plant construction, dryer performance, dry plant controls, loadout methodology, dust control, respiratory silica mitigation, and wet plant operation, as well as issues pertaining to engineering, procurement, and construction (EPC) of frac sand facilities.

“It requires a total team effort to combine the technical expertise and needs of the customer with the engineering, construction, and controls capability of IAC. This teamwork ensures the facility design and operation exceeds the needs of the customer’s patented formulations and product throughput requirements,” stated Bob Carter, president of IAC.

Resin coating has played an important part in hydraulic fracturing in the oil and gas industry. With the recent industry focus on cost control when completing a new oil well, companies opted to utilize less resin in the hydraulic fracturing process, due to the high cost of transportation. Yet, as IAC contends, in-basin resin coating facilities reduce resin logistics costs and allow resin coating to be utilized when drilling, thus enhancing oil recovery.

IAC’s engineering and controls expertise, combined with prior employee experience in building and operating resin coating facilities, allows for what it describes as a true team effort with the customer.

IAC gained its experience as an EPC contractor by providing engineered solutions, facility design, procurement, and construction services into thousands of companies for over 30 years. Each of these products fit within an engineered solution. IAC is the most experienced EPC serving the frac sand industry with equipment supplied or work completed on 45 commissioned plants.

IAC is currently commissioning a 3 million ton frac sand plant in Oklahoma, a 1.5 million ton facility in Texas, and starting construction on a 1.5 million ton facility in a new south east basin. IAC provides commissioning, startup and optimization services to our customers to ensure success beyond initial turnover of the equipment.

Bob Carter is scheduled to present the next generation of Plant Optimization within the Frac Sand and Resin Coatings Industry to a large audience at the Frac Sand Industry Update North American Frac Sand Conference February 26 in Houston Texas. For more information, please visit our website at www.iac-intl.com.

About IAC: Founded in 1986, Industrial Accessories Company is a fast-track, high-technology equipment design, fabrication, and optimization company. As an Engineering, Procurement, and Construction (EPC) contract provider serving numerous industries including frac sand, cement, lime, asphalt, and biomass, IAC has delivered systems for customers across the globe. IAC delivers up to $150 million in EPC projects. For more information about IAC, visit their website at www.iac-intl.com.

Caption:

IAC’s resin coating facility allows for enhanced oil recovery while reducing the historically high costs of transportation.

IFS: Diversify or Disappear;

Five Predictions for 2019

by Colin Beaney, IFS Global Industry Director for Energy, Utilities and Resources

With renewables accelerating even faster than previously predicted, with CX and UX driving innovation, and with a new generation of proactive consumers driving demand for more diversified energy, business, and payment models, the year 2019 brings energy and utility companies face-to-face with the challenge of rapidly diversifying, decentralizing, and digitizing. The sure-fire way to keep up? Make sure you stay ahead!

Prediction #1: By 2040, 66% of the global energy market will be in renewables, driving an urgent race to diversify in 2019.

GLOBAL GREEN HOTSPOTS

India and China: By 2040, solar will be the largest source of low-carbon energy capacity in the world. A major factor will be the rapid deployment of solar photovoltaics (PVs) in China and India.

China: 33% of the world’s current wind and solar PV power is currently in China. The country accounts for more than 40% of global investment in electric vehicles. IEA: “The scale of China’s clean energy deployment, technology exports and outward investment makes it a key determinant of momentum behind the low-carbon transition.”

Brazil: The share of direct and indirect renewable use in final energy consumption will rise from 39% today to 45% in 2040 in Brazil, (compared with the global rate of 9% to 16%).

European Union: By 2040, renewables will make up 80% of new power capacity in the EU. Wind power will become the leading source of electricity soon after 2030, with strong growth in both onshore and offshore.

By 2040 the equivalent of a whole new China and India will have been added to the planet’s global energy demand, a 30% increase over today. The IEA (International Energy Agency) reports that by 2040 renewables will meet 40% of the planet’s energy demands. This will also be driven, the report says, by “enormous efficiency improvements on the supply side.”

Diversification, beginning now, is key to seizing the opportunity. And as the table shows, this is not just a European trend. Worldwide, the direct use of renewables to provide heat and mobility will double by 2040.

So in 2019, traditional major energy providers and even heavy industries will all be racing to adapt to the rise of renewables.

The Last Mile Hots Up

And as they compete to capture the green euros of more proactive, eco-conscious consumers, energy and utilities companies will focus more and more on smart grid management and customer service.

Take National Grid Smart, in the UK. Its solutions support the UK-based National Grid’s new smart meter initiative. The initiative expects to fit 26 million domestic smart meters in the country by 2020, powering national energy efficiency. Using IFS Applications, the company offers national energy suppliers a fully-managed smart meter service, with asset financing and installation, managed logistics and customer communications, also feeding critical data from engineers in the field via IFS Mobile Work Order application. These advanced capabilities in the last mile deliver a powerful competitive edge for energy providers.

