Paving the Way for New Profit Centers

It is often difficult to find the right opportunities for new profit centers, particularly if your product is dependent on location and environment.

For example, for an oil company like us, growing geometrically in the United States, a mature oil and gas province , is a challenge. At some point, most businesses will have to look internationally or to other new areas. However, these new domains are rarely panaceas. Oftentimes, potential gains are undermined by political risk or capital requirements that dwarf the size of the company.

The thing to remember when desiring to forge new profit centers is to not jump into something entirely unknown and foreign. Combining the old with the new is a much safer and more practical method. Sometimes ideas are the result of applying new technologies to old areas, or taking old ideas to new areas. Although acquisitions can provide an entr e into a new region, the key to success is having the talent base to generate new opportunities or synergies associated with the acquisition and subsequently exploit and expand it.

Attractive growth opportunities for any business must originate within your core expertise, or your hedgehog . Figure out an area that combines your talent, passion, and potential for profitin what region do you have the most expertise and skill? What do you love? What area makes money? If the answers to these questions coincide, you will find new growth opportunities. We have based our personal experiences on this philosophy. We believe that we can continue to grow in the continental U.S. both organically and via acquisitions generally within our current core areas. While the necessary people and roles will of course differ from company to company, the general aims are important for every business. The key is having the best technical talent (geoscientists, drilling and production engineers, landmen as well as financial expertise). The geoscientists goal is to come up with exploration and development ideas that no one has previously implemented. Having a continually active source of new insights is essential. In addition, you should work to ensure efficient execution by each discipline. For us, this is initially handled by the land and acquisition people. They acquire the leasehold rights either directly or via acquisitions that generally include producing properties. Finally, after the planning and logistical information have shaped a strong foundation, you must have a reliable team to build upon it. The engineers must execute the idea so that costs are minimized and the resource is recovered as quickly and completely as economically possible.