Finished business, finalized plans, and other matters of tidying up are all served up in this month’s miscellany of truncated articles. These are the full versions of the “Drilling Deeper” news items that appeared as abbreviated versions in the print edition of the April 2015 PBOG.
Western LLC Breaks Ground on Hangar P
Western LLC, a local aviation development and design-build firm, has broken ground on the first aircraft hangar in Phase II of the Corporate Aviation Facility Complex Development at the Midland International Airport (MAF). The first hangar being built in Phase II is labeled as “Hangar P” and is just one of four hangars that will be a part of the MAF Phase II development. Currently, three of the four hangar lots at MAF are reserved, leaving only one remaining lot available. On Wednesday, Jan. 28, 2015, Western LLC began standing steel for the frame of Hangar P and is expected to have the steel installation completed by mid-February.
Western LLC met with their Hangar P client for months to establish a design that would fit their exact needs as well as be cost effective for their client’s budget. Hangar P is spectacular in size and architectural design, making it a strong attribute to the overall aesthetics of the MAF development. With an impressive 25,000 SF of hangar space divided into two hangar sections in one facility, Hangar P has the ability to accommodate several types of aircraft. The facility has 2,500 SF of office space that will consist of a lobby, four offices for pilots, and a kitchenette. Western LLC also designed a private fuel farm for Hangar P with a holding capacity of 20,000 gallons of jet fuel. This size fuel tank is economical for Hangar P because it will save them both time and money by allowing them to self-fuel their aircraft.
Western LLC began the excavation of the Hangar P site in November 2014 and is scheduled to have the facility completed by early summer 2015. Casey Hayes, Western LLC’s Regional General Manager, is overseeing the Hangar P project as well as the MAF Phase II development. Casey explained how important Hangar P is to this development, “We are so excited and blessed to have been afforded the opportunity to work on such a milestone project. We have been fortunate to be such a large part of the Phase I development and this marks the next chapter of Midland growth in being the first hangar in Phase II. Hangar P will be the largest hangar built to date, which makes this hangar particularly exhilarating for us to be a part of.”
Knight Warrior LLC Moving Forward
Knight Warrior LLC, a Texas limited liability company, announced that it has reached several key milestones and is moving forward with its 160-mile pipeline. The pipeline, which will link the emerging East Texas Eaglebine/Woodbine crude oil resource play to the Houston refining and export markets, is scheduled for startup in the second quarter of 2016. The project is backed by shipper commitments, including a transportation agreement with Vitol, a diversified multinational energy company, and SEI Energy, LLC, a natural gas and crude oil marketer/producer services company with offices in Tennessee, Texas, Virginia, and Oklahoma.
Knight Warrior also announced it has awarded contracts to Hatch Mott MacDonald, LLC, Contract Land Staff LLC and Apex TITAN, Inc. for engineering and design, land management, and environmental services, respectively.
Knight Warrior has assembled a team of industry veterans led by Fred Brown, senior project manager, to manage construction of the pipeline. Mr. Brown, who has more than three decades of pipeline experience in the energy and mining industries, is knowledgeable in all aspects of pipeline projects from FEED studies to construction feasibility, route selection, project management, construction techniques, and implementation. Mr. Brown will be responsible for overseeing all aspects of the Knight Warrior project.
Previously, Mr. Brown has worked on major pipeline projects throughout the United States, Asia, and South America including the feasibility study, route design, and construction of the Gas Atacama Pipeline, a natural gas pipeline built across the Chilean Andes whose highest point is 5,100 meters above sea level, and the All American pipeline, the longest heated oil pipeline in the continental United States when constructed. Mr. Brown also served as the construction project manager for the Da Hong Shan iron ore slurry pipeline in Southwest China, which has the highest operating pressure and total lift of any pipeline in China.
“I am excited to be part of the Knight Warrior team during this transformative time for the company,” said Mr. Brown. “Knight Warrior LLC is committed to being a good neighbor during construction and subsequent operations of the pipeline, and I will empower our team members to focus on safety and strong stakeholder relations throughout the duration of the Knight Warrior project. My experience in all aspects of construction of some of the most technologically challenging pipelines in the world will enable me to successfully manage a project of this scale and scope.”
“We are pleased with the progress of the project to this point and are confident in the abilities of the experienced team that we have assembled to effectively manage the planning, permitting, and construction processes,” said Mr. Brown. “Hatch Mott MacDonald, Contract Land Staff, and Apex are leaders in their respective fields, and we will rely on their expertise to assist with a sound and reliable project. When completed, the added capacity provided by the Knight Warrior pipeline will help the prolific Eaglebine/Woodbine region achieve its full potential by giving producers there direct access to the Gulf Coast refinery complex, as well as other United States and foreign markets.”
