When things started to go south last year, it appeared that, as a group, our beloved oil and gas industry was in a wait and see what happens mode. Response to slowing activity was rife with trepidation and speculation that surely we were not barreling head long into another slump. We were having so much fun for God’s sake. Oil at $100 plus per barrel had us all dancing in the streets throwing money around like Lloyd Christmas and Harry Dunne in Dumb and Dumber. Here ya go, and that’s for you. Remember? There was empire building going on everywhere as the intoxication of excess overwhelmed us. If there was a problem, well hell, just throw some money at it, and it will magically disappear. Who cares what it costs. The stark reality is things are not rebounding quite as fast as we had hoped. The new mantra seems to be, “We better figure out how to operate more efficiently if we want to survive or else we will be putting lids on double doubles for the rest of our days.”
What is the cost of doing nothing? According to Ken Blanchard, most executives instinctively know that strong leadership is essential for overall organizational success. However, in most organizations, there is a lack of urgency to improve leadership skills driven by a belief that an organization’s current leadership capacity – and subsequent performance – is good enough. But, is it? Analysis by The Ken Blanchard Companies* shows the average organization is forfeiting over $1 million per year in untapped potential because of less-than-optimal leadership practices.*
Exploration and production companies around these parts have certainly been in a quandary. Do we spend money and drill or sit tight and wait for the rebound? What has been the cost of doing nothing and waiting? I suppose only time will tell, but the forecast of the number of companies driving the stagecoach toward the cliff is getting frighteningly larger. The mood has certainly shifted from the halcyon days of 2013. I think the bigger issue here is how do we learn from this and establish better operating procedures to allow us to be successful in this new environment and really
batten down the hatches when or if commodity prices come back to a reasonable level? Is it good enough, or can we get busy and figure out how to do it cheaper and faster with less people?
The interesting part of being a producer is, for the most part, your success is dependent on other people. The majority of the money you spend is outside of your company. The question has to be asked whether your company has made the investment to determine if the companies you have selected to work with are the best for you or have your supplier selection tendencies fallen into the trap of the industry status quo. We have always used them, and until they really screw up, we don’t want to make changes type of mentality. That could be your cost of doing nothing. Eureka moment right there! How do you know if you are getting what you pay them for? How do you measure it? How much do you know about that company and their specific skill set? Do you have a vendor depth chart?
So many questions; so little time. Oilfield HUB can help. We have a team of experts ready to assist you in the organization and identification of potential backups and depth of knowledge investigation you typically don’t have time to do yourself when things get busy. We work with producers and service companies to flesh out the value proposition and ease vendor frustration by leveling the playing field and creating transparency, so there are less head scratching shenanigans going on behind the scenes. If your success is dependent on others, let’s work together to maximize those relationships and increase our efficiency.
The cost of doing nothing may very well end up with you putting lids on double doubles. Nobody wants that to happen!
*Based on initial results of participants using Blanchard’s Cost of Doing Nothing Calculator