Twenty years ago, Oil and Gas vestor made its debut as a magazine focused on the opportunities and decisions behind exploration, production, financing and strategy. As it has matured, the industry has undergone a personality change. Go-getters who worked on instinct, a handshake and a good whiskey have become MBAs armed with "lawyerly" contracts, PowerPoint slides and a cell phone. Both types have shown a fervor for high-tech advances, but today's oilman also keeps one eye on the bottom line and the other on Wall Street. A new financial and operating discipline has taken hold, borne of some very tough times in the past 20 years. Independents based in Oklahoma know the intricacies of the gas markets in Singapore; Denverites, of offshore South Africa. These days, that sort of thing is not at all uncommon. Here, a few of the executives who've seen the industry's progress share how they entered the oil patch, the incredible changes they've witnessed since, and what they foresee for the industry's future. Luke Corbett, CEO, Kerr-McGee Corp. In 1970, this math major left his Atlanta nonenergy job to become a geophysicist for PanAmerican Petroleum (a forerunner of Amoco) in New Orleans. At the time, the majors had rigorous training programs, so he attended classes and handled jobs in Tulsa, Houston, Chicago, Midland and elsewhere. Later he worked at Mitchell Energy & Development. He joined Kerr-McGee in 1985. "Two things have always stayed with me. I was a geophysicist at Amoco and thought I was a big deal, but it took them just two hours to replace me when I left. And with George Mitchell, I learned you could have 'senior vice president' on your business card, but he had 'owner' on his! "Technology...and consolidation...have had the most impact on our business. You've had to be flexible. Who would have thought we'd be developing fields in 5,000 feet of water? I can remember developing seismic records in the hotel bathtub at night, and now we have 4-D seismic. I remember logging wells with all that paper-now you can follow a well bore in real time, on your computer at the office. "Mergers have helped and hurt our industry. So many people just got tired of the roller-coaster. So, we have to do a better job educating high school students and tie the social and economic consequences of our industry to their careers and to the American lifestyle. We need an energy policy, we have to find a way to educate the public, we need to be part of the solution "The future? In a word, volatile. I think the role of the large-size independent is very important. What separates us from the majors is speed and clarity of focus. There is a role for us to play domestically and internationally. A 100-million-barrel field can be important to an independent, where it isn't to a major." Chuck Davidson, CEO and president, Noble Affiliates Coming out of Purdue in 1972 as a nascent chemical engineer, Davidson wanted a job in refining or petrochemicals, but like many people in this industry, his career took a detour. Upon applying at Arco, his resume was sent to the E&P group, where the need was greater at the time. His first assignment? Designing natural gas processing plants, from Arco's Dallas office. "The collapse in 1985-86 was the catalyst for so many things. We learned that oil was not going to $100 and OPEC did not have a lock on it either. You had to be very, very efficient to be a top performer. That started the wave of consolidations, outsourcing and the sharing of infrastructure, and codevelopment of technology. "When people reflect on the industry as it was 20 years ago, and as it is today, it's not just about technology. It's about streamlining the bureaucracy. Back then it could take 20 people to approve a well. We've gained so much more productivity. The drive for efficiency in management processes and systems will be a real driver for the future. Companies that can access and manage their data most efficiently can create differential opportunities for themselves." "We'll still have ultralarge, medium, small and teeny companies in this business...There will be a migration to more international projects, but these tend to carry more risk than domestic projects, so you'll have to have a portfolio of them, that matches your ability to fund them. "The drive for cleaner fuels always gets back to natural gas...." George Gaspar, analyst, Robert W. Baird & Co. After graduating from Marquette University and working at the Army Corps of Engineers, Gaspar has become probably the only energy analyst in the country who has held just two jobs in 40 years. He has published the Gaspar Report since 1975, covering the big oils, service companies and OPEC. "The crash in the '80s focused the E&P sector on economizing, and on the pitfalls of existing technology, starting all these new approaches to produce better results, which in turn led to the gradual move to deep water and deeper structures onshore. It was a tremendous learning curve that led to losses of millions of dollars in some cases. "There is a totally new focus on North American gas and that will tell us where the drilling will occur. In this decade I think we'll see a gas pipeline out of Alaska and more emphasis placed on the Far North in Canada. What's driving that is the tremendous infrastructure growth in gas-fired power generation." Robert A. Hefner III, chairman and CEO, Seven Seas Petroleum His father and grandfather were in the oil business, so when he was 15, Hefner decided he wanted to be an exploration geologist. Now he is best known for his many years of deep-gas wildcatting. His latest successes are the Potato Hills gas play in southeastern Oklahoma, and his Guadas (Emerald Mountain) oil find in Colombia. "My first job was as a trainee