Prediction 2: By 2023, 75 percent of utilities assets will be digitally connected ⁽¹⁾—but how they’re integrated will be make or break

For proactive consumers, diversification means more options over which energy they use, how much they pay for it and even how they can store and sell it back. For energy and utility companies, it also means more complexity. And the urgent need for accessible data throughout. A recent IDC Report ⁽¹⁾ says that over the next five years the need to power predictive maintenance and extend asset life cycle will drive 75% of critical utilities assets to be digitally connected. But it’s how well integrated AI and IoT technologies are that will ultimately turn all this data into value.

INTEGRATION IMPERATIVE

By 2022, 55% of utilities will use a core digital platform to automate, optimize, and orchestrate assets, business processes, customers and employees. ⁽¹⁾

By 2022, utilities will ‘need to overcome siloed initiatives by integrating and orchestrating change across the organization’ in their planning horizon. ⁽¹⁾

Integrated smart drilling

One of our customers in the offshore drilling sector operates one of the youngest but most advanced fleets of oil rigs in the industry—including the largest harsh-environment jack-up rigs in the world, deepwater drillships and semi-submersible rigs. All are run as individual business units earning revenue in locations as far apart as the Gulf of Mexico, Africa and South East Asia. In a typical situation like this, an integrated system undoubtedly helps increase efficiency, quality and reduce operational costs. Before the company rolled out IFS Applications globally, its software landscape included six separate software systems.

In 2018, we saw a growing number of energy and utilities companies look to upgrade their applications. Two major utilities in Norway, Sogn og Fjordane Energi and Glitre Energi, both chose to upgrade to IFS Applications 10, and this need for advanced capabilities and integration will continue to be a powerful factor moving forward.

The mining industry is a great example. In 2018, most mining companies invested heavily in IoT sensors and technology. 2019 will be the year these investments must begin to deliver. ⁽²⁾ And again, integration will be critical.

Integration imperative: Industry spotlight—mining

Companies that fail to integrate at least 50% of their operations and IT systems by 2022, will gain no value from digitalization regardless of strategy, organization, or technology focus. ⁽¹⁾
50% of mining companies that prioritize an integrated approach to tracking yield will achieve an industry-leading performance by 2022. ⁽¹⁾
Companies that embrace continuous improvement and digital innovation as a single integrated business process will outperform peers in terms of profitability by up to 20% by 2021. ⁽¹⁾

Prediction 3: By 2024, 25% of extraction and mining companies will have created digital twins ⁽²⁾

Digital twin key driver #1: Integration. The IDC FutureScape Mining report ⁽²⁾ predicts that by 2024, 25% of mining companies will have created digital twins—specifically in order ‘to integrate geospatial, geological and mine operation insights’, to better integrate planning, execution, and maintenance. Overcoming the challenge of siloed data will be a key driver of digital twins.

Digital twin key driver #2: Automation. As reserves shrink, companies are exploring ever tougher, more remote terrain. And in harsh environments like these, automated equipment delivers multiple benefits. Onsite robots are more cost-effective, resilient and able to operate for longer hours, more accurately even in severe conditions. With integration in place, automated assets are perfect for digital twin simulations too. Leveraging digital twins for automated assets massively cuts risk in both operational and investment decisions. From planning to development to production and maintenance—every dollar can be accounted for and measured before any risk is taken. The savings and competitive edge this produces means that while traditionally high-risk, high-automation industries like mining and aviation pioneer digital twins, uptake will soon follow in all industries where complex asset management is crucial.

Prediction 4: Energy & utility retailers will double their AI investments in 2019 as they battle to boost customer experience

As we’ve already seen, the customer is priority #1 in the energy and utility sector right now. In 2019, even more so. The competition to enhance customer experience (CX) by improving convenience, customization, and control is intensifying. In 2019, it will drive many retailers in the sector to double their investments in AI. ⁽¹⁾

As energy and utility providers compete on customer service, they’ll look to provide a more retail-like customer experience model. One where customers can get the right personalized energy solution, on the channel they want, in just a few clicks. Take HomeServe in the UK. They install gas residentially and carry out approximately 300,000 calls and 200,000 visits a year. When they installed IFS’s AI-powered omni-channel contact center solution it included all customer, asset, field service scheduling and parts information, meaning HomeServe Gas agents no longer had to search in multiple screens or systems for different data, all contextual data they needed to resolve customer requests is delivered to the agent as and when they need through their service desktop. This transformed the experience that agents were able to offer customers.

AI wins the customer war on two fronts

So AI delivers a double benefit. It enables better customer experience—as well as significant savings and efficiencies on the operational side. And cutting supply costs will be essential to cutting prices and winning customer loyalty in an increasingly crowded marketplace. But, just as before, integration will be critical to winning that war.