“Hatch Mott MacDonald (HMM) is delighted to join the team of energy professionals that will design and construct the new Knight Warrior pipeline,” said Hatch Mott MacDonald President and CEO Nick DeNichilo. “HMM will provide engineering, mapping, and procurement support services, playing a key part in the development of the project. Building on our credentials as a leading pipeline engineering consultant, we look forward to providing solutions for this important project.”
“Knight Warrior’s pipeline represents a significant investment in a new system to ensure crude oil producers in the emerging Eaglebine/Woodbine crude oil play have access to key refining markets,” said Brent Leftwich, president and CEO of Contract Land Staff, LLC (CLS). “CLS will work closely with landowners along the route to acquire right-of-way for the proposed pipeline. We are thrilled to be part of the team for this important project.”
“Apex is pleased to be working on the Knight Warrior project,” said Robin Laine, national program manager at Apex. “Designing, siting, and building a new pipeline of this magnitude is a complex and involved undertaking, especially given the detailed environmental impact information that is required before construction can commence. Apex, with more than 25 years of experience in the industry, is confident that we will successfully navigate the state and federal permitting process and ensure that the Knight Warrior project is in compliance with all applicable regulatory requirements.”
The Knight Warrior East Texas project will consist of a 160-mile, 16-inch diameter pipeline originating in Madison County continuing south through Walker, Grimes, Montgomery, and Harris counties. The pipeline will have an initial capacity of 100,000 BPD, will be expandable up to 200,000 BPD and will serve Eaglebine/Woodbine crude oil producers via two origination stations located near North Zulch and Madisonville, with a third station near Roans Prairie planned to accommodate future production growth in the area. The pipeline will have the capability to segregate and batch crude oil in order to help producers capture value for this premium product. The pipeline is estimated to cost approximately $300 million, subject to final pipeline design and shipper commitments, and is anticipated to be financed using a combination of debt and equity.
Hiring and Retaining The Best
By Ed Basler
Exorbitant student loans constitute just one reason why young people eager to experience the world may want to reconsider college, says Ed Basler, a veteran entrepreneur.
There is now $1.2 trillion worth of college debt in the United States and the average borrower will graduate $26,600 in the red, according to The Institute for College Access and Success (TICAS) Project on Student Debt.
“None of this guarantees a job or even that a college grad will be job-ready,” says Basler, CEO of E.J. Basler Co.(www.ejbasler.com).
“After four weeks of business school I, the son of a businessman, had realized that the professor had no real-life experience running a business and that I wouldn’t learn the practical principles necessary to succeed. But I stuck with business school for two years until I dropped out, and I haven’t had any regrets 40 years later. Hands-on experience trumps a degree all the time.”
Factor in the fact that necessary business skills evolve faster than the time it takes to earn a degree and the overall lack of preparation for the real world provided by college and the choice to save time and money is a no-brainer, says Basler.
Business owners and hiring managers should see past the college degrees of potential employees, or lack thereof, and focus on the content of an applicant’s skills and character, says Basler, who offers, in his own words, the following tips for hiring.
• Do not accept any bad attitudes. A bad attitude spreads like the flu, and if you don’t stop it, it’ll make your whole team sick. Good attitudes will spread too, so look to hire people with a positive nature. Is the prospective hire full of complaints about previous employers? Don’t be surprised if you become the next target of such whining. No one is indispensable. I have interviewed people who were clearly bright and skilled. Yet, afterward, I felt like telling them not to let the door hit them on the way out. I’ve never regretted my decision to insist on good attitudes.
• Hire friends very cautiously. They can become your best employees. Often, however, they are your worst, and they’re hard to fire. Hire family members even more cautiously. Let them know the ground rules and expectations up front. And treat them like the rest of your employees. I hear horror stories all the time from business people who are suffering because of family involvement. But it can also work very well—it has worked out well for me.
• Hire not only for skills but also for potential. Leaders can be made if trained and motivated properly. I’ve seen many a young person with no previous experience or knowledge of my business learn a trade or skill and prosper and excel. Many times, it’s even an advantage to start from the beginning with someone who does not have the baggage of bad habits or practices from a previous employer.
• Put people in the right positions. Test them for their personality and skill sets. There are many tests—one good one is the Meyers Briggs and the DISC profile. It’s hard, sometimes, to understand where people fit, which is why we try to use testing to learn about their particular skills.
“A college degree is a generic qualification and is by no means the ultimate criteria by which you should hire talent,” Basler says.
About Ed Basler
Ed Basler is a longtime entrepreneur and CEO of E.J. Basler Co., (www.ejbasler.com), which provides precision-machined parts and solutions to companies worldwide. He is a sought-after motivational speaker and president of Fresh Eyes Coaching, a firm that helps small businesses identify profit opportunities and obstacles. Ed and his wife, Cathi, also founded and ran a nationally recognized not-for-profit youth organization for 15 years. He is the author of The Meat & Potatoes Guide to Business Survival: A Handbook for Non-MBA’s & College Dropouts.
