Virtual Operating: The New Oil Entrepreneur
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It does not necessarily reflect the views of Rigzone.
One survey by GoBankingRates found that 29 percent of Americans believe they’ll become a millionaire. With a little bit of know-how, a good enough idea and a little luck, any of us could end up being the next Mark Zuckerberg or Elon Musk, right?
And while there are more millionaires than ever before in the United States, they make up less than 10 percent of the population, and about half of the nation’s millionaires are retirees… not millennial tech entrepreneurs.
For many people, what happens in the oil patch is mythical.
And while everyone is busy talking about Exxon, Chevron or the acquisition of Anadarko by Occidental, there’s a much smaller subset of oil and gas companies known as independent operators.
And by coupling ingenuity and technology, these tiny operators have identified an opportunity by morphing into an altogether new type of oil entrepreneur.
Enter: John Graham
John Graham is a virtual operator.
John is a second-generation petroleum engineer, and he has nearly 40 years of experience in the petroleum industry under his belt. He founded Select Exploration Group alongside his former Devon Energy colleague Paul Baclawski. And they’re running their small oil and gas company as virtual operators.
After opting for early retirement, John and Paul decided to strike out on their own.
The two did some research, and then it was time to start buying up wells. And as they got started, they had some decisions to make.
John says, “We see a lot of our friends go the private equity route to get started. If you get backed by a private equity company, they want you to be structured with an office and all the overhead that comes with it.”
According to John, this is bad news.
“We talk to a lot of companies about acquiring some of their existing oil and gas properties that are uneconomic are marginally economic. And with these companies it’s their general administrative expense that’s eating them alive. They have office and staff overhead – what’s more, is they’re leasing prime office space which gets expensive. There's a lot of oil and gas properties that are profitable if you don't have that overhead.”
Instead of going that route, John and Paul looked to Houston’s Harbinger Resources. Another small petroleum startup, their partnership also allowed them to keep operations lean.
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