Energy and utility companies need omni-channel customer service centers just like HomeServe’s, offering voice and digital self-service. And they need to integrate all supply and enterprise data into one system. Being able to join up the dots instantly, from the field to the last mile of the consumers’ home, is non-negotiable if you’re going to win customer engagement. Again, AI will be a powerful driver—with the right integration.

Prediction 5: Oil and gas will invest more on assets and exploration again as demand outstrips supply

I’ve written before about the buoyancy of the oil and gas industry. There is no doubt that in 2019, investment and exploration will rise again as demand for both oil and gas outstrips supply. In 2019, the industry will resume capital investment in assets. Price Waterhouse Cooper’s 2018 Strategic Report, Oil and Gas Trends 2018-19, shows how global capital expenditure in oil and gas dropped nearly 45% between 2014 and 2016, but will rise 6% year-on-year in the medium term, evidenced by a string of major projects being greenlighted:

Gulf of Mexico: BP goes ahead with Phase II of floating production platform Mad Dog.
North Sea: Shell to launch ‘Penguins’ field, its first new staffed installation in almost 30 years.
Peru and Cote d’Ivoire: Tullow wins offshore production license. BP & Kosmos begin exploration offshore of Cote d’Ivoire.
Ghana, Namibia, offshore Mauritania: ExxonMobil enter exploratory phase.

This new investment is heartening. But will it be enough? Despite shale oil currently performing well, its severe environmental impact still makes it unpredictable moving forward. So in the near future, oil demand will continue to outstrip supply. Exploration, extraction and supply will all therefore need to stay collaborative, standardized, agile, and most of all—cost-efficient. Three of the PWC Report’s key strategic polices for 2019 point to how:

Refocus investment and efforts on asset maintenance, especially true for companies that deferred maintenance beginning in 2014.
Double down on digitalization, leveraging advanced digital technology will drive efficiencies and new opportunities. This could involve digital twins, drones to inspect offshore platforms, and data analytics to optimize production and reserves.
Develop talent for a new era of technology, the industry needs new expertise in digital operations. It will need to attract more data scientists and software engineers into the industry.

(1) IDC FutureScape: Worldwide Utilities 2019 Predictions, Doc # EMEA43108918, October 2018

(2) IDC FutureScape: Worldwide Mining 2019 Predictions, Doc # US43109118, October 2018

Develop People with Coaching

by Jeffrey W. Foley

Effective one-on-one coaching is one of the most important skills a great leader must possess. Effective coaching inspires in others an internal drive to act ethically, without direction, to achieve goals. Effective coaching drives performance, builds competence and confidence, and ultimately enhances relationships. The best coaches help people find ways to make things happen as opposed to creating excuses why they can’t.

Effective coaching also requires you to believe in yourself. You need to believe that you can have an impact in the workplace, and that you can inspire others to achieve their goals they might not otherwise achieve. The real question is not if you will make a difference, but what difference you will make.

Respectful, transparent, and regular face-to-face communication between leaders and their people breaks down barriers and builds trust. What you can see in a person’s eyes or other body language can be revealing. While technology can be effective at times, it will never replace human contact for discovery and inspiration.

The most impactful leaders are adept listeners, and don’t allow their egos to become roadblocks. When egos are alive and well, listening ceases, effective coaching environments disappear, and organizations suffer.

Here are three recommendations that can help you raise the bar on your ability to coach others.

Create a positive and open environment for communication

People listen to and follow leaders they trust. They engage in meaningful dialog with people they trust. They are not afraid to disagree with people they trust. Trust provides the foundation for a positive and open communication environment where connections between people can thrive.

When people connect, they learn about each other. They enable understanding of cultures, individual strengths and challenges. Knowing your people’s unique capabilities and desires helps focus on how to help them be successful.

Knowing your people also reduces the probability of promoting someone into a management position who does not want it or is not otherwise qualified. Not all physicians want to be managers. Not all sales people want to be sales managers. Not all technicians want to be a shop foreman. The costs can be exorbitant to an organization that wrongly promotes someone into a management position.

There are three questions that can help establish this open line of communication: What is on your mind? What can I do for you? What do you think? How am I making your life more difficult? When asked with the genuine interest, people respond with more honesty.

Meet with your people regularly helps break down barriers. Not just in your office, but on the manufacturing floor, outside the operating room, in the cafeteria, or the warehouse. Talk to folks outside the work area like the jogging track, grocery store or the kid’s soccer game. The informal sessions can be wonderful enablers of opening the line of communication.

Establish agreed upon goals and strategies to achieve

Most people want to know what success looks like. They want to be clear in their goals as an individual and, if appropriate, the leader of a team. Well-defined, measurable, relevant goals on paper help people gain clarity on success for them. Assigning responsibility with authority helps inspire an individual’s commitment to be successful.