Edge Natural Resources LLC Announces Launch
Edge Natural Resources LLC (“Edge”), a Dallas-based private equity firm formed to make small-cap investments in the North American energy industry, recently announced its formal launch. Edge is led by a group of former executives of Natural Gas Partners (“NGP”) consisting of Roy Aneed, most recently Managing Director at NGP; Jesse Bomer, most recently General Counsel at NGP; Stacie Moore, most recently Chief Accounting Officer at NGP; and Oscar Pate, most recently Senior Associate at NGP.
Edge will focus on making small-cap equity investments in the North American energy industry in partnership with best-in-class management teams that have an edge in their particular area of focus. Edge plans to make growth equity investments requiring $30-75 million of sponsor capital in the upstream and oilfield services sectors.
Commenting on the formation, Mr. Aneed said, “We are thrilled to bring this team’s comprehensive skill set to bear on the underserved small-cap energy space. The Edge team will leverage its deep industry relationships and apply its significant experience to focus on an area of energy private equity that we think is full of compelling investment opportunities.”
The Edge team will be complemented by an Industry Advisory Board consisting of a diverse set of energy industry veterans who will bring a wealth of knowledge, experience, and business networks to the venture.
Kinder Morgan Buys Highland Partners
Kinder Morgan, Inc. (NYSE: KMI) closed its previously announced acquisition of Hiland Partners (Hiland) for a total purchase price of approximately $3 billion, including the assumption of approximately $1 billion of debt. Hiland’s assets, mostly fee based, consist of crude oil gathering and transportation pipelines and natural gas gathering and processing systems, primarily serving production from the Bakken Formation in North Dakota and Montana.
“This transaction establishes a premier midstream platform for us in the Bakken with a significant amount of acreage dedicated under long-term gathering agreements,” said Kinder Morgan Chairman and CEO Richard D. Kinder. “These acreage dedications are with some of the Bakken’s largest and most successful producers, covering some of the most attractive and economically viable areas in the basin. We look forward to providing quality midstream services to producers in the Bakken and pursuing incremental growth opportunities in the basin.”
Hiland’s customers include Continental Resources, Inc., Oasis Petroleum Inc., XTO Energy Inc., Whiting Petroleum Corporation, and Hess Corporation, among others.
Continental Concludes Veyance Acquisition
Continental, a leading producer of technologies for transporting people and their goods, has concluded its acquisition of the U.S. rubber company Veyance Technologies Inc, of Fairlawn, Ohio. On Jan. 29, the Brazilian antitrust authority CADE (Council for Economic Defence) cleared the transaction with certain conditions, thus providing the approvals necessary for completion. International automotive supplier, tire manufacturer, and industrial partner Continental is boosting its worldwide industrial business with this acquisition. The transaction is valued at 1.4 billion euros.
Veyance operates globally in the field of rubber and plastics technology and in 2013 recorded sales of some 1.5 billion euros, around 90 percent of which were achieved in industry business. The workforce at its 27 plants around the world totaled 8,500 at the end of 2013. Veyance Technologies generates around half of its sales in the U.S.A. Other important markets include Latin America, Africa, China, and other countries in Asia. The product focus is on conveyor belts, hoses and power transmission belts. In 2013, ContiTech and Veyance together achieved sales totaling some 5.4 billion euros and employed around 38,000 staff worldwide.
“By integrating Veyance in our ContiTech division, we are expanding our global position in rubber and plastics technologies. In addition, this acquisition will bring Continental a significant step closer to its strategic goal of further increasing the proportion of industrial and end-customer business in its sales,” says Dr. Elmar Degenhart, chairman of Continental’s Executive Board in Hanover. “Continental has financed the acquisition entirely from liquid funds and available lines of credit. Veyance will make an immediate positive contribution to the corporation’s profitability.”
“Both the workforce and the customers stand to profit from the merger of the two companies,” says Heinz-Gerhard Wente, a member of Continental’s Executive Board and CEO of the ContiTech division. “Veyance will complement ContiTech in markets in which we have been underrepresented up till now. Another very important point is that the acquisition will enable us to significantly expand our industrial and end-customer business and, as a result, enable ContiTech to achieve a share of almost 60 percent of its sales outside the automotive original equipment sector.” ContiTech’s Conveyor Belt Group (conveyor belt systems), Fluid Technology (hoses and hose assemblies) and Power Transmission Group (power transmission belt systems) business units will benefit in particular from the improved global alignment.
Because of the significance of the acquisition, antitrust authorities worldwide had spent the last eleven months scrutinizing the purchase and its impact on the respective markets. In response to the structural concerns expressed by some of the antitrust authorities, Continental will divest Veyance’s air springs business in NAFTA and its current steel-cord belting business in Brazil. In total, around 600 employees work in the operations that are to be divested.
