EnerCom360 Magazine - August 2020 - The Oil and Gas Conference Editorial Edition

Abraxas Petroleum Corp. Adams Resources & Energy Inc. Amplify Energy Corp. Anadarko Petroleum Corp. Antero August 2020 • Vol. 1 • Issue 3 Resources Corp. Apache Corp. Approach Resources Inc. Black Stone Minerals LP. Bonanza Creek Energy Inc. Breitburn Energy Partners LP Cabot Oil & Gas Corp. California Resources Corp. Callon Petroleum Co. Camber Energy Inc. Carrizo Oil & Gas Inc. Centennial Resource Development Inc. Chesapeak Energy Corp. Cimarex Energy Co. Citadel Exploration Inc. CKX Lands Inc. CNX Resources Corp. Cobalt International Energy Inc. Comstock Resources Inc. Concho Resources Inc. ConocoPhillips. Contango Oil & Gas Co. Continental Resources Inc. Daybreak Oil & Gas Inc. Denbury Resources Inc. Diamondback Energy Inc. Dorchester Minerals LP. Earthstone Energy Inc. Eclipse Resources Corp. Energen Corp.

Energy XXI Gulf Coast Inc. EOG Resources Inc. EP Energy Corp. EQT Corp. ERHC Energy Inc. Erin Energy Corp. EV Energy Partners LP Evolution Petroleum Corp. EXCO Resources Inc. Extraction Oil & Gas Inc. FieldPoint Petroleum Corp.

Freeport-McMoRan Inc. Genie Energy Ltd. Goodrich Petroleum Corp. GulfSlope Energy Inc. Halcon Resources Corp.

An EnerCom Inc. Publication HighPoint Resources Corp. Hess Corp. Houston American Energy Corp. Isramco Inc. Jagged Peak Energy Inc. Jones Energy Inc. Kimbell Royalty Partners LP Kinder Morgan Inc.Kosmos Energy Ltd. Laredo Petroleum Inc. Legacy Reserves LP Lilis Energy Inc. Linn Energy Inc. Lonestar Resources US Inc. Marathon Oil Corp. Matador Resources Co. Mexco Energy Corp. Mid-Con Energy Partners LP. Midstates Petroleum Company Inc. Murphy Oil Corp. National Fuel Gas. Newfield Exploration Company. Noble Energy Inc. Northern Oil & Gas Inc. Oasis Petroleum Inc. Occidental Petroleum Corp. Panhandle Oil & Gas Inc. Parsley Energy Inc.PDC Energy Inc.PEDEVCO Corp.Penn Virginia Corp.Petrolia Energy Corp.PetroQuest Energy Inc.Pioneer Natural Resources Co.QEP Resources Inc.Range Resources Corp.Resolute Energy Corp.Rex Energy Corp.Ring Energy Inc.Rosehill Resources Inc.Royale Energy Inc.RSP Permian Inc.Sanchez Energy Corp.

SandRidge Energy Inc.SilverBow Resources Inc.SM Energy Co.Southwestern Energy Co.Spindletop Oil & Gas Co.SRC Energy Inc.Stone Energy Corp.Tengasco Inc.Tiger Oil and Energy Inc.Titan Energy LLC.Torchlight Energy Resources Inc. Transatlantic Petroleum Ltd.T-Rex Oil Inc.Ultra Petroleum Corp.Unit Corp.U.S. Energy Corp.Vaalco Energy Inc.Vanguard Natural Resources Inc.Viper Energy Partners LP.W&T Offshore Inc.West Texas Resources Inc.Whiting Petroleum Corp.

WildHorse Resource Development Corp.WPX Energy Inc.Yuma Energy Inc.Zion Oil & Gas Inc. Abraxas Petroleum Corp.

Adams Resources & Energy Inc. Amplify Energy Corp. Anadarko Petroleum Corp. Antero Resources Corp. Apache Corp.

Approach Resources Inc. Black Stone Minerals LP. Bonanza Creek Energy Inc. Breitburn Energy Partners LP Cabot Oil & Gas Corp. California Resources Corp. Callon Petroleum Co. Camber Energy Inc. Carrizo Oil & Gas Inc. Centennial Resource Development Inc. Chesapeak Energy Corp. Cimarex Energy Co. Citadel Exploration Inc. CKX Lands Inc. CNX Resources Corp. Cobalt International Energy Inc. Comstock Resources Inc. Concho Resources Inc. ConocoPhillips.

Building a premier investor conference Contango Oil & Gas Co. Continental Resources Inc. Daybreak Oil & Gas Inc. Denbury Resources Inc. Diamondback doesn't happen overnight.