Success also includes how to reach their goals. Strategies are developed and agreed upon by the manager and team member so that both understand each other’s roles. The probability of success increases dramatically when strategies and accountabilities are well defined.

Enforce accountability by assessing performance

There are many and significant consequences when people are not held accountable for achieving goals or otherwise performing to standard. Integrity disappears. Discipline erodes. Morale evaporates. Leaders are not taken seriously. Problem employees become a cancer in the organization. The best people leave. Results are not achieved.

Effective coaching demands assessment of performance. Without this assessment, no system of accountability will be achieved. If the senior leader does not hold his or her executive team accountable, subordinate leaders are likely to think “Why should I?”

Consistent, regularly scheduled coaching sessions with your people are the key to ensuring effective follow-up assessments to celebrate successes and identify areas to improve.

Summary

Coaching session agendas will vary based on a variety of conditions. A good place to start is outlined below.

First, review the individual goals and those of the organization. Ensure alignment of both to clarify where the individual is contributing to the mission of the organization.

Second, discuss what is going well. Where do both the coach and the individual agree on successes? Provide positive recognition for achievements where important.

Third, discuss the challenges or areas for improvement. Underwrite honest mistakes in the pursuit of excellence so people can learn. Determine how you as the manager can help. Gain a clear understanding of the shortfall in the individual’s ability and desire to achieve the goal and what resources or assistance the individual needs to be successful. When unsatisfactory performance occurs, managers must address it. Leaders who never take action to remove an underperformer are doing a great disservice to their institution. All too often, good people serving in leadership positions fear the task of confrontation. They hope, magically, that something will happen which will turn the underperformer around and all will be well in the end. Hope is not a strategy; the magic seldom happens. Your goal as a leader and coach is to inspire a willingness to succeed. When coaching, it is often easier to criticize and find fault. Think before you speak—find ways to praise.

Fourth, as the manager, seek suggestions for how you can be a more effective leader for them. This question can change the dynamic of the coaching session and can provide powerful feedback for the manager in his or her quest to be the best they can be. Doing so will enhance their trust in you and help build confidence in their own capabilities.

Remember, effective one-on-one coaching can be the catalyst for attracting and retaining the best people, and that will ultimately help your organization to unprecedented results.

For more information on Jeff Foley, visit www.loralmountain.com.

O&G M&A Hit Record

Before Year-End Stall

Drillinginfo, a leading energy SaaS and data analytics company, announced Jan. 8 that U.S. upstream oil and gas M&A clocked in at $84 billion in 2018 for the highest total since oil prices fell from their peak in late 2014. Large billion dollar plus deals fueled the surge in the back half of the year with a record-setting $32 billion in 3Q18 and $21 billion in 4Q18. BP’s transformational $10.5 billion buy of most of BHP’s shale assets is the largest deal of the year and fourth largest since 2009. The deal underpins BP’s strategy to roll-out BPX as an independent and leading US shale player. The year also ran a close tie with 2014 for the most public company consolidations with RSP Permian, Energen, Newfield, WildHorse, and Penn Virginia leading the exit list in 2018.

As Drillinginfo predicted in July 2018, the pace of consolidation picked up late in 2018 with corporate-level deals accounting for over 70% of the $21 billion total deal value in 4Q18. That is the highest quarterly corporate deal total since 3Q14.

Top 10 Deals of 2018
Date	Buyers	Sellers	Value ($MM)	Type	Play
07/26/18	BP	BHP Billiton	$10,500	Property	Multiple
03/28/18	Concho Resources	RSP Permian	$9,500	Corporate	Midland
08/14/18	Diamondback Energy	Energen	$9,200	Corporate	Delaware
11/01/18	Encana	Newfield	$7,700	Corporate	STACK/SCOOP
10/30/18	Chesapeake Energy	WildHorse	$3,977	Corporate	Eagle Ford
03/20/18	TPG Pace Energy	EnerVest	$2,662	Property	Eagle Ford
07/26/18	Encino Acquisition	Chesapeake	$1,900	Property	Utica
09/04/18	Flywheel Energy	Southwestern	$1,865	Property	Fayetteville
10/28/18	Denbury Resources	Penn Virginia	$1,716	Corporate	Eagle Ford
11/07/18	Vantage Energy	QEP	$1,650	Property	Bakken

“Investors continue to demand that companies deliver a clear line-of-sight to positive free cash flow,” said Drillinginfo M&A Analyst Andrew Dittmar. “Scale is one piece of the puzzle on how to get there given efficiencies in developing larger acreage blocks, optimizing supply chain logistics to lower costs and G&A savings. Wall Street no longer supports growth for growth sakes and is ready to punish buyers who do deals without a clear profit strategy.”

With the precipitous drop in oil prices that broke all support levels beginning in early November, the deal markets ground to a virtual stall. This came almost immediately on the heels of perhaps the most talked about week in the industry’s recent history. In a span of just five days, public company consolidation went into a frenzy with Denbury buying Penn Virginia, then Chesapeake buying WildHorse and Encana purchasing Newfield.

