Strategic Planning for Explorationists

Thomas E. O'Connor
Petroleum Management Advisor, Camano Island, WA

Make sure that your Board is with you on what you are trying to accomplish. The Board and Corporate Officers have to agree on the objectives, rational and methodology. Agree on a corporate strategy, with measurable mileposts. Develop your selection criteria. Know what you are looking for before you start the search. Develop short-lists; obtain Board approval for “hunting licenses” within these target lists. Don't invest significant time and money in maturing the search until you have your hunting license.

Do your homework first. Know the geology of the plays in your selected basins. Be sure that your technology provides a comparative advantage. Who has been there before and is there now? What are the results of these efforts and where is the niche that you are looking for located? Get familiar with the petroleum law, regulations, model contract and environmental constraints. Make sure that you can live with them. Identify likely technical, economic and political risks and develop risk offsetting methodologies.

Understand the Government's side of the transaction. Where possible, help them reach their non-petroleum objectives during negotiations. An unbalanced contract that does not meet the Government's objectives will come back to haunt you at a very inconvenient time. Consider the benefits of a local partner and a close association with the local National Oil Company.

Start planning your operation and your local office before contract signature. Chose your local managers well; they are your ambassadors. Select, train and mentor your expatriate staff well before their expatriation. Be open with the Government in your dealings. They are your partner and you cannot do the job without them.