The New Normal: Volatility
The 7th annual edition of the World Energy Issues Monitor, entitled “Energy Price Volatility: The New Normal,” is a barometer of the top issues set to shape the energy sector for the year ahead. This year the report has gathered the views of more than 1,000 energy leaders, including ministers and chief executives from nearly 80 countries.
The uncertain impact of volatile energy and commodity prices, first highlighted in last year’s report as an emerging priority, has now established itself as the number-one issue for energy leaders worldwide. Energy leaders are worried about the recent sharp plunge in the oil price to its five-year low. They are kept busy by the continual reduction in the cost of renewable energy technologies, which have increased their share in the energy mix, but have also put strains on the energy system. In some parts of the world that do not have viable energy storage solutions, the grid is not yet able to cope with large shares of intermittent forms of energy, and lacks effective market signals to deliver back-up capacity or storage.
Climate framework is perceived as the next most critical uncertainty ahead of a global climate agreement being reached at the Conference of the Parties meeting (COP-21) in Paris at the end of this year. This issue—which could spell the presence or absence of a meaningful carbon price—has been a top critical uncertainty since the first World Energy Issues Monitor in 2009.
Energy leaders believe that the emissions agreement between China and the United States, announced in November 2014, has increased the pressure on other large emitters whose stance and approach to cutting emissions still pose a large question mark for investors. Leaders from North America and other OECD countries believe that a climate framework will strongly impact on their energy sector, and this reflects these countries’ historic and expected commitment to legally binding climate targets. By contrast, while African leaders see climate change as a top concern, they are more worried about the physical impacts of climate change such as extreme weather events, rather than about the uncertain outcomes of negotiations on a climate framework.
Christoph Frei, Secretary General of the World Energy Council, comments at the launch of the report at the Handelsblatt Annual Conference “Energy Industry” in Germany:
“High price volatility has become the new normal facing energy leaders. This is the context in which we expect them to take investment decisions at an unprecedented scale. The unprecedented uncertainty, the need to redefine infrastructure resilience in response to emerging risks, the expectation of changing market designs and evolving business models, as well as the changing geopolitical balance have all placed energy among the top strategic issues globally for at least the next decade. The importance of choosing smart policy options and innovation strategies has become greater than ever, and balancing the energy trilemma must be at the very center of efforts of energy leaders.”
The report also finds that developing electric storage and the quest for energy finance continue to keep energy leaders busy. These issues will be influenced by the future of energy subsidies, a key “need for action” area in the 2015 survey, with the design of market mechanisms playing an important role. Capital markets ranked among the top critical uncertainties in the 2014 survey, but in 2015 this issue is considered as an urgent action item. In particular, the increasing shares of intermittent renewable energy sources, which are expected to quadruple by 2035, will further drive the need for storage facilities to stabilize the supply. The storage issue has increased in perceived impact and uncertainty compared to 2014 and has risen globally in importance.
Christoph Frei adds: “We are seeing more emphasis on the need for new electricity market design, which has been in response to the greater unpredictability of supply as a result of the increasing adoption of solar and wind in the electricity mix. Along with the emerging need to better manage data and a greater risk exposure to cyber-attacks, these developments have paved the way for new business models. This trend is already shown by utilities such as E.On where fundamental shifts around the role of technology and the ‘prosumer’ have led to the restructuring of business units.”
The 2015 survey underlines the way that geopolitical issues have gained importance for energy security, especially with the Russia–Ukraine conflict. However, as concerns about the effects of the global recession have alleviated since last year’s survey, energy leaders go into 2015 feeling more optimistic.
Regionally, the study finds that in addition to climate framework and energy and commodity prices, the top critical uncertainties are:
Africa: energy subsidies, energy affordability, capital markets
Asia: large-scale accidents, extreme weather risks
Europe: Russia–Europe, nuclear
Latin America and Caribbean: capital markets, LNG
Middle East and North Africa: coal, LNG, energy efficiency
North America: electric storage, China–India
DCP Midstream Restructuring
Jan. 30, 2015, Denver-based DCP Midstream executed a reduction in workforce affecting approximately 20 percent of its employees in corporate staff functions. With this corporate restructuring, DCP Midstream will close its Oklahoma City regional office and reduce its workforce in its Tulsa and Midland offices, relocating functions in those locations primarily to its Denver headquarters and Houston regional office.
“DCP contributes to the country’s energy vitality as the largest natural gas gatherer and processor and natural gas liquids producer. With a 90-year history, we are repositioning ourselves for the long term and ensuring we have a sustainable workforce that meets our future needs,” said chairman and CEO Wouter van Kempen. “While this transition is difficult, we are establishing DCP for continued growth founded upon a culture of operational excellence.”