The shift towards corporate-level M&A late in 2018 also cut into private equities’ share of deal activity. After hitting a high-water mark in 4Q17 by taking the buyer role in 46% of deals, private equity’s share of acquisitions fell to only 7% in 4Q18. Private equity wasn’t overly active as a seller in 4Q18 either, accounting for only 4% of sold deals by value versus 23% in 4Q17.

Private and institutional capital is still highly active in the upstream business and playing an important role. PE-backed companies continue to explore emerging areas like the Louisiana Austin Chalk as well as the margins of more established resource plays. PE capital is also ready to move in when it feels public markets are undervaluing assets or companies as seen by the letter put out by Elliott Management addressing QEP’s stock performance and including a firm offer to buy the company.

Another clear theme from 2018 was the institutionalization of the minerals market with deal activity in this sector growing 100% over 2017 with deal value reaching nearly $3 billion. Buyers cross all capital sectors from public royalty companies like Kimbell Royalty Partners to institutional players like Ontario Teachers’ Pension Plan to public E&Ps like Continental Resources.

Looking forward into 2019, Drillinginfo expects the pace of oil and gas deal markets to remain impacted by oil price volatility which ultimately provides numerous special situation opportunities, particularly for oil equities that have been oversold. According to Brian Lidsky, Sr. Director Market Intelligence, “The straight-line $31 drop in WTI spot oil prices from $76 to $45 per barrel from the start of October to just before Christmas coincided with the risk-off appetite that was pervasive across the capital markets. U.S. E&P equities responded largely in lock-step with the rapid decline.

Looking ahead, the reality is that albeit global oil demand may slow some, growth remains unabated and for all intents and purposes has surpassed the 100 million barrel per day level. All eyes are on the impact of the start of OPEC+ round two cuts, Iran sanctions plus the trend of global oil demand.”

Currently, Drillinginfo quantifies $39 billion of deals in play in the U.S., of which 50% is located in the Permian. There is certainly high-quality assets in the marketplace and buyers ready to acquire. The only barrier is bridging the bid/ask price. Historically, if the gap has widened, deals often come with contingent payments predicated on a price or asset performance benchmark.

Top Takeaways from 2018:

Total of $84.3 billion in 2018 with $20.9 billion in 4Q18 and 63% of total value in 2H18.
For 2018, Permian is again most active area for deals with $28.3 billion or 33% of total.
Funding asset acquisitions via an overnight equity raise became virtually non-existent.
SPAC business model (raise public market cash then find an asset) continues to work.
The IPO market for E&Ps remains largely closed.
Royalty markets double and rapidly gain institutional attention.

Outlook for 2019:

Expect the launch of numerous non-core asset sales from public E&Ps with BP likely leading the charge.
Private equity likely to reemerge as a key buyer on asset deals with willingness to pay for PDP and take risk on upside.
Markets will reward scale and low-cost leaders which translates into richer equity currency for large players to make accretive buys of smaller players.
Remains to be seen if rapid drop in oil prices will affect the closing of 4Q18’s corporate deals.
Leveraged E&Ps likely to find themselves under renewed pressure to take action to improve balance sheets.

Click Here for additional detail on 4Q 2018 Oil and Gas M&A activity.

DrillingInfo Releases Forecast

For Markets “After the Storm”

Drillinginfo, the leading energy SaaS and data analytics company, released on Jan. 9 a forward-looking report entitled, a forward-looking report detailing the company’s view of the oil, natural gas, and NGL markets over the next five years. This update, entitled “After the Storm,” follows the market intelligence team’s recent overview confirming crude oil prices have hit their peak price for the foreseeable future.

The 50+ page report includes a depth of market insight including how speculative factors drove the price of oil up to $75/Bbl in 2018. Though much of the industry’s focus remains on the Permian Basin and its economics and vast stacked play potential lately, it is worth noting that the core of all major shale basins remain economic at prices below $55/Bbl. Also included in the report are OPEC quotas and impacts to OECD inventories, and how over a longer time frame, a $55/Bbl and $2.85/MMBtu long-term price scenario would drive oversupply for several years before starting to succumb to an undersupplied market in 2023 due to lack of longer-term projects, continued demand growth, and plateauing U.S. production.

Natural gas is predicted to continue to grow, especially in the Appalachian and Permian Basins, as will liquified natural gas (LNG) exports. The report also highlights the importance of Mexico as an export destination. During the next five years, U.S. exports are expected to reach 5 Bcf/d, representing more than 60 percent of the supply stack in Mexico.

Natural Gas Liquid (NGL) production is still hitting record highs, despite fractionation and infrastructure constraints. Drillinginfo projects that NGL production will grow ~five percent over the next year and ~20 percent over the next five years, with the highest growth out of the Permian (nine percent and 33 percent growth over one and five years, respectively).

