‘Flowing Well’ in an Economic Oil Downturn
‘Flowing Well’ in an Economic Oil Downturn
By Michele Day
With oil prices dropping since June due to oversupply outweighing demand, enthusiasm, among landmen, seems to be drying up. Uncertainty, anxiety, and fear appear to dominate most conversations. The topic of dropping oil prices have become the focal point, and conversations tend to go something like this: “We’ve seen bad days like this before.” “This is just like the downturn in the ‘80s.” “We are in for a long declining oil economy.” With these types of conversations, it is easy for landmen to become uncertain, negative, paralyzed, and even afraid for the future. Maintaining a positive, goal oriented attitude for landmen is like a “flowing well” with enough high pressure from a surge of positive reports and historic business models utilizing unique strategies to spiral companies up during an economic downturn.
A “Flowing Well” defined by Schlumberger’s Oil Field Glossary is “a well in which the formation pressure is sufficient to produce oil at a commercial rate without requiring a pump. Most reservoirs are initially at pressures high enough to allow a well to flow naturally.” During economic lows, worry and negativity slows the “flowing well” of landmen creating a potential decline in health problems and a weakened business focus.
Worrying about the future economy could lead to potential health hazards for landmen. According to WebMD, “chronic worrying affects your daily life so much that it interferes with your appetite, lifestyle habits, relationships, sleep, and job performance. Many people who worry excessively are so anxiety-ridden that they seek relief in harmful lifestyle habits such as overeating, cigarette smoking, or using alcohol and drugs.”
The National Institutes of Health (NIH) reports, “Chronic emotional stress can affect virtually every organ system in negative ways. Prolonged stress has been shown to cause numerous health problems, including:
• Weakening of the immune system, making you more likely to have colds or other infections
• High blood pressure
• Upset stomach, ulcers and acid reflux
• Anxiety
• Increased rapid heartbeat and heart palpitations
• Panic attacks
• Cardio-vascular problems
• Increase in blood sugar levels
• Irritable bowel problems
• Backaches
• Tension headaches or migraines
• Sleep problems
• Chronic fatigue syndrome
• Respiratory problems and heavy breathing
• Worsening of skin conditions, such as eczema
Although it is good to stay up to date on oil prices and the economic future, keep the negative reports at a minimum to maintain positive health and business. “Psychology Today” showed studies “we care more about the threat of bad things than we do about the prospect of good things. Our negative brain tripwires are far more sensitive than our positive triggers. We tend to get more fearful than happy. And each time we experience fear we turn on our stress hormones. Media studies show that bad news far outweighs good news by as much as seventeen negative news reports for every one good news report. Why? The answer may lie in the work of evolutionary psychologists and neuroscientists. Humans seek out news of dramatic, negative events.”
Fixating on dropping oil prices can increase stress hormones in landmen. Daily oil price reports vary day to day and can put landmen on an emotional rollercoaster if not grounded. It is important to gather enough news, not oversaturate with negative news, and then landmen can work on strategies for business and focus on the positive. Forecasts for future oil prices vary in a Yahoo Finance report: “Most forecasters today are predicting oil prices to remain more or less where they are, which is around $52 per barrel. The recent volatility in oil markets, however, has generated an unusually wide variance among outlier forecasters, such as Economist Gary Shilling, who argues that most producers will continue pumping oil even at super low prices, causing a huge supply glut that will drive prices down to $20 or even $10 per barrel. Famed oilman T. Boone Pickens, sees oil prices returning to typical levels of $90-100 within 12 to 18 months. OPEC Secretary General Abdell El-Badr thinks prices could soar to $200 per barrel, as many oil-producing nations fail to build new energy infrastructure, thus hampering supply.”
The unclear current economic status is not that different than other volatile seasons faced by businessmen and entrepreneurs. American Businessman Executive Jeffrey R. Immelt, CEO of GE who said, “I have learned that nothing is certain except for the need to have strong risk management, a lot of cash, the wiliness to invest even when the future is unclear, and great people.”
Looking to model others who have succeeded during an economic downturn can keep a landman’s momentum and focus on business energized. “Fortune 500” spotlighted companies that succeeded despite a struggling economy: “During the recession, Kraft created Miracle Whip in the early 1930s in response to lagging sales of Mayonnaise. It premiered nationwide at the 1933 World’s Fair and gained popularity thanks to an intense advertising campaign and even a two hour radio show devoted to the product (a lesson that advertising in a recession pays off). By the end of the decade, Miracle Whip was selling better than all other brands of Mayo.”
Fortune 500 highlighted “Steve Jobs and Co.as they introduced the iPod less than two months after the Sept. 11 attacks and the economic downturn that followed. The product was an expensive luxury, and yet it sold modestly. As the economy picked up, and the design changed from year to year, the iPod became a staple for music listeners everywhere. Well over 100 million iPods have been sold to date.”
Another company, “Henry Heinz invented Ketchup in the early 1870s by adapting an old Chinese recipe (pickled fish sauce). The company didn’t release the product until the tail end of the recession in 1876. It has since become the dominant condiment in this country.”
Landmen can maintain motivation for their internal “flowing well” by keeping the focus on positive reports, innovative companies, and people who have turned a seemingly tragedy into a triumph. To quote the prominent oilman, geophysicist and philanthropist Everett DeGolyer, “Prospecting for oil is a dynamic art…The greatest single element in all prospecting, past, present, and future, is the man willing to take a chance.”