at Phillips Petroleum in 1957. They had a superb one-year program. I started in exploration in Oklahoma City...then moved to a seismic crew working in Kansas. We'd go to school every night and work all day. Eventually I worked in economic analysis in Bartlesville-that's when I learned that majors put no value on natural gas (in those days). "Gas has finally, after all this time, come into its own and decoupled from oil prices. In my opinion it should sell at a premium to oil. "Technology has brought independents on a par with the majors at a price they can afford. Now there is real access to global financial markets, which again, allows independents to be involved in all sorts of projects. "Independents have an enormous opportunity in the U.S. to discover and produce all the gas that's going to be needed as our economy transitions from coal and oil...We have a lot of work in front of us. "I'm happy that I've persisted-there were times when I looked at my career and wondered, 'Why am I doing this?'" Jerry Jordan, chairman, IPAA Since his father was a drilling contractor in Oklahoma and Illinois, Jordan was a roustabout and roughneck from the age of 15. Subsequently he became a geologist and oil and gas attorney, and since 1988, an independent producer and natural gas marketer. "One thing people tend to miss is the growth of natural gas into the critical fuel it is today in our economy. Essentially it was a spotty product, not used widely, and it wasn't really much of an industry before. That's the biggest change in my lifetime. "Secondly, we've gone from being relatively self-sufficient in oil when I was a youngster, to needing so much imported oil today. And of course, the other big change has been technology advances. "The thing that hasn't changed is our concern with government regulation and the cost of imports. My father showed me industry publications when I was a teen-ager that talked about those same issues. "I see continued growth at all size levels, from mergers and lots of new companies. I look forward to it." David Kimbell Sr., chairman, Burk Royalty Co. Two sons of this second-generation oilman from Wichita Falls, Texas, now help to run a business formed in 1928. He was born into it: wells creaked out behind his house located in the famous Burkburnett Field in Texas. Kimbell got a geology degree from Oklahoma University in 1950 and at one time, owned three drilling rigs. Today, Burk Royalty operates or participates in 20 to 40 wells per year, some internally generated, throughout Texas and Louisiana. "It's so sophisticated now. In high school as a roustabout, I used to stand in the dark and shoot off Roman candles so this guy could site the wells. Technology is really what's kept us afloat in the face of foreign competition. All of us have had to become more legalistic. We've become more involved with industry partners as the wells got deeper and more complicated. The geologist has so many good tools to work with now, from 3-D workstations to digitized logs. So much more information is available from government and private sources. "We will always have independents as niche players, assuming oil doesn't go back to $8...As these big companies get larger and larger, they aren't interested in a field that makes less than 10 million barrels, whereas we can make money at that size. It's a different world-they have things that are too big for us to fool with and we have deals too small for them. Once in a while we may cross paths with a major in some frontier play. "It's inevitable that the independent will change...What won't change is that so much depends on the knowledge you have, and your contacts." Bill Montgomery, head, Towers Perrin global oil and gas practice In 1973 Montgomery joined Global Marine as a vice president responsible for nondrilling activities: oceanographic consulting, a small engineering subsidiary that did government projects and a small oil and gas producer. After seven years, he joined the consulting world, where he's been since. "Clearly the consolidation we've seen is the biggest thing that's happened. It has allowed companies to lower their costs, get their hands on more resources and high-grade to bigger projects. When I got into the business there were 400 public companies, and now it's 200. And, you've seen the rise of the national oil companies on the world stage. "Things have gotten a lot more technical. Over time the big companies have become almost 'merchant banks' offering decision-making and financing. Their key competency is to make the right decisions. Money is in more disciplined hands now-oil prices are off the charts but drilling activity is not. "The can-do attitude has not changed. The big companies will focus on those areas or countries where new technologies and money make a difference, like in deep water or the Arctic, or in gas-to-liquids. In the mature areas, assets will go to the very good, low-cost operators who can wring out the last drop. There could be regional production companies...but there will always be a place for the independent with specific skills. "Every time a merger happens, some guys go off and start again...." Raymond Plank, chairman and CEO, Apache Corp. More than 40 years ago, Plank started Apache in Minneapolis as a passive investor in wells, then a major public-fund sponsor. He grew it into an operating company that boasts a billion barrels of proved reserves. "Clearly, the North American majors have concluded there are fewer reserves to be found here, so they've concentrated elsewhere. But handing off assets to others has slowed some...One reason is they are being criticized for [high energy prices] and challenged on why they are leaving the U.S, so they are going to tread cautiously about