After the Storm addresses a number of renewable energy projects that are slated to come online by 2023. From 2019 to 2020, if all wind and solar projects come online as expected, natural gas demand for power burn will decrease 1.24 Bcf/d.

Key Takeaways from the 50+ Page Report:
▪ Global economic growth drives demand for petroleum products. However, fears of a global economic slowdown suggest demand could suffer a blow. At the current forward curve, supply should outpace demand for 2019. In 2020+ a large supply deficit is possible offering an opportunity for higher prices. Prices will remain low throughout 2019. Volatility will be present as the speculators react to news, but any extensions higher will be subject to fundamental realities.

▪ Following the strength in prices at the end of 2018, natural gas prices are expected to range $2.60- 2.75/Mmbtu over the next five years. These prices will allow production growth at a pace to meet the expected demand growth in natural gas. LNG exports will lead the demand growth for the natural gas market while the power sector battles for market share with renewables sources.

▪ NGL production has hit a record high eight months in a row. Y-grade pipelines, railcars, and fractionators are all nearly full. Oversupply and constraints have yielded lower prices and lower netbacks. There is also increased volatility, which will likely remain at least over the next two to three years as incremental projects are completed and more constraints potentially unfold. Many greenfield projects have been announced to increase frac space and take advantage of some of the wide frac margins and optimization opportunities. Some midstream providers have been creative, recommissioning frac space through maintenance, building small pipelines to increase flow optionality, or optimizing volumes on their systems and through storage to create more space.

▪ M&A was the biggest story in Q3 for E&Ps, with activity surging 250 percent over Q2 to $32B, and 76 percent above the quarterly average since 2009. Consolidation within plays likely will increase in momentum as scale and efficiency reward larger players. Constraints exist across all commodities and vary by region but are another way consolidation can present strategic opportunities. As in prior quarters, investors are still favoring producers with more visibility to free cash flow. Costs will be flat to down in 2019 after seeing a five percent to 15 percent bump across the U.S. in late Q2 and early Q3, especially after the recent drop in crude and NGL prices.

Workforce Lodging Opens

in Carlsbad, New Mexico

There’s no place like home, especially when you’re far away from it. Just ask anyone who works along the Permian Basin for days, weeks, or even months at a time. With the recent opening of the new Ellipse Global Lodge and Quahada RV Park near Carlsbad, N.M., those comforts of home are no longer beyond reach.

Mobile base camp services leader Ellipse Global has secured operating permits for both operations, enabling each to accept occupants and reservations effective immediately. For oil and gas companies struggling with a scarce supply of quality accommodations, the lodge and RV park couldn’t arrive at a better time.

Situated on 87 acres just 7 miles east of Carlsbad, off Hobbs Highway at 26 Quahada Road (County Road 603), Ellipse Global Lodge at Delaware Basin offers a variety of features designed for the remote worker. Its 48 hard-sided structures feature 4 individual, single-occupancy apartments that include amenities such as full-sized beds, quality mattresses, large closets and individual office spaces. Private bathrooms, including full-size baths and showers, toilets, sinks, and mirrors are available for each single occupant. All units are Wi-Fi enabled. Services also include a free laundry facility and regular housekeeping.

Quahada RV Park is located directly adjacent to the Lodge and contains 118 spaces for rent over various intervals of time. Each space features full hook-ups and 60-foot pull-throughs, as well as individual picnic areas and barbeques.

In addition to clean and comfortable accommodations, the Lodge and RV park also offer first-class food service with custom, heart-healthy menus prepared by trained, Incident Command System (ICS)-certified chefs. With choices such as a made-to-order omelet bar, box lunches, a rotating dinner bar, and a 24/7 coffee bar, guests are fueled by a menu that provides at least 4,000 calories per day.

“Oil field service workers endure a lot of hardships when working remotely,” said Stephen Humphreys, CEO of Ellipse Global. “We designed the Lodge and RV park to provide best-in-class comfort, flexibility, and value.”

Leverage Your Talent Brand

To Attract Great Candidates

By Jeremy Eskenazi

Have you ever struggled to hire the right people? Do most of the people you interview seem like a questionable fit at your company? It might be a symptom of not using your employer brand to your best advantage. An employer brand is what employees and candidates say about your company and the work experience when you’re not in the room. It’s not something you can go out and buy, or have a fancy branding exercise to develop and replace if you don’t like the one you have. Much like branding a product, your employer brand takes on elevated meaning and a predisposition to buy or join. In what is currently a competitive talent market, effective branding creates a sustainable competitive advantage and can make a huge difference in who is interested in working for you.

