One thing has remained constant in the petroleum industry for the past fifty plus years is change. It is this ever changing landscape of the industry, which brings the biggest challenges, especially to independent operators. The petroleum industry is one of the most capital intensive industries in the world today. However, it does not matter how much money a company has if it does not have the right people to invest those dollars wisely. The third leg of the stool, to use an already overused analogy, is technology. We have seen giant strides made in 3D seismic, extended reach drilling, measurement and logging while drilling, multilateral wells, production surveillance systems and on and on. Even with the brightest people and a pot full of money, a company will soon loose it competitiveness if it does not stay up on the latest technological changes in the industry.

For nearly all independent operators capital is a scarce commodity. Capital is typically obtained through debt from banks or institutional investors or through equity by selling a part of the company through private or public placements. These capital dollars are used to secure the manpower and technology required to acquire properties, drill wells, and complete exploratory plays and a host of other things. If this is done with debt, the operator has repayment obligations, which eats into the capital. If this is done with equity, the growth of the company is shared with others. Each independent operator must look inside to see what type of company they are and what they want to be in the future. They must set a strategy for getting there and then balance the technology, manpower and capital available to them throughout the process.

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