Energy Inc. Dorchester Minerals LP. Earthstone Energy Inc. Eclipse Resources Corp. Energen Corp. Energy XXI Gulf Coast Inc. EOG Resources Inc. EP Energy Corp. EQT Corp. ERHC Energy Inc. Erin Energy Corp. EV Energy Partners LP Evolution Petroleum Corp. EXCO Resources Inc. Extraction Oil & Gas Inc. FieldPoint Petroleum Corp.may Freeport-McMoRan “Twenty-five years not be a Inc. Genie Energy Ltd. Goodrich Petroleum Corp. GulfSlope Energy Inc. Halcon Resources Corp. HighPoint Resources long time, geologically, but it is Corp. Hess Corp. Houston American Energy Corp. Isramco Inc. Jagged Peak Energy Inc. Jones Energy Inc. Kimbell long time for aReserves business,” Royalty Partners LP Kinder Morgan Inc.Kosmos Energy Ltd. Laredo a Petroleum Inc. Legacy LP Lilis said Energy founder,Resources Greg Barnett.

Inc. Linn Energy Inc. Lonestar Resources US Inc. Marathon Oil Corp. Matador Co. Mexco Energy Corp. MidCon Energy Partners LP. Midstates Petroleum Company Inc. Murphy Oil Corp. National Fuel Gas. Newfield Exploration Company. Noble Energy Inc. Northern Oil & Gas Inc. Oasis Petroleum Inc. Occidental Petroleum Corp. Panhandle Oil & Gas Inc. Parsley Energy Inc.PDC Energy Inc. PEDEVCO Corp.Penn Virginia Corp.Petrolia Energy Corp.PetroQuest Energy Inc.Pioneer Natural Resources Co. QEP Resources Inc. Range Resources Corp.Resolute Energy Corp.Rex Energy Corp.

Ring Energy Inc.Rosehill Resources Inc.Royale Energy Inc.RSP Permian Inc.Sanchez Energy Corp.SandRidge Energy Inc. SilverBow Resources Inc.SM Energy Co.Southwestern Energy Co.Spindletop Oil & Gas Co.SRC Energy Inc.Stone Energy Corp.Tengasco Inc.Tiger Oil and Energy Inc.Titan Energy LLC.Torchlight Energy Resources Inc.Transatlantic Petroleum Ltd.T-Rex Oil Inc.Ultra Petroleum Corp.Unit Corp.U.S. Energy Corp.Vaalco Energy Inc.Vanguard Natural Resources Inc. Viper Energy Partners LP.W&T Offshore Inc.West Texas Resources Inc.Whiting Petroleum Corp.WildHorse Resource Development Corp.WPX Energy Inc.Yuma Energy Inc.Zion Oil & Gas Inc. Andeavor Blue Dolphin Energy Co. Calumet TECH CORNER INNOVATION ANALYSIS – ESG - INTERVIEW Specialty Product+Partners LP CVR Energy ENERCOM Inc. Delek US Holdings.

HollyFrontier Corp.OAG360 Marathon Petroleum Corp. Par Pacific Holdings Inc. PBF Energy Inc. Phillips 66.Valero Energy Corp.

QEP Resources Inc The lastest innovations in Oil and Gas There is more evidence to support that The Unique Problem with Iraq. An

The Oil & Gas Conference

are needed due to the global economic shutdowns and the oil and gas price war from Saudi and Russia.

P/18

companies that adopt an effective ESG strategy can gain many competitive advantages.

P/6

exclusive interview with former U.S. ambassador to Iraq, Christopher Hill. P/20

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CONTENTS MiFID

EnerCom Focus

The implementation of MiFID II in January of 2018 sounded the bells on significant changes for the equity research industry.

ESG AND THE ENERGY INDUSTRY Enercom Analysis Nowadays we can find more evidence to support

4

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that companies that adopt an effective ESG strategy can gain many competitive advantages.

THE OIL & GAS CONFERENCE Special Edition

Building a premier investor conference doesn't

10

happen overnight. “Twenty-five years may not be

a long time, geologically, but it is a long time for a business,” said Barnett.

THE UNIQUE PROBLEM OF IRAN Oil & Gas 360 Interview

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An exclusive interview with former U.S. ambassador to Iraq, Christopher Hill.

THE LATEST INNOVATIONS IN OIL AND GAS Tech Corner

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The lastest innovations in Oil and Gas are needed due to the global economic shutdowns and the oil and gas price war from Saudi and Russia.

ENERCOM360 M A G A Z I N E

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ENERCOM FOCUS

The implementation of MiFID II in January of 2018 sounded the bells on significant changes for the equity research industry.