If you’re not sure what your employer brand is today, think about employer review websites online that are popular in North America and many parts of Europe. If you’re not familiar with the concept of these sites, they’re user-driven platforms that encourage people to anonymously record their experiences with a company as a candidate or employee. They can write whatever they want, even if it’s negative, and they can encourage people to run in the opposite direction. The flip side is that reviewers can also sing your praises and wax lyrical about you. Unfortunately, much like any user-driven site, anonymous contributors are usually either delighted with something, or were very upset; so you tend to see wild swings of positive or negative comments.

An employer brand is not necessarily changed overnight, but every time you interact with a candidate, you create an impression. Now multiply these impressions dozens or even hundreds of times. This is a powerful force. This is your professional brand and your opportunity to create (or start to re-create!) the first experience.

The people, symbols, and meaning we try to attribute to the company can be a powerful tool in communicating where the organization is headed. The brand management process helps you to unearth the organizations’ brand expression in the marketplace. The five ways to leverage your employer brand are:

Asset Assessment. Be honest: what are your strengths and weaknesses? How large is your companydo you need people who thrive in an intense corporate environment or do you want people who are happy to have a more stable career? What benefits do you offer? Is there opportunity for advancement? Knowing this and being able to clearly articulate it is so important.
Employee Involvement. What is your organizational culture? Is it vertical, with top-down direction and little front-line input, or are decisions made on a broad collaborative basis? Is there opportunity for creative thinking? Knowing how your employees interact today and empowering them to tell the story of how they contribute is powerful.
Competitive Assessment. What other organizations can your candidates work for? You need to know who your competitors are and what they offer. If another company offers higher wages, can you compensate with profit sharing or better benefits? Are there opportunities for you to be creative about your offering based on what your competitors are packaging for candidates?
Brand Positioning. You need to know where your organization fits in the overall market. Does your company compete on price, or are you targeting the upscale market? Are you known for promoting from within? Does your company have a reputation for treating women and minorities fairly? The comments left online are a good starting point for this, as are any internal surveys you run.
Brand Expression. This is the combined result of all of the “brand signals” that are present in the marketplace and are picked up by consumers and candidates. Every element of your employer brand needs to be in alignment. For example, if you claim to care about the environment and candidates are offered Styrofoam cups when they come in for an interview, you’d be surprised how much that can alter perceptions of your company and what you stand for.

In today’s competitive global economy, these five steps can help you find the candidates you need. Remember that candidates can be both internal and external. If you bring the right talent into your team, they may be interested and have versatile skills that could allow them to try new jobs at your company. They may be ready to take on a new role and be promoted, or they may be excellent at their current job. The point being: there is active work required to engage your current employees as brand ambassadors as well—they too represent and can carry your employer brand far and wide.

Remember, you can’t “make” an employer brand. An advertising agency can’t help you create a brand. They can help create a brand message. Whether or not you know what your brand is isn’t the issue. It’s knowing the what the themes are that people use to talk about your organization. Then you can manage the expression of the brand—and how people receive it—as part of your brand as an employer. You can do this through your goals, vision, and values, and the taglines that best explain what your company is about.

It’s easy for someone to throw out “we aspire to be the best place to work.” Your employer brand cannot be solely aspirational—it has to be accurate for where your organization is today. When your position is too aspirational, people will likely be unhappy when they encounter you—both candidates and employees. If you were in their position, don’t you think you’d feel let down too?

About the Author:

Jeremy Eskenazi is an internationally recognized speaker, author of Recruit Consult! Leadership, and founder of Riviera Advisors, a boutique Recruitment/Talent Acquisition Management and Optimization Consulting Firm. Eskenazi is not a headhunter, but a specialized training and consulting professional, helping global HR leaders transform how they attract top talent at some of the world’s most recognized companies. For more information on Eskenazi, visit: www.RivieraAdvisors.com.

Company Launches Platform

For Blockchain O&G Trading

PermianChain Technologies has launched the prototype of its platform for trading potential oil and gas reserves that have yet to be developed. PermianChain’s management states that their blockchain-based approach will make it easier to put a value on reserves before those reserves have been produced, thereby enhancing efficiency and improving understanding of a project’s viability.

PermianChain has been designed to augment the way that firms across the oil and gas sector interact and trade. The platform takes a blockchain-based approach using the PermianToken (XPR) to put a value on potential oil and gas reserves and a market where these tokens can be traded securely and transparently. By digitizing oil reserves, the platform lends ease to getting a comprehensive understanding of a project’s viability and current status. The approach also will reduce the administrative costs involved in a trade, creating savings that, potentially, could change the status of marginal fields. There are 1.6 trillion barrels of proven oil reserves globally. Even a small improvement in efficiency could have a significant impact on the industry’s profitability.

The Permian platform is built around five integrated pillars which have been tailored to support different aspects of oil well developments, investment, and trading processes.

