To wrap up a day of panel discussions and rapid-fire demos at Digital Wildcatters’ and FreightWaves’ virtual conference, Evolve: The Next Evolution of Oil & Gas, Allen Gilmer and Chuck Yates sat down with a bottle of cabernet to reminisce about lessons learned from the boom-bust cycles of the oil and gas industry — and offer advice for those getting into a business sector that could be on the verge of a new upswing.
“I think the biggest culprit in all of this were public investors measuring companies on the basis of production growth,” said Yates, whose job title is “galactic viceroy” of Digital Wildcatters. “They didn’t care about rates of return. And you got addicted to that as a public company. So, am I going to experiment with six wells even though I think 12 wells is the right spacing? No you drilled the 12 wells.”
“We got very comfortable,” agreed Gilmer, founder and chairman of Enverus, a software service company dedicated to the energy market. He added that, at the same time, the U.S. was “destroying global demand growth. We’re meeting all the demand here, and all of a sudden moving into a swing production point of view in a way that scared the hell out of the rest of the world, because it was completely uncontrolled.”
Gilmer asked Yates for his thoughts on which company or industry had the best chance of effecting decarbonization in a world that is driving hard in that direction.
Pointing out first that it is not government regulation that’s behind the push to decarbonize but the private sector and its investors, Yates said it was the energy sector itself that is in the best position — particularly the BPs and Exxons of the world. But it’s a much different story if you’re not one of the major players, he said. “I wouldn’t want to be on the board of a $3-$5 billion oil and gas company trying to figure out that question.”
Yates asked what their generation should be telling those in their 20s and 30s who are in or are interested in entering the oil and gas industry today.
“In my career I always knew what was going to happen five to 10 years in the future,” Gilmer said, but he found as he got older that “your gears get stuck in a certain place. Young people are coming in with a clarity and are not gumming up the gears yet.
“The cost of being able to manage an oil and gas asset lends itself to divesting to the next level down, and right now if you take a look at the big companies that have been acquiring, they’ve announced there’s going to be $50 billion worth of divestment coming in the next year. And with regard to pivoting and knowing where the next play is, I’ve always been a believer in just doing what you’re good at and don’t be a victim.”
Acknowledging that he and Gilmer have made their living in an industry that is not appreciated by many, “the single most important thing I would tell 25- to 35-year-olds is control the narrative,” Yates said. “Because these two old guys sitting here? We haven’t done it.”