Since 2010, DCP has put in service approximately $4 billion of capital projects in the country’s major producing basins. Having executed successfully on this growth portfolio, DCP has proactively reorganized the company to ensure its focus is on improving its operational reliability and efficiency.
Liberty Lift Acquires Southern Sierra
Liberty Lift Solutions, LLC (“Liberty Lift”) has acquired substantially all of the assets of Southern Sierra General Engineering, Inc. (“Southern Sierra”) of Taft, Calif. The 58-person company was founded in 2006 and operates service centers in Taft, Bakersfield, and Santa Paula, Calif. Southern Sierra offers a diverse line of services for the oil and gas industry including pumping unit sales, service and repair, lubrication services, machine shop services, welding, portable concrete foundations, and 12 ½ -90 ton lift capacity crane trucks.
The acquisition augments Liberty Lift’s capabilities in California’s largest drilling region and provides the opportunity to introduce additional products and services. Mike and Tracy Chitwood, the owners of SSGE, grew the business in this oil rich area. Mike and other management at Southern Sierra will be joining the Liberty Lift team. Bobby Evans, President and CEO of Liberty Lift commented, “I’m very excited about what the Southern Sierra acquisition brings to our company. The knowledge and experience that they bring to our organization will help with our growth strategy in both sales and service. This gives us a much a larger footprint in a very strategic area.”
Dawson Geophysical Completes Combination
Dawson Geophysical Company, previously known as TGC Industries, Inc., on Feb. 11, 2015, announced the completion of its previously announced strategic business combination effective Feb. 11, 2015. Trading in the combined company’s common stock will open on NASDAQ on Feb. 12, 2015 under the symbol “DWSN” on a post-split basis (CUSIP No. 239360100).
Under the terms of the transaction, which was structured as a stock-for-stock merger and intended to qualify as a tax-free reorganization, Dawson Operating Company, previously known as Dawson Geophysical Company (“Legacy Dawson”), merged with a wholly owned subsidiary of Dawson Geophysical Company (the “Combined Company”), previously known as TGC Industries, Inc. (“Legacy TGC”) and continued as the surviving entity and a wholly owned subsidiary of the Combined Company. As consideration for the transaction, all outstanding shares of Legacy Dawson’s common stock, par value $0.33 1/3 per share, were converted into the right to receive 1.760 shares of Legacy TGC’s common stock, par value $0.01 per share, after giving effect to a 1-for-3 reverse stock split of Legacy TGC’s common stock. Immediately prior to the effective time of the transaction, Legacy Dawson changed its name to “Dawson Operating Company,” and Legacy TGC changed its name to “Dawson Geophysical Company.”
After the close of regular NASDAQ trading hours on Feb.11, 2015, and immediately prior to the effective time of the transaction, Legacy TGC effected a 1-for-3 reverse stock split of its outstanding common stock. As a result of the reverse stock split, every three shares of Legacy TGC’s common stock outstanding immediately prior to the transaction were combined and reclassified into one share of Legacy TGC common stock. No fractional shares will be issued in connection with the reverse stock split. Instead, each fractional share to be issued to a Legacy TGC shareholder will be rounded up to the nearest whole share.
Legacy TGC retained its transfer agent, American Stock Transfer & Trust Company, LLC (“AST”), to act as its exchange agent for the reverse stock split. AST will provide shareholders of record of Legacy TGC immediately prior to the merger, which was the effective time of the reverse stock split, with a letter of transmittal providing instructions for the exchange of their certificates and book-entry shares representing pre-reverse stock split shares for certificates and book-entry shares representing post-reverse stock split shares in the name of the Combined Company. Shareholders owning shares through a broker or other nominee will have their positions automatically adjusted to reflect the reverse stock split, subject to brokers’ particular processes, and will not be required to take any action in connection with the reverse stock split and the name change of the Combined Company.
The consummation of the reverse stock split reduced the number of Legacy TGC’s outstanding shares of common stock on a pre-transaction basis from approximately 22.0 million shares to 7.3 million shares. Immediately after the issuance of shares to Legacy Dawson’s shareholders in connection with the transaction, the Combined Company had approximately 21.6 million shares of common stock outstanding, with Legacy Dawson shareholders owning approximately 66 percent of the Combined Company and Legacy TGC shareholders owning approximately 34 percent of the Combined Company. The Combined Company is authorized to issue an aggregate of 35.0 million shares of common stock, including the shares mentioned above. AST is also acting as the exchange agent in connection with the transaction and will send to the former registered holders of Legacy Dawson’s common stock a letter of transmittal containing instructions on how to exchange Legacy Dawson stock certificates and book-entry shares for certificates and book-entry shares of the Combined Company.
