We all love the "Blame" game, but who really stalled Buccaneer Energy's Endeavour.
Recently I had the opportunity to sit with one of the guys that Archer let go and I got to hear the story of how the Endeavour got stuck. It seems that Archer was hired because they knew a lot about how to refurbish rigs, well maybe someone over there does but not the crew that worked on this one.
When he was hired he was told the rig would be moving into the Inlet in about three weeks with just a couple of remaining items on board to "adjust" when it got to the Cook Inlet. Now my guy has been working on equipment for a very long time, but mostly on platforms, so he knows when something is done and when it isn't. He was telling me about the day that the rig arrived and he was just walking around doing a mental checklist of things to be done and things to be checked. Well let's just say that by the end of the day even he knew it wasn't the short list he had been told about.
It seemed the deeper they got into it the more stuff they uncovered and it just got worse and worse. Of course every time he brought up that this was supposed to have been done already he was told just to soldier on and not to bring that up to the company man. It seemed the Archer boys were all about covering up. Now eventually that catches up with you, you know someone has to pay the bill and the rig has to go out and drill. Eventually even the Pirates were going to notice.
Now that the rig has been moved on site and it looks like things are going to start happening I decided to look into why the Pirates keep getting tripped up by deadlines and extensions while constantly saying something was just about to happen. I get the rig delay but it seems they constantly make this mistake. I know its Alaska and we expect everything to take a long time, so why did Buccaneer think they were going to be different?
I suppose its all relative, but I decided to look into some of the past announcements from the company and see just who is driving this. Nothing new there of course, we see our Chief Pirate in Charge (Curtis Burton) and his first mate Dean Gallegos but neither is really an Alaska guy and while Burton may be great at making deals he certainly doesn't appear to be a land man.
So what has been holding these guys up? They entered the Inlet in 2010 and got first production on line in 2012, not terrible but it doesn't match the timeline. Well, who is in charge of watching over that part of the business (timing)? I did find a bunch of video done about the company, pretty good stuff, and I find that that's not Curtis, that's this Jim Watt fellow, President of Buccaneer Alaska. A veteran according to him, so certainly he would have warned Curtis and Dean that everything moves slowly around here and even the very best plans experience delays. Then I came across some old video from the World Energy guys featuring Jim. And there he is in all his glory telling the reporter about the difficulties and the reputation Alaska has. He says things have changed and that they are going to drill… in 2010?
http://www.youtube.com/watch?v=fbwoDs5lmfg Don't take my word for it, watch the video.
Sometimes you can forgive a couple of "deal" guys for getting the numbers wrong (If they are close) or using the "best guess" that they like, but Jim ought to know better. If he told the Buccaneers that he could do a deal with them in April and be drilling by the end of that year (2010) he would have needed a boatload of permits in his pockets. He says he has spent over 15 years of his career working up here, but what has he done. At one point in the 90s he developed the Alpine field. I would guess that had a little bigger budget and a whole lot more bodies were thrown at it, because since then most of what he has done is buy leases and trade leases. That is until the Buccaneer's came to the Inlet. The Pirates must have been salivating over the lease position and believing in his ability to deliver quick.
Jim doesn't stop there he tells us in the video that he brought with him all the guys that know how to get this done. He even suggests that there are stacked rigs he can get by snapping his fingers. I think after 15 years in the Inlet he would know very well that anything that's been stacked for any period of time is going to be pretty much useless.
Now don't get me wrong, I love the Buccaneer story and I have written about it numerous times. (especially like the name) I like the acreage position they have, I like the pluck they have shown in getting in early, buying a couple of rigs (I guess the stacked ones didn't work) and getting down to business at Kenai Loop. From my perspective they did a pretty good job, but I didn't set the expectations back in 2010 that they would be drilling that year. Trust me, up here nothing moves like that and he should have known it. So why tell management and others that they could do it?
Well I thought this was interesting so I began to dig a little deeper, made some calls and dug into some of the bios on the website. If you look at the staff he brought with him they are mostly geologists with one engineer thrown in there. Now that would have been a red flag to me and I'm not sure why the CPIC (Chief Pirate In Charge) didn't pick up on that. Although I am sure, that like he does in the video Jim would have told him that everyone would be available to work once the gas was located and all he needed was a GEO team. But that also meant he wasn't bringing anyone who could counter the story or might bring up that these deadlines might be hard to meet without production guys in the wings.
Now I see that Buccaneer has added a bunch of people to back fill these guys. I guess they don't want to wait anymore, or perhaps Curtis has realized that Jim will tell him anything he wants to hear and not what he needs to hear. I can only imagine what would have happened in my day if I kept telling my CEO that we were going to have something done by xxx date and he reported it to the market and we continuously missed the deadline. He'd have had our heads.
I know with the Jack-up rig the guy was telling me that as one of the workers it was blatantly obvious that Archer hadn't done what they were supposed to do in Singapore and that now that company consultant was gone and Rike was directly working on this, the shit was hitting the fan every day. When they would tell him, just 10 more days he would get hotter and hotter. Once even saying this is the longest 10 days I have ever seen and it's becoming Ground Hog day around here.
Perhaps that is what we see here. Archer thought they could slide one under the rails and Jim over sold the Pirates on what he could deliver, but once he got started on Kenai Loop he got himself a reprieve. Then his "great" team steps over the fault and screws up on KL 3 and drills on the wrong side of the fault.
CPIC orders extensive seismic and brings in new people to evaluate it and the next well is successful, it even goes on production when they said it would. I looked at the new website and I see this video of Jim is not featured anywhere. Nice presentation from Curtis, but this Jim guy is only seen on the people page with an ever-increasing number of "others".
In reality there is always a learning curve when companies come to the Inlet. Some don't survive long enough to get through the process, for instance Pacific Energy came in with big plans, but they over bought and were pretty much blasted out of the water by a Volcano. So from where I am sitting the Buccaneers have had a pretty good run, even if they were obviously painted a very different picture of what life is like up here. This doesn't take away from the fact that the Buccaneers got in early, they secured an excellent position and have bought the right stuff since, they brought the assets in that are needed and they have managed to get production on line.
I have to give Burton some credit here, even when the sky was falling last year and the vendors were screaming they needed money he still managed to keep the company going, others would have said screw it and gone home. I wonder what he said to Jim when he was told that they really didn't have any projects to drill in 2010. For that matter, I wonder what the conversation with Archer was like when he told them to get stuffed. Of course we get a peek into the ramifications for misleading Curtis by reading the lawsuit. That's gonna be fun.
I guess in the end if you can make it through the learning curve and begin to figure out who is telling you the straight story you can do great things in Alaska. Production and sales tend to fix the problem over time, lets hope our band of Pirates can survive long enough to get their bounty.