The European regulation ended the long-standing arrangement of research being provided for free to the buyside with the expectations that trades would be channeled to the sellside firms providing the reports. Under MiFID II, asset managers would need to pay for research, “unbundling� it from trading fees.

Market in Financial Instrument Investment The decision was taken as part of a push to offer greater transparency into the cost of both research and trading commissions. The regulation went into effect in the European Union, but because of the global scope of asset management, many buyside firms made the decision to come into compliance with the European regulation to avoid conflicts elsewhere in the world.

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ENERCOM360 M A G A Z I N E

W

hen MiFID II was initially implemented, this unbundling was expected to negatively impact

the research industry, particularly niche firms covering small-cap companies. As asset management firms developed research budgets they needed to decide whether to pass that cost along to clients or to find ways to absorb it themselves, a reality that quickly brought the cost of research into focus and put research analysts in a position where they had to prove they generated sufficiently valuable insight.

The effects of the European Union’s decision to implement MiFID II appear to be making their way through the market. A study conducted by the CFA Institute of European members in 2019 found 57% of buyside respondents were sourcing relatively less research than they were prior to MiFID II and that there was a reduction in sellside analyst roles as the market contracted. The same survey found buyside

may allow the staff to study the impact of MiFID II, taking over 900 days is simply unreasonable,” the statement said prior to the eventual extension of the no-action letters.

firms decreased their research spend by an average 6.3% the year following

“Transparency and disclosure are vital to our capital markets.

the implementation of MiFID II and that 47% of buyside and 53% of sellside

Transparency in government process is equally important. It

respondents reported decreased coverage of small- and mid-cap stocks.

is critical that investors and other market participants have an

U.S. SECURITIES AND EXCHANGE COMMISSION REMAINS ON THE SIDELINES

opportunity to voice their concerns and ideas. I encourage the staff and the Commission to consider timely notice and comment rule making in order to reach the best policy outcome in this area,” Stein said in her statement.

Following the announcement of MiFID II by the EU, the SEC adopted a wait-and-see strategy. The SEC Division of Investment Management and the Division of Trading and Markets issued a series of no-action letters addressing research payment provisions in MiFID II saying the Commission would analyze the regulations. The latest extension of those letters is in effect until July 3, 2023.

The decision to adopt this stance did not sit well with all members of the SEC, however. One of the

...When payments for research and trading are combined, do investors know that they are paying for research? Do investors know what they are paying for trading? Do investors know of the potential conflicts of bundled Kara M. Stein payments?

public statement issued on October 26, 2017: “Questions about transparency and investor protection are central to this conflict. When payments for research and trading are combined, do investors know that they are paying for research?

Do investors know what they are paying for trading? Do investors know of the potential conflicts of bundled payments?

“The staff’s no-action relief does not adequately address these issues and merely kicks the can down the road. This inaction may be costly to investors and advantage some market participants over others. While a time-limited approach

Jay Clayton issued a press release explaining the commission’s ‘noaction relief’ for MiFID II: "Today's no-action relief was designed with input from a range of market participants to reduce confusion and operational difficulties that might arise in the transition to MiFID II's research provisions," Clayton said. "Staff's

five SEC commissioners, Kara M. Stein, accused the SEC staff of “kicking the can down the road” in a

That same day, SEC Chairman

letters take a measured approach in an area where the EU has mandated a change in the scope of accepted practice, and accommodate that change without substantially altering the U.S. regulatory approach. These steps should preserve investor access to research in the near term, during which the Commission can assess the need for any further action.

“Cooperation with European authorities, including the European Commission, has been instrumental to the SEC's ENERCOM360 M A G A Z I N E

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ENERCOM FOCUS

efforts, and I welcome the additional guidance the EC published today. We look forward to continued dialogue on this and other important issues."

RESEARCH HAS BECOME MORE COMPETITIVE, BUT MAY NOT DELIVER BETTER OUTCOMES In the wake of MiFID’s implementation, research firms decided to take the financial burden of research onto themselves, primarily.

About 74% of firms of all size responded that they firm now pays for their own research.

Those with fewer assets under management reported passing the costs along to clients, or sharing costs equally with clients, at a greater rate than those with higher AUMs, but the

Today's no-action relief was designed with input from a range of market participants to reduce confusion and operational difficulties that might arise in the transition to MiFID II's research provisions...

trend is consistent across the board.

Larger firms in particular scaled back their reseach budgets as the cost of research impacts the bottom-line. Firms managing more than €250 billion in assets reported an average budget reduction of 11.1% in 2019 while firms with less than €1 billion under management reported a 0.8% increase in research budgets.

Anecdotally as budgets for research shrink, so too have the number of sellside analysts.

