By: Chris Sutton
Picture taken by Kyle Jerome. Derrickhand with Sun Well Service in North Dakota

The nature of the energy industry can bring frequent changes resulting in professionals reentering the work seeking world.  Some of these changes are beneficial for oil and gas companies.  For example, acquisitions and divestitures (A&D’s) are a part of the asset allocation strategy for oil and gas companies and are constantly evaluated on both a short and long-term basis.

Operators look for assets where geological knowledge of formations is available, and where technical expertise in specific plays can be leveraged for higher margin recovery. Companies divest assets to raise funding for existing asset development or to acquire new assets more closely aligned with long-term strategic goals.

In a survey conducted by Ernst & Young, when Oil & Gas companies were asked to disclose the main causes for an acquisition, the majority of the respondents listed their top two reasons were to gain shares in existing markets and gain shares in new markets.

Although A&D’s are typically beneficial, they can still impact the workforce on either side of the transaction.  Other workforce changes are less beneficial – but still somewhat common in the volatile oil industry.  For example, if an exploration and production company loses a major project, they will likely have to downsize their workforce by laying off the contractors hired for that project.

Of course, downsizing also occurs for other reasons, such as shifting resources internally and changing company goals.  Following are some common scenarios for professionals during company changes, as well as tips for preparing to reenter the workforce.

What do workforce changes mean for oil and gas professionals?

When a company divests an asset, several things can happen to a professional’s job position.  Often, the professional will be asked to move with the assets to the acquiring company.  Moving to the new company sometimes means relocating, so some professionals will turn down the offer and start by searching for a new job in their area.  The divesting company usually encourages current employees to go to the new company if they have the option, because they will be laid off if they stay.  Higher-level employees may have the option to accept a retirement package instead of relocating.

In other situations, some professionals might be told the asset is being sold and they’re not being offered a new position at the acquiring company.  These professionals are often laid off because they are no longer being used on a project.  This scenario is similar to E&P companies losing a major project –some contractors may be asked to join another project or assignment, but usually there isn’t enough work available to avoid downsizing.

What should oil and gas professionals do?

Because the scenarios above are commonplace in the oil and gas industry, professionals in this field should always be ready with a plan of action.  Luckily, in the case of A&D’s, professionals are usually given several months of notice before a company divests the asset  at which they work and they will know shortly afterwards whether or not they will get an offer from the acquiring company.

Unfortunately, many people don’t start looking for a job until after transitioning out of their role.  And in the case of Exploration & Production (E&P) oil companies losing a project, or other downsizing scenarios, professionals may even have less time to ready for a change in employment.  This causes laid off and retired employees to enter the job searching market at once including those who do not accept an offer from the acquiring company as well as professionals from the acquiring company who quit.  Competition for jobs will be fierce and offered pay may be lower.  Our first tip is to begin looking for a job as soon as you know you’ll need one.

Our second tip is to check location.  Location can be a deal breaker for professionals who are offered a position at the acquiring company.  If you get an offer from the acquiring company, find out if they require relocation.  Do some research into the area and decide early whether or not you are willing to move and find affordable housing.

Thirdly, professionals with a lot of experience should consider taking the exit offer and reentering the workforce as a highly compensated, knowledge-based consultant.  Taking a retirement offer doesn’t necessarily mean the end of your career.

Lastly, it’s important to continuously network with industry professionals and get to know about projects in your area. This way you will be able to forge meaningful relationships with contacts that can get you in front of hiring managers.  Information gained from networking can lead to an easier job transition during a company downsizing or similar situations.

Preparation makes for an easier transition.

Workforce changes are inevitable in the oil and gas industry, and most professionals who work on oil production will switch companies at least once during their career.  Preparing for this transition can make finding a new job easier and might even result in a higher paycheck.  You can prepare for any possible layoff by learning about companies involved in deals affecting you and by networking with industry professionals, who may be willing to help you quickly transition to a new project.

Good luck and good hunting.

Chris Sutton is a Partner at Clover Global Solutions, LP.  He can be contacted at: Chris.S@clovergs.com

 

 

Written by Janelle Holden

In December 2012, 5.19 Sales & Marketing connected communities in Eastern Montana with business leaders looking to launch a first-of-its-kind housing project for oil and gas workers in the Bakken region.

With the guidance of the Eastern Montana Impact Coalition (EMIC) and the commitment of IAP Worldwide Services (IAP), the Eagles Landing Housing Community Project was born.

Just nine months later Sidney, Montana is now home to phase one of Eagles Landing, a state-of-the-art housing facility that includes 339 beds, private rooms, chef-prepared meals, free daily breakfast, a commercial grade laundry facility, housekeeping services, fitness center, 24-hour security and ample parking.

In this interview, Troy Selland of 5.19 Sales & Marketing shares lessons learned from the project and the secret to creating successful business ventures in the Bakken region.

