Imagine for a moment the world where oil prices are low and no one knows how long they will stay low. Imagine the world where the capital that fuels the business dries up. Imagine the world in chaos where survival depends on your ability to drive a return that keeps your cash flows positive and keeps the bankers away from your door.
Imagine that your actions don’t only make you survive but catapult your company into one of the top companies in the industry
Each person has an ability to create greatness, to drive their companies to greatness and themselves to heights that are unimaginable. The choice is yours.
The choice to make often is not obvious and often requires bravery and commitment. It requires an ability to see beyond the present and to imagine a different world.
An analogy that is often used is that “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”. The obvious answer is not always the simplest, easiest or the best answer.
Let’s talk about the obvious answers for producers.
In order to drive profitability, they must reduce their costs because without lower costs they cannot drive positive cash flow and additional drilling.
What is the obvious answer to this equation?
Producers should ask their suppliers for lower costs because this will make them more profitable and thus they will be able to grow and prosper.
What is not obvious is that by doing this we make our suppliers weaker. The industry is dependent on suppliers to innovate and to supply the goods and services required to find the oil or gas. If we make suppliers weaker, we as an industry become weaker.
So what is the right answer? We need to strengthen our industry not just the producers. This means we need to jointly find a way to overcome our costs.
This problem is much like trade between countries. It was held by nationalists that we should protect our industries even though they are not competitive to keep jobs in Canada. We fought for a country not to open up our borders because we were afraid that we would lose jobs and we would become a wasteland. In 1988 we agreed to a free trade deal with the United States. We suffered through the structural changes but when we look back now, we divest of industries that were not competitive and succeed in industries where we had a competitive advantage. Jobs actually increased and our economy strengthened. This took courage, foresight and a willingness to work together.
Our industry and our producers need to think like this. Beating suppliers into bankruptcy in order for producers to succeed only creates negative consequences when prices turn. The current crisis calls for extreme measures, measures that should not be focusing on driving suppliers out of business but rather build strong partnerships and strategic relationships.
It is my belief that working together and focusing on the real issues will drive a long term sustained industry and one that could drive a competitive advantage over other countries and other producing regions.
Our cost structures are high and the environment that we work in is one of the harshest and most difficult to work in. If we are to be successful, we need to think about breaking down structural barriers that create costs and put our industry at a disadvantage. We need to think win-win to remove frictional costs and support innovation. All hands on deck are required if we are succeeding. I’m not implying it is easy but “Greatness begins beyond your comfort zone” Robin Sharma.
Our industry is a digital industry working individually company by company. Imagine the world where the information and knowledge we have is shared in a way that eliminates all these costs and finds better ways to exploit our resources. Imagine the world where in order to succeed someone else does not have to fail.
Think outside the box. Imagine.
CEO Founder – Innovation Centric Group
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