When asked their opinion on the number

appeared to be strong in 2019 with 87%

Analysts are, in turn, working hard to prove

of sellside analyst positions since the

saying the amount of research they source

their research is generating enough revenue to

implementation of MiFID II, 54% of European

in-house either stayed the same or increased

support their jobs.

asset managers said they believed the number

While the survey indicates that most European

of sellside analysts decreased. While both the

asset managers believe the research space

buyside and sellside indicated this translated

is more competitive following MiFID II, the

into fewer research notes, particularly for small-

majority (59%) also believed that the regulation

and mid-cap equities, the majority of buyside

did not translate into better outcomes for end-

respondents said the overall quality of research

investors.

especially pronounced among small- and mid-

THE CHANGING FACE OF RESEARCH

stocks are seeing lower liquidity and greater

following the implementation of MiFID II. Of the research providers, investment banks

In response to changes brought on by MiFID

appear to be the hardest hit. Results from the

II, the research industry is changing the way

CFA survey indicated that 57% of respondents

it works. Investment banks, which were hit

were sourcing less research from investment

especially hard asset managers reducing

banks compared to 38% receiving relatively

budgets, are exploring subscription fees for

less research from “other third-parties,” and

written research while charging a premium for

27% receiving less research from independent

access to analysts.

was unchanged. Most sellside respondents felt the quality of research declined in the year

research providers. In-house research

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ENERCOM360 M A G A Z I N E

The reduced flow of information back and forth between the buyside and sellside is also making it more difficult for the market to come to a consensus on different stocks. This is cap stocks. Without quality coverage, those volatility. The investor relations teams of smalland mid-cap companies will need to work harder to distribute their message on their own in order to avoid mispricing.

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

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ENERCOM ANALYSIS

ESG and the Oil and Gas Industry

A

Corporate Social Responsibility Report (CSR) is a document that summarizes a company’s self-regulation strategy that is designed to guide the organization’s

actions and activities in pursuing a sustainable financial return for shareholders, as well as a positive impact on the environment, consumers, employees and communities.

ENERCOM HAS CONSISTENTLY FOUND THAT: • Growing public expectations around corporate responsibility is increasing the pressure on institutional investors to invest in sustainable businesses. Moving forward, a CSR strategy will become a requirement for access to lowcost capital for the oil and gas industry.

• More and more companies in the oil and gas industry are

Contained within the CSR report are Environmental, Social and Governance (ESG) benchmarks and indicators used

quickly developing

Moving forward, a CSR strategy will become a requirement for access to low-cost capital for the oil and gas industry.

to quantify and track a company’s progress and improvements in sustainability and are the metrics used by a growing number of investors to help determine the longer-term financial performance and health of a company.

There is growing evidence to support the theory that companies that adopt an effective ESG strategy can gain many competitive advantages, including a more stable investor base, lower cost of capital, broader access to financing, improved employee engagement and deeper customer loyalty. These benefits are vital to companies seeking to strengthen their corporate performance, maximize shareholder returns and maintain their social license to operate.

Over the last year, EnerCom has met with oil and gas executives and the investment community to talk about Corporate Social Responsibility and ESG.

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ENERCOM360 M A G A Z I N E

a Corporate Social Responsibility strategy and ESG benchmarks to proactively address the rapidly growing number of institutional

investors that are employing varying degrees of ESG evaluation in their investment decision.

• Although Environmental metrics, like sustainability programs focused on water usage and volatile organic compounds (VOC), methane and CO2 emissions reductions, have been a primary focus for investors in oil and gas, the first half of 2020 has heightened investor attention on the importance of the Governance and Social aspects of ESG, such as executive compensation, Board of Directors diversity and workforce recruitment of underrepresented populations.

• Investor Relations Officers hate filling out multiple, different, ESG forms.

‘‘CANCEL CULTURE’’ IN THE ENERGY INDUSTRY Based on these findings, EnerCom is encouraging

For individual companies, ESG strategies to consider

the oil and gas industry take a more proactive

for 2020 should focus on addressing issues like

strategy regarding evaluating and communicating

management accountability, compensation and

ESG risks and opportunities, as the failure to do so

diversity; flaring; water use and disposal; methane

could allow the growing ESG movement to rapidly

and VOC emissions; carbon capture; and clean fuel

devolve into a type of “Cancel Culture” effort against

advancement and investment.

the industry.

Lastly, whether your company is just starting to

This collective industry strategy will require a louder,

develop a CSR strategy, or farther down the path

and more harmonious, industry choir of voices

of ESG, companies need to have a comprehensive

addressing the reality that the current and future

CSR communications plan to report their ESG

development, production and use of hydrocarbons

initiatives and progress that is genuine and honest;

is necessary to meet the food, shelter, mobility and

intentional; consistent; and broadly messaged

welfare needs of a safe, healthy, growing, modern

through traditional and digital channels. As an

world.