Janelle: “So Troy, how did this project get started?”
Last December, I flew into Wolf Point, Montana with senior leaders from IAP to meet with EMIC executives. With over 60 years of expertise in remote site operations, IAP was looking for a community in the Bakken region in which to build and operate a multi-million dollar workforce housing community.

We toured six sites across Montana and North Dakota. All of them were potentially a good fit for a large-scale project, but the company was impressed by the opportunities that existed in Montana and how the EMIC represented the region.

Janelle: “Who is IAP Worldwide Services and why were they interested in building?”
IAP specializes in providing temporary housing solutions in remote locations around the world. It’s a company that has the capability to build specialized housing solutions in virtually any environment around the world. In the past, they have worked primarily with government agencies and were looking to expand into the private sector.

Janelle: “I’ve heard that Montana has had trouble in the past winning contracts like these. Is that true and if so, what made the difference here?
Montana has historically lost out on similar opportunities to other oil states such as North Dakota and Texas and the field was open to IAP to build anywhere in the world.

In early 2012, EMIC formed to address community challenges in the Bakken region and they welcomed IAP into the community. The coalition wanted to help solve a regional housing shortage that was persistent, challenging and frustrating.

When they met, the coalition members spoke with one clear voice about their visions, challenges and hopes for a region that is roughly the size of the state of New York.  This made the difference with IAP as it was clear that an opportunity truly did exist for them in Montana.

Janelle: This project was built in record time and it seems like everyone in the community has been happy with the result. How did that happen?
Good communication and great partners. The coalition worked with the company to ensure that every phase of design, planning and construction would address and resolve the community’s concerns and fit with Montana culture.

As a result, Eagles Landing has become home to more than just oil and gas industry personnel. Current and future residents include county employees, policemen, electricians, and even families.

Janelle: What have you learned about doing business from this project?
When I look at the history of this project, I’m proud of Montana for finding a creative way to work with businesses and solve community challenges in the Bakken. The real secret to the success of the project was combining the visionaries of IAP with the local members of the EMIC. Including community input via the coalition and building local support is the secret for businesses looking for long-term success in Montana’s Bakken region.

Troy Selland is the Founder of 5.19 Sales & Marketing, based in Livingston, Montana. He has over fifteen years of leadership and consulting experience in the commercial airline, ground logistics, and oil and gas sectors. 5.19 Sales and Marketing helps firms of vision find their place, and ultimate success, in today’s unconventional energy industry.

For More Information: 5.19 Sales & Marketing: www.five-nineteen.com
Eagles Landing Project: www.iapeagleslanding.com
EMIC: www.gndc.org/EMIC%20page.htm

 

by North Dakota Housing & Finance Agency

The Industrial Commission of North Dakota has reported that more than 600 private investors have successfully capitalized the $15 million state Housing Incentive Fund (HIF).

“Thanks to North Dakota citizens and our business community, the Housing Incentive Fund is fully capitalized and available to move forward on affordable housing projects in western North Dakota and across the state,” members of the Industrial Commission said in a joint statement. “With legislative approval, we will continue to utilize the Housing Incentive Fund to encourage even greater affordable housing development.”

The Industrial Commission, consisting of Governor Jack Dalrymple as chairman, Agriculture Commissioner Doug Goehring and Attorney General Wayne Stenehjem, oversees the North Dakota Housing Finance Agency, which administers HIF.

Created by the 2011 Legislature, HIF is used to develop affordable multifamily housing. Contributors to the fund receive a dollar-for-dollar state income tax credit for their contributions. Dollars given can be targeted to a specific project or community.

Ninety percent of the contributions were by individuals who contributed an average of $10,021. The largest corporate supporter was Marathon Oil Co., contributing $3 million. Gate City Bank contributed $1.25 million, the most by a financial institution.

“Developer interest in the program was strong from the start, with all of the available financing spoken for in less than a year,” said Mike Anderson, NDHFA executive director.

NDHFA has conditionally committed HIF dollars to 26 projects to create 739 new units in Beach, Belfield, Bowman, Crosby, Devils Lake, Dickinson, Grand Forks, Kenmare, Killdeer, Kulm, Mandan, Minot, Parshall, Ray, Watford City and Williston. Total construction cost for the projects is $104 million.

“Our greatest challenge was getting the word to taxpayers that they could direct their tax dollars to affordable housing development,” said Anderson. “We are grateful for assistance from our housing partners, business groups and the media in reaching this goal.”

Governor Dalrymple has proposed transferring $30 million from the state general fund for direct investment in HIF for the 2013-15 biennium. An additional $20 million in tax credits would bring the total fund to $50 million. The proposed legislation has been pre-filed as House Bill 1029.

For more information on HIF, contact NDHFA at (701) 328-8080, (800) 292-8621 orwww.ndhousingincentivefund.org.

Posted on 1/3/2013. Retrieved January 10, 2013.