WellPoint Systems' Blog

CFOs Plan to Invest in Technology
“When the economy reboots, chief financial officers are planning to improve their information technology systems, according to a survey by Robert Half Management Resources. When asked where they are most likely to spend when a recovery occurs, 40 percent of CFOs said IT, according to the survey of 1,400 CFOs from U.S. companies with 20 or more employees. The next most popular answers for areas of investment were new products or service lines (18 percent) and new locations or real estate (14 percent).“As companies emerge from the recession and become more profitable, they will begin to focus on shoring up critical business applications and technology infrastructure,” said Paul McDonald, executive director of Menlo Park. Calif.-based Robert Half.”

The term “Big Oil” is thrown around routinely in the media and generally draws a visceral reaction from the public, invoking images of an all-powerful cabal secretly pulling the levers that control the flow of oil. But in reality, America’s independent natural gas and oil producers develop 90% of US wells, produce 82% of US natural gas, and produce 68% of US oil.

Although “Dallas” has been off the air for many years, J.R. Ewing remains for many the symbol of America’s oil and gas industry. In reality, however, the workforce comprising the oil and gas industry is quite diverse. In June of this year, women working for America’s oil and natural gas companies in 11 states were on Capitol Hill to meet with policymakers to discuss their concerns with major issues affecting the industry. Geologists, petrophysicists, land professionals, refinery workers and others from Louisiana, Illinois, Texas, Arkansas, Alaska, and beyond — all active, contributing members of their communities and their states, are using the opportunity to talk about how legislation under consideration would affect them, their communities and all American consumers.

Louisiana native Aisha Ragas, a senior geologist with Anadarko Petroleum, said she believed it was important to let members of Congress see the oil and natural gas industry for what it is. “The oil and gas industry is many faces. It’s not just middle-aged men. It’s women too. We are from all different ethnic backgrounds, different socio-economic backgrounds. We have different career paths — some are scientists, others are managers, some are field or rig workers. But all of our jobs are valuable, and we all care about what everyone else cares about: doing our jobs well, taking care of our families, and giving back to the community.”

Environmental record
The public perception of the oil industry’s environmental record is that the oil and gas industry has done a dismal job of protecting the oceans, the land and wildlife from oil spills. That spills are routine occurrences rather than rare accidents. The truth is that the oil industry lives with a focus on safety for the environment, wildlife, and people. For starters, as with health of humans where an ounce of prevention is worth a pound of cure, cleaning up pollution is far more expensive than preventing it. Avoiding a catastrophic disaster, such as the Exxon Valdez accident or the blowout and spill at Union Oil’s platform off in the Santa Barbara Channel off Los Angeles in 1969, is a major factor in oil companies’ dedication to operating in safe and environmentally sound manners. Failure to prevent such an accident would cost the company billions. In fact, according to API, only 14% of the oil in the sea is directly attributable to the world’s oil industry, with two% occurring from exploration and production spills and the remaining 12% attributable to accidents involving oil tankers. In contrast, 46% of oil found in our oceans is from natural oil seepage according to the National Research Council of the US Naval Academy of Sciences.

There is also the perception that the industry is somehow in favor of increased greenhouse gases in the Earth’s atmosphere. In reality, the US oil and natural gas industry is spending billions of dollars developing new advanced energy technologies to reduce greenhouse gas emissions while still meeting future energy needs.

Between 2000 and 2008, the industry invested more than US $58 billion in new low- and zero-emissions technologies. This represents 44% of the $133 billion spent by all US industries and the federal government combined. These large investments are critical to provide the low-carbon energy we will need in the years ahead. And to help meet future US energy demand growth and to diversify the US energy portfolio, US oil and gas companies invested an estimated $121.3 billion from 2000 through 2007 on emerging energy technologies in the North American market. This investment represents 65% of the estimated total of $188 billion spent by US companies and the Federal government.

We are still seeing a nice spike in website hits, as well as inbound inquiries for BOLO, Energy Broker (in some cases we are seeing companies looking at both), and others looking to learn about the variety of solutions under the WellPoint Systems umbrella. The pipeline will continue to grow as we further qualify and penetrate these interested companies.

The BOLO sales team made it down to Dallas this week for a couple of days at the A & D Strategies and Opportunities Conference. BOLO was the only software vendor who had a booth at this show, and it was vital for name recognition. This conference was different than others in that the attendees are generally at a very high level in their organization. Lots of CEO’s, CFO’s, and VP’s looking to make a play for their next lease acquisition, and others looking to sell off interests.

There was a very wide range of opinion regarding the outlook of oil and gas for 2010. Some feel that Natural Gas Prices will settle in at less than $3 per MMBtu, due to the abundance of Natural Gas here in the US – One quote that I do recall offhand is that “The US is to Natural Gas, what Saudi Arabia is to Oil”. Others felt that this was a down year, and have projections of Gas increasing all the way to $7.50 for MMBtu. I tend to be a glass half full kind of guy, and one line that really resonated with me was that “Oil prices dropped 76% in a 3 month period” earlier this year. My first thought was, if this happened in any other industry, the word “bailout” would be thrown around. But this industry was able to adapt, and now sustain. As we have seen recently, oil prices have settled into the $60-$80 per barrel range, proving that consistency and stability may have returned, even already.

While attendance was down in comparison to previous years, we were still able to have high level conversations with executives at target companies, and of course, have a chance to chat up with our existing clients in a relatively relaxed setting.

For example, I had a chance to chat with Tom Bandy (That is Bandy, not Brady – some of you must really have football on the brain, jeesh) of Blue Tip Energy, a friend of Chris Dinkler’s back at their Production Access days. Tom came up to me at the BOLO booth and mentioned that the Blue Tip team are huge fans of BOLO. Tom works in a variety of roles at Blue Tip – investor, IT guy, advisor and more, and he said that even though he is not using the system on a regular basis, he knows that it must be a great system for them, because, well, he never hears any complaints about it – and if they did not like it – he certainly would be hearing it. Steve Miller, the controller there, as well as Troy Hatler, who both use the software on a daily basis confirmed that it is a great system for them, emphasizing the ease of use, ability to quickly generate reports, and the willingness of Customer Care to assist them…even when the reason for the call into CC might be due to a user error.