ESG strategy note, it’s important to recognize that,

Toward this effort, the global oil and gas industry can do more to govern our companies more equitably; build a more diverse workforce; make energy production cleaner; resource utilization more sustainable; and minimize the impacts of CO2 and air emissions while maximizing the social benefit of the production and use of hydrocarbons.

in general, ESG rating systems tend to reward companies with more disclosures, so a robust communication plan can improve rating agency scores and can also help create a standardized reporting structure that can help minimize the need to fill out the variety of ESG forms – which the IR team will appreciate.

About the Author – Dan Genovese is a Director at the energy consulting firm EnerCom, Inc. with experience in corporate strategy, investor relations, ESG, government relations and policy. Mr. Genovese has worked in capital markets and has experience in upstream production and downstream energy demand.

Contact: dgenovese@enercominc.com

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

ENERCOM360 M A G A Z I N E

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Building a premier investor conference doesn't happen overnight.

The Oil & Gas Conference in August has become a highly anticipated event for many in the energy investment community. Our presenters and attendees routinely tell us that the event is among their “must attends� even as many dialed back on the number of conferences they attend each year. The conference placement just after second quarter earnings offers a unique opportunity to bring companies together with capital just as presenters are reporting. We're told the fact that it helps get many out of Texas in the summer doesn’t hurt either.

10 ENERCOM360 M A G A Z I N E

B

uilding a premier energy investment conference doesn’t happen overnight.

In the last 25 years, the conference has evolved from eight presenters using 35-millimeter slides to showcase

themselves to less than one hundred attendees into a global event that hosts some of the largest energy producers in the world presenting live to a global audience. And while the event today is a well-established opportunity for companies to set the stage for their performance in the second half of the year, The Oil & Gas Conference’s© first iteration had a decidedly different feel.

“I thought I killed EnerCom,” the company’s founder Greg Barnett said of the first conference. “It sucked at the time.

I had some good companies, but no one was there.”

Barnett said he reached out to presenters to get their input and was surprised to hear they were pleased with

The mindset of EnerCom has always been that we are at the crossroads of Wall Street and the energy industry...

Blanca Andrus

how the event went and encouraged him to continue putting on the event.

“I spoke with Joe Foster of Newfield Exploration after the conference and asked his opinion. He said it was great,” explained Barnett. “He met new investors and analysts

Greg & Tommye Barnett, the founders

and encouraged me to keep going and not to quit.

Newfield was a client, and he reminded me that NFX had drilled more than 20 dry holes when the company started.

‘Failure is short term. Keep working hard and I know you’ll be successful,’ he told me.”

BUILDING A CONFERENCE TO SERVE CLIENTS Prior to the first conference, clients told Barnett that there were not enough conferences where they could present their story. In the process of raising client visibility, Barnett decided EnerCom would put on its own event.

“When I founded EnerCom we were service-oriented toward the client. I know it sounds obvious, but over the years I’ve watched a lot of consultants want to do the work to bring ENERCOM360 M A G A Z I N E 11

SPECIAL EDITION attention to themselves rather than the client,” said Barnett.

The format and focus on bringing together quality companies with investors attracted more people each year. “We kept setting new records even in down markets,” said Barnett. “I think that speaks to the quality of the product.”

ENERCOM EVOLVES WITH THE CONFERENCE “Twenty-five years may not be a long time, geologically, but it is a long time for a business,” said Barnett. In that time many of the things that made the conference valuable in the first year remain the same. Presenters are given a platform to share their value and members of capital markets have the chance to get a beat on what is to come in the back half of the year.

Much of what was valuable to the audience 25 years ago has remained unchanged, too. “Everyone is still focused on how they will generate a return for their investors,” explained Barnett. Whether it’s by being the low-cost producer, the best operator, producing the best rock, or some combination of

Technology played a significant role in shaping the event itself, too. “I believe we were the first energy conference to provide webcasts of the presentations,” said Barnett. The conference continues to implement the latest technology, not just showcase it. For its 25th anniversary, EnerCom built off the foundations of years of webcasting and took the conference to a fully digital format for the first time.

“If 2020 has shown us anything, it’s that we need to be nimble and evolve to remain the top energy investor conference,”

I believe we were the first energy conference to provide webcasts of the presentations. Greg Barnett

said EnerCom Chairman and CFO Blanca Andrus.