The Combined Company is operating under the leadership of Stephen Jumper, who serves as the Combined Company’s Chairman, President and Chief Executive Officer, and Wayne Whitener, who serves as an officer of the Combined Company and as Vice Chairman of the Combined Company’s board of directors. In addition to Messrs. Jumper and Whitener, the Combined Company’s board of directors includes four members of the Legacy Dawson board—Craig Cooper, Gary Hoover, Ted North and Mark Vander Ploeg—and two members of the Legacy TGC board —William Barrett and Dr. Allen McInnes. In addition to Messrs. Jumper and Whitener, the board of directors of the Combined Company appointed James K. Brata, Christina W. Hagan, James W. Thomas, C. Ray Tobias, and Daniel G. Winn as officers of the Combined Company.
Raymond James & Associates, Inc. served as financial advisor to Legacy Dawson while Stephens Inc. served as financial advisor to Legacy TGC. Baker Botts L.L.P. served as legal counsel to Legacy Dawson while Haynes and Boone, LLP served as legal counsel to Legacy TGC.
Good Managers Can Be Bad Crisis Leaders
By Lucien Canton
You are the manager of a big company and you know your business. Each day, you make important decisions regarding money, policy, and strategy. You’re in total control. Without warning, you are confronted with a major crisis: an earthquake, a fire, or a reputational risk. Now you find yourself uncertain and unsure. You don’t know what to do and you realize that everybody is looking to you for guidance—and the decision you are about to make will directly affect the survival of your company.
We see this all the time. Otherwise capable and competent managers appear to self-destruct during crisis, making bad decisions and stumbling in public. Consider the decision by BP to try to “spin” the oil spill crisis and the poor performance of CEO Tony Hayward, for example.
Why do your decision-making skills seem to desert you during a time of crisis? To understand this, we need to take a closer look at what happens during a crisis.
We sometimes forget that, although we are 21st century people, many of our reactions to stress are based on reactions developed in more primitive times—the “fight or flight” response. This means that at the time we are faced with a crisis, our bodies undergo physiological changes that prepare us for a response. Among these are increased respiration and heart rate, auditory exclusion, and tunnel vision. These changes can inhibit our ability to think rationally and limit our decision making capacity. The greater the crisis, the more extreme the reaction.
Response to crisis can be roughly separated into three phases. When confronted with a crisis, the strategy with the highest success rate in prehistoric times was simply to freeze in place. Even today, the initial reaction of many people to crisis is denial: a failure to recognize or believe a crisis is occurring. This is why so many people appear to be dazed and unresponsive at the scene of an accident. Once we recognize the crisis, we begin to gather information and consider options for responding. This is where the physiological changes take place and the level of stress becomes a significant factor in our ability to assess the situation. The final phase making a decision and acting on the option we consider most viable.
The problem is that the length of time for these three phases varies based on the individual, the nature of the crisis, and the people with whom we interact. Some people never progress past the first phase unless subjected to an outside stimulus. Others move from phase one to phase three in a matter of seconds.
The key to success lies in the identification of options in the second phase. Managers are trained to use a standard problem-solving model that works extremely well in day-to-day business: we define a problem, gather information on the problem, consider alternatives, decide on an alternative, and implement it. The problem is that this model does not work during a crisis.
A crisis is characterized by ambiguity and conflicting information. There are usually severe time constraints and very high stakes. Using a structured decision-making model may, in fact, lead to a certain paralysis as the decision-maker attempts to gather more information and keeps putting off making a final decision. Couple a complex problem with inadequate time for analysis, add in the physiological changes induced by stress, and it becomes apparent why so many managers make bad decisions.
Crisis requires a more intuitive decision-making process. Research into military and emergency services’ decision-making shows that leaders reacting to crisis rely on pattern recognition rather than a structured decision making process. That is, they unconsciously attempt to find a correlation between the current problem and their past experience. Once a match is found, the decision-maker runs a quick mental simulation to see if it actually fits the current problem, makes any necessary adjustments, and acts. This process happens extremely fast and the decision-maker may not even be conscious of it, often claiming that they acted on a hunch or a feeling.
Recognizing that decision-making in a crisis is different from day to day decision-making is the first step to successful crisis leadership. Once this is understood, it is possible to increase the amount of available patterns through three ways:
1. Direct experience—While there is truly no substitute for actual experience, crises have a way of involving the people least equipped to handle them. The crisis for many will be an once-in-a-lifetime event. However, remember that we are considering patterns, not identical situations, so experience gained in one situation could be applicable to a different one.
2. Learning from the experience of others—There are numerous case histories of organizations that have successfully survived crisis. There is even more literature on those that did not. Research demonstrates that reading accounts of other crises and the decisions made during them is almost as effective as gaining direct experience. Reading articles in business magazines, reviewing case studies and after action reports, and viewing documentaries all can increase the patterns available for recall. This is why so many military officers study historical campaigns.
