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People and Data: Two Important Assets

Over the past couple of weeks, I have come in contact far too often with the starkest impact of low commodity prices on our industry. Whether the elimination of positions in a company is called a layoff, a reduction-in-force, a redundancy, or a strategic trimming, it's still the same. People lose their jobs. During my career, I've been on both the giving and receiving end of this situation and I can assure you that it is not pleasant on either side of the desk.

The price of oil and gas is set on the global market and we all react to the cash flow implications of low commodity prices. In the operating companies, first capital budgets are trimmed, then projects delayed or canceled, and finally all that is left for trimming is personnel. In the service companies, the reality hits much sooner as they are quickly impacted by the operators reduction in capital budgets and the resulting reduction in the rig count.

Our industry is known for technological innovation; fiber in wellbores for monitoring, subsalt seismic imaging, nanotracers in fracking fluids. Unfortunately, we are also an inefficient industry. With the advent of the shale revolution, that's changing, but the base cost of operating has a new hard deck and companies are facing very real challenges. The most common metric of efficiency for a long time has been cost per barrel. The numerator in this metric (cost) gets most of the attention. We've seen the cost of wells in the shale plays significantly reduced over a relatively short period of time. Thankfully, some companies are now also focusing on the denominator (barrels). Whether I achieve my lifting cost goals by cutting the cost in half or by doubling the production, I end up with the same result when measured in $/BOE. How can we get more oil with fewer wells? Once again, the answer lies in taking specific actions, monitoring the results, tying those results back to the actions, and analyzing what happened. After a while, lessons are learned and the actions can be changed or prioritized to gain more favorable results. Of course, this means that the data is in a state that it can be trusted: that it's current, correct, complete and consistent. And this means the decision makers realize the efforts and people that are now being viewed as a purely discretionary cost are in reality a cost saver once the total cost of ownership is taken into account. We don't drill a well or bid in a license round without due diligence and running the economics. The same should apply to how the data and information are handled.

Every decision the business makes is based on the data and information at its disposal. If data and information projects and support are cut as discretionary overhead, those business decisions may get very expensive indeed.

And also remember, when you meet that former colleague in the market, they are the same person that they were before the redundancy. They were a victim of global politics, economics, and the resulting corporate decisions. Most importantly, they deserve to be treated with the same dignity and respect as they were when oil was over $100 a barrel.

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