divesting assets. I think they will sell less than I would have assumed two years ago. The biggest dog to kick is the oil and gas industry and this dog would rather not be kicked. "The independents are going to be the heirs of the function of supplying energy in North America some years down the road-from the small producer whose son doesn't want to enter this industry, on up to the large company like Apache that does want to continue. "But the 80% or so decline in energy-related college enrollments is a sign of what people think the opportunity is. "I think we're at the end of the period when the very small company, the peanut or start-up, can make it-the era of the corner grocer is over. The odds against a midsize guy are enormous-you've got to either find it or acquire it. "The $100-million companies would do well to figure out how to get together rather than go it alone. Large companies such as ours don't have to merge and I'm not saying that to be smug...because with $1- or $2 billion of cash flow, we can spend it efficiently. I do see more consolidation and more companies needing to have an international arm... "If I were running a U.S. company with $100 million in assets, it would indeed be time to step into Canada, to get people up there and start exploring or buying reserves-again I come back to the limited potential in the U.S. We're down to looking for a needle in a haystack and there are fewer needles." Bob Rose, CEO, Global Marine After Rose left the Air Force, an uncle working in oil in Houston asked him if he'd ever considered the oil business. His first job? Designing casing strings for Wilson Industries (now part of Smith International). He joined Global Marine in 1964. His first assignment was to take the first drillship, Glomar 4, to the North Sea in 1965. "In those days, all the offshore technology and equipment was in the U.S. Anyone located anywhere else had to come to us. When we went to the North Sea, we had to take not only the rig, but the anchor handling boat, the supply boat, helicopters...everything. Now we have evolved from iron men with wooden derricks to real businessmen who are concerned with the environment. "We are more sophisticated in our relationships with suppliers and customers, and with our own people. The kids coming in today are more intelligent and would not put themselves in harm's way the way we did back then. "The industry has got to be more efficient. I hope the service companies will play a larger role in that. More independents have financial investors that are requiring them to at least get turnkey bids, or a guaranteed cap on drilling prices...We can absorb going over budget by $500,000, whereas they may not be able to. "The industry hasn't woken up and gone back to work yet [as it needs to do], but it is yawning and stretching...This is the fourth cycle I've been through, but the fundamentals never looked better." Art Smith, CEO, John S. Herold Inc. Smith became a junior E&P analyst in 1976 at Argus Research, when no one else wanted to cover "those boring oil stocks. They figured they'd give that to the new kid. Then, they took off," he says. By 1984 he had acquired his own research firm, Herold, which he still runs today. "Independents have an advantage in that they are more apt to adopt new things, especially in IT, and they are good at small incremental changes and paying attention to details, such as production enhancement. The majors are more apt to be seeking legacy assets and positioning themselves in megaprojects around the world. Independents are more willing to share information with each other, such as through the Petroleum Technology Transfer Council (PTTC). "As for the future, I think we need more Prozac for oilmen-we need to get away from these manic-depressive cycles. People are talking more about showing profits, but...it appears a lot of companies will have a hard time in 2001 finding good projects on which to spend their cash flow-this would suggest the geophysical market will pick up." "Some people think there are too many independents, but I think the real issue is there is a shortage of great managers." Earl Swift, chairman, Swift Energy Co. His father and uncles ran a cable tool outfit, so Swift's first recollection is backing into a steam line at a well and getting burned. From age 12, he did odd jobs and worked on the rigs. His first job out of Oklahoma University in 1955 was as a reservoir engineer in Humble, Texas. After working for Michigan-Wisconsin Pipeline Co. for 16 years, he founded Swift in 1979 to look for natural gas, which was in a shortage at the time. "In 1979 everything was hectic and it was easy to raise money. We always tried to run the business so we could take the swings in prices, because we knew they'd come. "When I left college, this country was still in the significant exploration stage and you heard about the big wildcatters. We were just beginning to go offshore. In the 1960s we entered the exploitation phase. Now you don't hear so much about the wildcatter; you hear about the organization man. "Today the international arena is more like the U.S. was in the '60s. It hasn't really started to enter the exploitation phase yet. The oil industry has peaked as far as finding oil around the world, and we'll see the first phase of continued exploitation begin. This is the beginning of the end of the oil era... "You're going to have to scramble harder to do more with less. I hasten to add that doesn't mean everybody will be out of work soon-it will take a long time yet-but it is starting to change. "The independent will serve primarily as the developer of natural gas. It will fetch higher prices and be found with more technology. We're really going to be looking at niches now...."