3. Simulations—Simulations or exercises combine the best of both worlds. They can be based on hypothetical scenarios or actual scenarios found in after action reports or articles. In addition, they can provide direct experience to participants, allowing them to become familiar with the physiological changes brought on by stress. Even something as simple as a short discussion-based exercise can provide additional pattern sets to decision-makers.
Decision making during a crisis is not the same as decision making for routine business. It requires a shift from a structured decision making model to a more intuitive one. Recognizing that decisions must be made using this intuitive process and preparing yourself to use it is the best way to prevent a leadership failure during a crisis.
About the Author
Lucien G. Canton, CEM is a consultant specializing in preparing managers to lead better in crisis by understanding the human factors often overlooked in crisis planning. A popular speaker and lecturer, he is the author of the best-selling Emergency Management: Concepts and Strategies for Effective Programs. For more information, visit www.luciencanton.com, or email Info@luciencanton.com.
Taking Your Attitude’s Pulse
By Darlene Hunter
Hard times that sap your energy and leave you frustrated are an inevitable part of life. Maybe you lost a job. Maybe your finances took a turn for the worse. Maybe your personal life is in disarray or a health problem emerged forcing a lifestyle change.
Such setbacks can leave people feeling afraid, uncertain, angry, or unsatisfied, says Darlene Hunter, a speaker and the author of Win-Ability, Navigating through Life’s Challenges with a Winning Attitude (www.darlenehunter.com).
Overcoming those emotions, she says, comes down to a person’s mindset and perspective. “Your attitude is a critical factor that can either hold you back or help you move forward,” Hunter says. “Everyone needs to take the time to do a pulse check on where they are in their thinking. Is it positive or negative?”
A positive attitude comes easily when life is rosy. The real trick is persevering when things go awry so you can continue to strive toward your goals.
“The important thing to remember is that we cannot give up just because things do not work out the way we want,” Hunter says. “We must be persistent and press our way through to the end.”
Hunter offers five tips that can help change your thinking, which in turn will change your behavior and, ultimately, change your results.
• Be a planner. To live your dream, you need to know what you want and have a plan for getting there. “Planning your day, week, and month are critical ingredients to living your dream and purpose,” Hunter says. The “how” and “why” elements are important factors in planning, as they guide you in the direction you want to go.
• Be goal oriented. Once you set goals, the next step is to work on completing them. That’s why it’s important to set goals you can accomplish. Each time you can check a goal off your list, you are one step closer to what you ultimately want to achieve. “The sense of accomplishment that comes from reaching even the smallest goals will help you keep moving and striving to get your desired end,” Hunter says.
• Be driven for results. When you are driven, Hunter says, you have a compulsive and urgent desire to accomplish what you are seeking, whether it’s a bonus, a promotion, additional knowledge in a particular area, or some other goal. The important factor is to always know what you are seeking. Results-driven people focus on meeting objectives and delivering on the goals they set.
• Have a winning attitude. You must be determined, dedicated, and devoted to succeed. “You should never give up on your goals and dreams simply because something goes wrong or you are not getting where you hoped to be fast enough,” Hunter says.
• Be focused. When you are focused, you have a clear perception and understanding of what you want to accomplish and where you need to go to get there. “Think about long-distance runners who will run a 26-mile marathon,” Hunter says. “They find their pace and then they stay with it. They may get weary and tired, but they find their zone and stay focused and concentrate on what is needed to get to the end.”
“Plenty of stories can be told about people who failed in the beginning, but made it to the top of their profession because they did not give up after being told they weren’t good enough,” Hunter says.
“The ability to keep trying and pushing no matter how many failures or obstacles you hit is the power of perseverance and is what “Win-Ability” is all about.”
About Darlene Hunter
Darlene Hunter, (www.darlenehunter.com), is president of Darlene Hunter & Associates, LLC, a motivational/inspirational speaker, author, life and business coach, and award-winning radio talk show host. Her new book, Win-Ability, Navigating through Life’s Challenges with a Winning Attitude, is her fourth on the theme of perseverance. She is the host of “The Darlene Hunter Show,” winner of the Fishbowl Radio Network 2013 Distance Show of The Year Award. Hunter has been a top performer in management for more than 30 years.
Errors That Undermine New Businesses
By Randy H. Nelson
The dream of launching a business runs deep in the American psyche, but more often than not those dreams go bust. Half of new U.S. companies fail in their first five years, according to Gallup. Expand the timeframe out to 10 years and the failure rate reaches 70 percent.
That’s not surprising, says Randy H. Nelson, an entrepreneur who has built multi-million dollar companies. The skills it takes to start a business aren’t necessarily the same as those it takes to keep that business afloat. What is surprising, though? In the United States, more businesses are now being shut down (470,000) than are being started (400,000).