“While the spikes in Covid-19 cases in late June drove our decision to make the 2020 conference virtual, the skill set required to provide an exception digital conference will continue to allow EnerCom to extend the global reach of the those and other factors, the goal continues to be generating the strongest return for each dollar spent.

conference.

“The mindset of EnerCom has always been that we are

Even as the goal of generating strong returns remains the

at the crossroads of Wall Street and the energy industry,”

same, the tools available to companies to execute have

continued Andrus. “The Oil and Gas Conference creates

changed. Companies presenting continued bringing new

an opportunity for companies to present to investors they

ideas to the table every year. Over the last 25 years, The Oil

may not come across at the broker-sponsored conferences,

& Gas Conference proved to be a forum for the latest trends

but as importantly, they will gain exposure to investors that

in the industry. Presenters shared with audiences diagonal

are unique to EnerCom’s conferences as well as sellside

drilling, which eventually moved to horizontal drilling, the

analysts and vendors providing the new technologies which

implementation of 3D seismic, the buildout of hedge books,

help further drive operational efficiency. For the buyside, the

new plays, and many other revelations.

conference offers companies that may be new to investors,

©

and our sellside attendees are able to meet with multiple 12 ENERCOM360 M A G A Z I N E

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SPECIAL EDITION

ENERCOM’S CONFERENCE PROVIDES A VENUE FOR GOOD IDEAS TO MEET WITH CAPITAL.

companies under coverage and hear what other issues matter to investors in Q&A breakout sessions.”

From humble beginnings with a handful of companies and attendees to a premier energy investment conference attracting thousands in the industry from around the globe, The Oil & Gas Conference® has grown substantially over the last twenty-five years. Much like the companies that it hosts, however, the message remains the same: EnerCom’s conference provides a venue for good ideas to meet with capital.

14 ENERCOM360 M A G A Z I N E

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®

OIL & GAS 360 INTERVIEW WITH CHRISTOPHER HILL, FORMER U.S. AMBASSADOR TO IRAQ

The Unique Problem of Iran Conflict in the Middle East increases when the U.S. killed major general Qasem Soleimani early this year. Christopher Hill explains what this means for the oil and gas industry.

R

CHRISTOPHER HILL, FORMER U.S. AMBASSADOR TO IRAQ

ising tension between the United

produced 2.1 MMBOEPD, according to secondary

States and Iran caused concern

sources reported in OPEC’s monthly report.

for oil supply and transportation when the U.S. killed Iranian major

Along with concerns that kinetic conflict might stop

general Qasem Soleimani on

production at the wellhead, Iran has frequently

January 3, 2020 in a drone strike

threatened to prevent transportation of crude through

in Iraq. In retaliation, Iran launched numerous ballistic

the Strait of Hormuz, a narrow strait approximately a fifth

missiles at targets inside Iraq including the Ain al-Assad

of the world’s oil shipments pass through.

airbase which houses U.S. troops. Protests continue in Baghdad this week and more rocket strikes have been reported in the city’s Green Zone, the heavily fortified area of the capital that houses the U.S. Embassy.

With a significant portion of global production and such an essential logistics chokepoint all being threatened by the possibility of a military conflict, Iran continues to be a major focal point for global oil markets and for U.S. policy.

“I think there’s an interest in the Trump administration to calm this down,” explained Ambassador Christopher Hill, former U.S. Ambassador to Iraq, and Chief Global Advisor and Professor of the Practice in Diplomacy at the University of Denver. “Iran has shown some restraint in that they have not killed any U.S. soldiers,” continued Hill, referencing that troops at al-Assad were warned in advance of the missile strike, “the president – any president – would have to go with Iran if we saw a successful attack against U.S. troops.”

Conflict in the Middle East is complicated and runs

Brent and WTI crude oil prices. Yellow line marks Jan. 3, 2020, the date Qasem Soleimani was killed by a U.S. drone strike in Iraq

deep. The assassination of Soleimani was a strain on the delicate balance in the region. “It’s important to understand that this was not some stateless guy living

The initial escalation of force sent oil prices to multimonth highs of $68.91 and $63.27 for Brent and WTI

16 ENERCOM360 M A G A Z I N E

in a cave. Soleimani was a general in the Iranian military and had quite a large following in Iran,” said Hill.

crude grades, respectively, on January 6, 2020. A hot

“In the view of many in the American military, Soleimani

conflict in the Middle East could quickly disrupt oil

was responsible for the death of thousands of U.S.

production in some of the largest producing countries

soldiers through his actions backing Shia militias in

in the world. Iraq accounted for 4.6 MMBOPD of crude

Iraq,” continued Hill. “I was in Iraq in June 2009 and an

production in the fourth quarter of 2019 while Iran

Iranian-funded Shia militia tried to kill me. Fortunately,

the bomb went off in front of my vehicle, not under it.

