6. Solving the Industry's Human Resource Challenges, Bill Thompson and Jeff Dressler, Marcellus Reso

Attracting and Keeping Talent

Serving the Marcellus and Utica Shale Plays

Canton Area Chamber of Commerce April 11, 2012

Agenda • • • •

Introductions General US and PA Employment Trends O&G Job Growth Difficulties You May Face in Finding and Keeping Your Key Talent • Some Good News • Where You Can Find Help • Q&A

Six member firms made up of over 50 seasoned professionals, with offices located throughout the Appalachian Basin Akron, Columbus, Medina, Steubenville and Warren in Ohio Cranberry, Johnstown, Pittsburgh, Southpointe and State College in PA Bridgeport, Charleston, Morgantown, Parkersburg and Wheeling in WV Raleigh, NC — Sewell, NJ — Elmira, NY — Dallas and Houston, TX

Deep Experience In Serving the Entire Oil & Gas Supply Chain

The Single Complete Source for Talent and Organization Solutions

Acquiring

Optimizing

Managing

Do you have the talent you need to grow and succeed?

The Single Complete Source for Talent and Organization Solutions

Getting Your Talent • Finding Them • Attracting Them • Screening Them • Training Interviewers • Reference Checks • Pre-hire Tests & Assessments • Orientation & On-boarding • Employment Contracts

Managing Your Talent • Wage & Salary • Incentive Plans • Policy Manuals • Employee Handbooks • Performance Reviews • Performance Coaching • Exit Management • Severance Packages & Agreements • HR/Legal Compliance • Back Office Admin

Optimizing Your Talent • Employee Engagement • Key Talent Retention • Talent & Capability Reviews • Management Training • Employee Training • Succession Plans • Organization Plans • Growth Plans • Culture & Change Management

Hiring and Retention Are Mission-Critical For Them!

The Industry’s Talent Barbell 70’s – 80’s Steady Hiring

These Hires Are Now In Their 50’s

1985 – 1995 Minimal Hiring

20 Year Experience Gap

Late 90’s Rebound Hiring

These Hires Are Now In Their 30’s

And That Makes Hiring and Retention Mission-Critical For You! Recently Announced Investments

Assumed Minimum Payroll

$2B

25 %

Minimum Average Wage

Assumed Benefits Factor

$ 40,000

30 %

Projected Payroll Investment

Average Compensation Per Employee

$ 500 M

Projected Payroll Investment

$ 52,000

Average Compensation Per Employee

~ 9,600

Employees Needed to Staff the Investment

What Happened When O&G Came To Town (from a PA perspective)

U.S. Unemployment Rate November 2010 9.3%

December 2011 8.2%

Pennsylvania Unemployment Rates Area

November 2010

November 2011

Net Change

Pennsylvania

8.2

7.4

-0.8

Allegheny County, PA

7.3

6.4

-0.9

Beaver County, PA

7.4

6.9

-0.5

Butler County, PA

6.6

6.0

-0.6

Fayette County, PA

9.5

8.2

-1.3

Greene County, PA

6.9

6.3

-0.6

Indiana County, PA

7.4

6.5

-0.9

Lawrence County, PA

8.8

7.7

-1.1

Washington County, PA

7.5

6.5

-1.0

Westmoreland County, PA

7.6

6.8

-0.8

Job Growth In the Shale Gas Industry 2010

2015

2020

2025

2030

2035

Direct

148,143

197,999

248,721

241,726

278,381

360,335

Indirect

193,710

283,190

369,882

368,431

418,265

547,107

Induced

59,494

388,495

504,738

512,220

576,196

752,648

601,348

869,684

1,123,341

1,122,377

1,272,841

1,660,090

Total

Direct Oil & Gas Jobs In Demand Occupation

2010 Jobs

2011 Jobs

Change

% Change

Service unit operators, oil, gas, and mining

42,110

46,766

4,656

11%

Derrick operators, oil and gas

23,323

25,747

2,424

10%

Rotary drill operators, oil and gas

28,116

30,981

2,865

10%

Roustabouts, oil and gas

75,636

82,678

7,042

9%

Helpers, extraction workers

44,303

47,247

2,944

7%

Petroleum engineers

29,063

30,917

1,854

6%

Biomedical engineers

16,065

17,061

996

6%

Wellhead pumpers

24,186

25,616

1,430

6%

Extraction workers, all other

23,423

24,784

1,361

6%

Geological and petroleum technicians

35,304

37,205

1,901

5%

Top Ten Jobs in the U.S. 1.

