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The opportunity and imagination challenge

senior partner, Gaffney, Cline & Associates

The first 20% of the full text of this article appears below.

Whatever the oil and gas prices, whatever the technical merits, however the current economic situation may look, it is, in the end, our imagination and our ability to challenge conventional wisdom that often, if not always, provides the next opportunity.

Gaffney

One frequently hears that there are few good deals for exploration or development, yet in the past decade almost half the world has opened up to our industry. We blame host country fiscal terms or so-called played-out basins but rarely face the fact that we may have become complacent; we have lost many of the deal-creators and their imagination and we now wait to be presented with opportunities instead of getting down to the job of developing them ourselves. That the opportunities are there is without question.

Having often allowed exploration costs to get out of line with reality and with managements and analysts less than enthusiastic about geology (or risk generally!), such impressions are perhaps not surprising.

In the technology arena, while technology advances around us with increasing speed, it is the application of available technology which really drives us forward in the short and medium term. Many of the technological advances that we need are in application rather than the development of a new technology itself.

The challenge to turn this situation around involves bringing the exploration cost base under control, encouraging and rewarding imagination, and convincing our management and perhaps the market. We live in an industry that cycles: The exploration/imagination cycle has been out of fashion (perhaps for good reason!), but it will come back and we should encourage it, take some risks ourselves, and prepare for the next opportunity.

	Is the deal flow down?

 
So is the good deal flow problem a myth or a reality? . . . [Full Text of this Article]