Despite Iraq electing a Shia government, and the strength of the Shia

So, there is a feeling that something needed to be done,

militias in the country, the Iraqi electorate is becoming increasingly

but back in Iran, he's somewhat a hero. After all, he was

fatigued with foreign powers in the country said Hill. “There has been

a key player in organizing Shia groups to fight against

a great deal of negative feelings toward Iran in Iraq, even though it is a

ISIS."

majority Shia state,” he said. “They have seen Iran excessively interfere

Adding to the geopolitical dimensions of Soleimani’s position as a high-profile general in Iran are sectarian issues at play throughout the Middle East. Once

in their country, but with the killing of Soleimani you are seeing a shift in sentiment that maybe the Americans should leave with the Iranians.”

Stability and participation could offer a path forward.

Saddam Hussein’s

Uncertainty creates volatility in any market,

Sunni government was removed from power in Iraq, a Shia-led government was elected, making it something of a political pariah among its Sunni-led neighbors.

The old Chinese proverb ‘the enemy of my enemy is my friend’ is more like ‘the enemy of my enemy is still my enemy’ in the Middle East.

and with tensions ratcheting up in the Middle East oil prices could see fluctuations.

Following the drone strike that killed Soleimani and Iran’s response, oil prices have settled back below $65 and $60 dollars per barrel for Brent and WTI respectively. Both the U.S. and Iran appear to be acting careful before

“Other countries in the

further escalating into what could become a

region are concerned that

hot conflict.

their own Shia populations will become emboldened if the Shia government in Iraq is successful, so they have never fully supported Iraq,” said Hill. For several reasons including the lack of support from its neighbors, the central government in Iraq has been weak, leaving room for Shia militias, many of which Soleimani was responsible for organizing and funding, to take a more

“Hope is not a good basis for policy, but we should hope that the Iraqis will name a new government, that Iraq’s Sunni neighbors will encourage Iraq’s Sunni population to be full participants, and that a new government will be able to stabilize things and get the economy going.

Let’s hope too that a new Iraqi government will not be pressing for the withdrawal of U.S. troops. We need some troops there to assist with the

prominent role in politics in the country.

problem of ISIS,” said Hill.

“Iran is tagged a terrorist state, and appropriately so -

How the U.S. and Iran will face escalating or deescalating tensions

they support Shia groups such as Hezbollah - but it’s important to understand that the terrorism of al-Qaeda and ISIS is of the Sunni variety,” explained Hill. “Iran and

from here remains to be seen, but with so much of global production originating in the region, and major transportation lanes at risk, oil markets will continue to watch events in the Middle East with interest.

these Shia groups in many ways led the fight against ISIS. The old Chinese proverb ‘the enemy of my enemy is my friend’ is more like ‘the enemy of my enemy is still my enemy’ in the Middle East.”

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

ENERCOM360 M A G A Z I N E 17

TECH CORNER: TECHNOLOGY FOR OIL AND GAS

The Latest Innovations in Oil and Gas

T

he keys for the oil and gas industry to emerge from 2020 with the ability to

profitably compete in a lowerfor-longer commodity price environment must include the adoption of technology that allows producers to get more resource from each well for less capital, extend the well life, dramatically improve the efficiency of operations to lower cost, and improve corporate sustainability for greater access to capital and retain a license to operate.

The process of moving from just surviving to thriving in 2021 and beyond will require good management teams to accelerate the adoption of proven, emerging technologies to make their best resources even better.

According to recently published quote from Chris Dinkler, Senior

As the scramble to respond to COVID-19 and the precipitous drop in prices continues, one thing is certain: it has created even greater urgency—and opportunity—for efficiency and innovation in how we operate...

CHRIS DINKLER Senior Vice President and General Manager of Business Automation at Enverus

Vice President and General Manager of Business Automation at Enverus, “As the scramble to respond to COVID-19 and the precipitous drop in prices continues, one thing is certain: it has created even greater urgency—and opportunity—for efficiency and innovation in how we operate,” he said. “Some will wait.

Others will wisely act and embrace change.”

EnerCom’s The Oil & Gas Conference features several innovative, emerging companies

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offering the latest in energy technologies and innovation during the Energy Innovation Capital Accelerator Session. The Session will feature management team presentations from high-growth companies offering proven solutions to cut costs, improve production efficiencies and enhance ESG performance. All Session companies are available for private 1x1 meetings during the conference.