2.

3.

4.

5.

Skilled Trades Sales Representatives Engineers Drivers Accounting & Finance

6. IT Staff 7. Management/Executives 8. Teachers 9. Secretaries, PAs, Admins 10. Machinist/Machine Operator

Facts of Life The U.S. is still wrestling with high unemployment, but‌

52% of employers report difficulty filling open positions.

Facts Behind the U.S. Unemployment Rate • 17% - No High School Diploma • 14% - With a High School Diploma • 5% - With Some College • U.S. High School Drop Out Rate 30% • Metro Area Drop Out Rate 50%

Why Are Employers Having Difficulty?

• • • • • • •

Applicants looking for more pay than offered Lack of "hard" job skills or technical skills Lack of industry or related work experience Lack of sufficient applicants / no applicants Applicants don't have the right values and/or mindset Lack of business knowledge or academic disciplines Lack of "soft" skills or interpersonal / communication skills

What It Boiled Down To In The PA Shale Play…..

• • •

Drug Testing Work Ethic/Culture Unfamiliarity with the business (Dad didn’t do it!)

• Lack of safety training and other related certifications • Lack of skills training

At first, it was a mad scramble with everyone trying to get on board to find out what O&G companies were here, where they were, what they needed‌.no one had the answers or knew where to find them!

The Good News from PA…..

• It’s all started to come together • The O&G companies are better at letting people know where they are and what their needs are • The local education/training infrastructure has been gearing up to address industry-specific needs • Local suppliers are learning how to serve O&G

Solutions – Short Term • • • • • • • •

Know what differentiates you in applicants’ eyes Be clear about what you expect of them And what they can expect of you Determine which skills you should build vs. buy Realize that recruiting is not a one-size-fits-all process Ensure your selection process is “effective” Recruit for talent, not for vacancies Use every action as a way to build your brand

Solutions – Longer Term • • • • • • •

Use an effective on-boarding process Ensure you are paying for performance Identify and retain your high performers Train your managers to manage effectively Effectively manage your marginal performers Don’t organize your staff – staff your organization Communicate, communicate, communicate

Local Support Resources • Your Local Chambers of Commerce • Online resources (e.g., ShaleDirectories.com, Ohio Shale Coalition, etc.)

• OOGA, IOGAWV, PIOGA, etc.

• Marcellus Resource Group and other providers

Local Support Resources Stark State will soon be offering ShaleNET programs which may include the following: •Roustabout •Floor Hand (combination of Derrick Operator and Rotary Drill Operator) •Production Technician •CDL •Welder’s Helper

Local Support Resources They will also be scaling up the following programs: •Welding •Safely – to include SafeLand, First Aid/CPR/AED, OSHA 10 and 40, First Responder, & others •Petroleum Basic Industrial Maintenance •Industrial Hydraulics and Pneumatics for Exploration and Production •Mechanical Drive Systems for Exploration and Production •Drilling Location and Positioning •Rigging •Basic Environmental, Environmental Technician and Environmental Supervisor •Geo-Environmental •Wastewater and Water Treatment •1-year OBR Certificate in Oil & Gas Exploration & Production Technology •A.A.S. Degree in Oil & Gas Exploration & Production Technology

Q&A

To further discuss how we can help your company grow and succeed – just contact: Bill Thomas at 866.302.9099 bill@marcellusresourcegroup.com Jeff Dressler at 724.562.3197 jdressler@marcellusresourcegroup.com