?I went out to Midland recently to attend the 15th annual Executive Oil Conference presented by Petroleum Strategies Inc. At the awards dinner that honors Permian Basin players, the centerpieces were telling: black tablecloths laden with Campbell’s Pork ‘n Beans, Spam and ramen noodles.

That just about sums up the oil and gas menu for now. The only other foodstuff we have heard used to describe the rest of 2009 is toast.

You know it’s getting dreary when some of the oil industry recruiters have been laying off employees.

The specter of low natural gas prices hangs over the industry and investors like a cloud about to unleash the rain. But wait. The hardy few are pointing to an essential truth—it is in times like these that real fortunes are made.

Interest rates are low. Equities are too. Credit is available to the strong and prudent. Private equity is fully loaded and looking to start the next round of deals. E&P companies are stress-testing their portfolios and A&D advisors are helping them prepare data rooms. A tide of asset buying and selling is about to hit the beach. But it is as if the industry is in a game of chicken. Would somebody please pull the trigger?

“The question seems to be, hunker down for a while longer or act?” noted Steve Pruett, president and chief financial officer for Legacy Reserves LP, which is the subject of a going-private proposal.

There lingers a myth that there are no buyers out there, but Ken Olive says this is “completely, absolutely and 100% incorrect.” Also speaking in Midland, the president and CEO of The Oil & Gas Asset Clearinghouse said that in the past three negotiated sales processes led by the firm, some 100 buyers signed confidentiality agreements for each deal, a healthy sign of interest.

“In the boom times, we’d see maybe five to 10 bids on a package, but in the last three we did, there were over 20 bids. If you are interested in being a buyer and you wait until the last quarter of this year, you’ll see more competition. Transaction activity will increase as the year progresses.”

Olive pointed out that the ultra-high oil and gas prices of 2008 only lasted about seven months (a short time in historical terms), but everybody in this industry “drank the Kool-Aid” and forgot that those prices were probably an aberration.

True, upside metrics have changed, with lower discount rates for proved developed reserves and less value ascribed to proved undeveloped locations.

As executives survey the landscape and figure out their place in it, St. Mary Land & Exploration Co. chairman and CEO Tony Best advises we look to the lessons from Captain Sully, the clear-headed pilot who saved lives by ditching his US Airways jet in the Hudson River.

“This industry has gone through multiple bird strikes this year. So what lessons can we learn from the Hudson River?”

Lesson one is leadership. For St. Mary, this means everyone at the top is taking a new and focused approach to every detail. At weekly executive meetings, management reviews cash flow and how industry trends are affecting the company.

Lesson two is to “pick your landing.” Sully landed the plane in the river to avoid hitting buildings in Manhattan, and he landed near two ferry terminals, so his passengers got help almost immediately. “So as you ride this market down, you have to pick your landing,” Best said. “Do you keep growing production or do you conserve cash? Do you lay down rigs or lay off people?”

Lesson three is to “prepare for action.” Like the crew who prepared right before this unusual landing, E&Ps have to prepare by ranking all projects based on current economics and cash flow, not on the ideal dream of growth. “This is different than having a project or a plan and keeping it going (regardless of industry events),” he said.

Lesson four is to “stay afloat.” For E&Ps and for St. Mary, that means to do whatever it takes to live within cash flow and protect the balance sheet. “It hurts my feelings that we have no rigs running in the Wolfberry now because it’s a great play. But we are drilling in the Haynesville and…using this downturn to be poised for the recovery.”

Lesson five is to “make new friends.” This is a good time to contact peers and potential partners, to perhaps trade assets with someone or consult with service providers on how to lower costs and keep work going.

Lesson six is to “plan for more bird strikes.” By that, Best means to do more elaborate scenario planning. “Plan what you’ll do if this recession last two more years—or five. Think about it. Be poised for the ramp-up when the recovery comes.”