ENERGY INNOVATION CAPITAL ACCELERATOR SESSION PRESENTING COMPANIES INCLUDE:

Ajax Analytics (Environmental Air Monitoring) - Ajax Analytics is an environmental software company of unbiased scientists providing air quality monitoring, including methane and VOC. Ajax provides a complete solution suite of hardware, sensors, monitoring, analysis and reporting. An experienced service provider, Ajax has been providing impactful environmental information to enable better conversations around complex environmental challenges with dense air monitoring networks, advanced analytics, understandable benchmarking and optional public facing presentations.

SCFCan, Inc. (Supercritical Fluid Extraction and Recovery System) – The world’s resources are too precious to be used once and then thrown away. SCFCan recovers valuable components from waste streams using its game changing supercritical fluid extraction process. SCFCan‘s distinct advancement is its capacity to process waste in a fully continuous manner which dramatically reduces recovery costs. Lower costs lead to a broader range of waste streams that can be viably treated. SCFCan’s technology is ready for commercial application. For oil and gas drilling waste, the technology offers reductions in net lubricant oil consumption, recovered lubricant at less than virgin prices, and a 75% reduction in life cycle greenhouse gas emissions.

Ubiterra (Real-Time, 3D Geosteering Software) – Stay in the Pay with Ubiterra’s ZoneVu cloud-based software for horizontal drilling. Connecting seamlessly to the rig during drilling, ZoneVu offers real-time data for better field interpretations and decisions through the fully-integrated, real-time 3D view of the subsurface for live geosteering while drilling. Geosteering, geology and data management all upload automatically to a single cloudbased secure storehouse with remote back-up.

ResFrac Corporation – (Integrated Hydraulic Fracturing and Reservoir Simulator) - Optimize the decisions that drive economic performance: cluster spacing, well spacing, fluid and proppant volume, landing depth, parent/child mitigation, perforation design, refracs, and much more. ResFrac’s flagship product is a fully integrated hydraulic fracturing and

reservoir simulator that has the capacity to model the full well life cycle from treatment through production. The ResFrac simulator has been successfully applied to optimize development decisions in every American unconventional basin, including Montney, Permian, Bakken, Eagle Ford, Utica, Marcellus, Haynesville, and Vaca Muerta. ResFrac offer licenses for the use of the software and also provides professional consulting services based on the technology and company expertise.

Locus Bio-Energy Solutions™ (Remediation & EOR Treatment Programs) – Locus Bio-Energy is an oil innovation company bringing award-winning green solutions to the industry with proven results. Using patented production technology, the company developed the first environmentally friendly, customized biosurfactant treatments that outperform traditional solutions in safely improving oil production and reducing the need for new drilling. Each cost-effective treatment is customized to individual wells for maximum performance, requires little to no shut-in and offers benefits previously only achievable by combining multiple solutions.

Data Gumbo (Oil and Gas and Industrial Blockchain Network) – Data Gumbo is a massively interconnected industrial network for companies, customers, suppliers and vendors. The network, called GumboNet™ integrates specific transactional data with automated smart contracts powered by blockchain technology.

Cleargistix (Digital Field Ticketing Solution) – Tired of dealing with paper service tickets and other spreadsheets and paper forms? Want to save costs? Get paid faster?

Operate more efficiently? Accelerate the availability of management information? Cleargistix is helping to re-engineer the administrative business processes in the oilfield and we are starting this journey by attacking the number one enemy of efficiency and effectiveness in the oilfield - paper tickets and forms. Cleargistix cloud-based Digital Field Ticketing Solution allows oilfield companies to digitally capture a wide variety of information in the field, including service tickets, JSAs, inspection documents, payroll forms, and expense reports, and digitally route that information through any type of workflow, saving costs, shortening cash cycles, improving efficiencies and providing real-time business intelligence.

We will probably see the tools of emerging technology as a significant catalyst for the oil and gas industry’s recovery over the next few years, lead by the companies that utilize these new tools to lower cost, increase recover and establish a sustainable business model.

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

ENERCOM360 M A G A Z I N E 19

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Expanding what’s possible for solving risk challenges – from the simple to the previously unsolvable.

CAC Specialty is an employee owned risk solutions company of seasoned and proactive industry leaders, operating as a nimble and collaborative partner who puts you and your business first. With a knowledge-driven approach informed by industry data and decades of honed instinct, CAC brings an innovative vision to insurance broking and merchant banking by providing solutions to solve your risk challenges. Backed by a $40B AUM asset manager and not constrained by traditional risk transfer thinking, CAC can expand the range of risk transfer through access to private debt and alternative pools of risk capital.

BRAD ELLIOTT

720-630-3119 Brad.Elliott@cacspecialty.com

We’re here to help. Let’s connect.

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