“The crypto asset-class has inevitably become an integrated part of the global financial markets, and the blockchain economy is becoming more and more important. At the same time, the oil and gas industry has reached a critical point where it needs to find new efficiencies and ways of assigning value,” says Mohamed El-Masri, Co-Founder of PermianChain Technologies. “The introduction of new sources of energy from shale gas, tight oil or coal seam gas creates an opportunity to examine how we trade before the current inefficiencies become entrenched. PermianChain will help generate early revenues for suppliers, provide higher discounts to buyers and increase value across the industry, complementing rather than disrupting the way that businesses currently operate.”

The Permian platform is being developed on IBM’s Hyperledger Fabric by PermianChain Technologies, creating a reliable framework for making direct equity investments in private oil campaigns. The platform is committed to compliance and security with a range of integrated know-your-customer (KYC) and anti-money laundering (AML) features from leading third-party providers.

PermianChain Technologies is working closely with King & Spalding, a global legal specialist, to license the PERMIAN platform and have PERMIAN Token (XPR) issued as a regulated crypto asset-class.

Helena Offers O&G “Tokens”

Helena Oil and Gas announced on Jan. 19 that it has created a “Helena Security Token” (HEST) in an effort to attract fresh investment to its oil projects in Texas. The token allows investors to support an existing, active project in the oil and gas sector without having to pay many of the extensive administrative and brokerage fees that are traditionally associated with the sector. Helena suggests that this approach offers investors a way to diversify their portfolios with oil and gas.

Per Helena’s own perspective, having investments come through the HEST token will remove a great deal of the back-office costs, to attract, potentially, a wider pool of investors than has traditionally been the case with comparable projects. The process could also ensure that the company that employs it can enjoy transparency of ownership and can focus its resources on the project rather than on clerical activities.

Helena Oil and Gas holds more than 3,000 acres in 20 oil and gas leases in Dimmit County, Texas. The two ﬁelds, Big Wells and Good Luck, have third-party conﬁrmed reserves of 6.85 MMbbl oil and 2.8 Bcf gas.

Over USD8 million has already been invested in the project. Activities completed so far have included initial production rate tests that were carried out in November 2017 at the Big Wells 1 site and exceeded expectations by almost 100 percent. Two wells have been drilled so far and the initial output was well ahead of forecast.

The company’s ambition is to drill a further 14 wells at its sites and increase daily production from 200 barrels to 2,500 barrels.

“There are several reasons why we are taking this innovative approach to attracting investment,” says Christoph Mahler, chief financial officer at Helena Oil and Gas. “With the United States moving towards becoming a net energy exporter, there is a great deal of focus on the sector in America. By offering HEST as a simple, transparent way to invest in our project, we are opening ourselves up to a wider pool of investors who can use an investment in us to make sure that their portfolio is diversified and balanced. Competition is fierce in the oil and gas industry, so we have to ensure that we are making the most of every dollar that is invested with us.”

HEST are initially valued at EUR1 per token. Since the Proven oil reserves amount to 6.85 MMbbl, calculatory, each HEST indirectly represents around 9 litres (or 2.4 U.S. gallons) of crude oil in the ground. The tokens can be converted into class-B shares in Helena Oil and Gas when the exercise period arrives in 2021. The HEST private sale commences on 15 January and runs into the first quarter of 2019. A full public sale will follow. Exercise of the warrants takes place in July 2021. The company is currently valued at EUR100 million but this could increase to EUR500 million based on the proven reserves and the business plan.

Onicon Acquires Pulsar

Onicon Incorporated, a Harbour Group company, acquired the parent company of Pulsar Process Measurement Ltd., according to an announcement made Dec. 14 by Jeff Fox, Harbour Group’s chairman and chief executive officer. Terms of the transaction were not disclosed.

Pulsar designs and manufactures ultrasonic- and radar-based non-contact level and flow measurement instruments. Pulsar’s products provide solutions related to level, open channel flow, pipe flow, sludge interference measurement, and pump control for water utilities and industrial customers worldwide.

As Fox commented, “The addition of Pulsar provides Onicon with further penetration and product offerings within the water and wastewater markets. Pulsar’s scale and operations also provide Onicon with an expanded international footprint.”

John Norris, president and chief executive officer of Onicon, commented, “Pulsar has a very strong brand, entrenched market position within water and wastewater, and extraordinary ultrasonic and radar measurement capabilities. We are excited to work with the Pulsar team and see tremendous growth opportunities for the combined business.”

Pulsar’s co-founder and managing director, Keith Beard, added: “We are excited to partner with Onicon and believe their reputation in market, strong product offering, and diversification will further enhance the Pulsar brand and business. We believe our engineering, market presence, and product suite will further complement the Onicon business, specifically in water and wastewater markets. We are also excited to leverage Onicon’s presence in North America to grow our business. In addition to partnering with Onicon, Harbour Group’s operational expertise will ensure we have the foundation to capitalize on the opportunities in front of us.”

Pulsar was founded in 1997 and is headquartered in Malvern, England.