“Many entrepreneurs have the gumption to take that dramatic first step of sparking something into creation, but too many lack the perspective to reflect on what’s needed for the next step,” says Nelson, author of The Second Decision – The Qualified Entrepreneur (http://randyhnelson.com/book/).
Also, anyone can declare themselves an entrepreneur. No qualifications are required. Nelson says that’s different from the Navy, where he served as a nuclear submarine officer and had to prove his qualifications before advancing. Because of that lack of proper qualifications, Nelson says entrepreneurs often make five mistakes that threaten to put their businesses at risk.
• Insistence on autonomy. An Inc. magazine study once said that a trait most entrepreneurs share is their desire for autonomy, which is great starting out, Nelson says. “In the startup phase, the company is all about you,” he says. “Your fingerprints are on everything, and there is very little you don’t know and aren’t directing.”
But after the startup phase, the company steams into the growth phase, becoming more complex and more vulnerable to industry and economic trends. At that point, an entrepreneur’s insistence on autonomy can hinder the company’s ability to respond quickly and intelligently to challenges it faces. “In the growth phase, you simply can’t do it all, and it’s foolish to keep believing you can,” Nelson says.
• Unwillingness to build structure, cultivate expertise or delegate. Many entrepreneurs will need to surround themselves with a strong executive team—or at least a steady right-hand individual—to ensure the company’s success, Nelson says. But too many business owners fail to create the kind of structure that produces good leadership decisions within a managerial team.
“As you grow your company and enlarge it to meet new opportunities, you must also build in accountability,” Nelson says. “Systems need to be put into place, and people, too.” The entrepreneur needs to know the employees and where their strengths lie to put them to good use, he says.
• Lack of financial leadership. Entrepreneurs by definition take risk when they make the decision to start their own business. In the area of financial leadership, which includes tracking cash levels and trends, financial covenants, metrics and expenses, entrepreneurs who are not financially literate and active will need the direct support of a financial expert to ensure they receive the advice and input needed in their organization.
The Small Business Administration has estimated that up to 60 percent of businesses owe their demise to a lack of cash. Other sources have this number as high as 90 percent. Nelson says: “When it comes to financial leadership, it is what entrepreneurs don’t know that they don’t know that will multiply the risk in their business exponentially.”
• Reacting unwisely to boredom. Starting a business proved exhilarating. The day-to-day operation of it may pale in comparison. A bored entrepreneur can create significant troubles for the business, Nelson says. “Things are going to get up-ended in a hurry, because many bored entrepreneurs either start new companies or abruptly make changes in their current companies to keep their own level of excitement high,” he says.
“Of course, entrepreneurs are to be celebrated for their guts and desire to innovate. But when a serial entrepreneur habitually and almost obsessively looks for new sandboxes to play in, what happens to the existing company or companies often isn’t very good.”
• Failure to engage in self-examination. Entrepreneurs need to be aware of their own strengths and weaknesses, the same things they gauge in their employees.
“You need to set aside your probably abundant self-confidence and take stock of what you know, what you’re good at, and what skills you still need to master in your leadership role,” Nelson says.
About Randy H. Nelson
Randy H. Nelson is a speaker, a coach, a Qualified Entrepreneur, a former nuclear submarine officer in the U.S. Navy and author of The Second Decision—The Qualified Entrepreneur (http://randyhnelson.com/book/). He co-founded and later sold two market-leading, multi-million dollar companies—Orion International and NSTAR Global Services. His proudest professional achievement was at the Fast 50 awards ceremony in the Raleigh, N.C., area when NSTAR, a 10-year-old company, and Orion, a 22-year-old company, were awarded the rankings No. 8 and No. 9, respectively. Nelson now runs Gold Dolphins, LLC, a coaching and consulting firm to help entrepreneurial leaders and CEOs become Qualified Entrepreneurs and achieve their maximum potential. He has a Bachelor of Science degree in Accounting from Miami University, Ohio, and was awarded the Admiral Sidney W. Souers Distinguished Alumni Award there in 2011.
A Flyer’s Survival Guide
By Margaret Page
Let’s be honest, being strapped into a tiny seat in a cramped airplane—along with dozens of strangers—35,000 feet above sea level is nobody’s idea of fun. The Internet is filled with stories of air rage, reclining seat standoffs, and articles with titles like “The Most Annoying Type of Airline Passenger Is…”
In Expedia’s 2014 Airplane Etiquette Study, the travel company named rear seat kickers as the top airline etiquette violators—with inattentive parents coming in at a close second. Other offenders called out as irritating to passengers included the “Aromatic Passenger,” the “Chatty Cathy,” and the “Audio Insensitive.”
And yet we fly the not-so-friendly skies—often.
Many people love to fly—to explore new places and new cultures—and there are few things more annoying than a travel experience sullied by fellow passengers.
Here are some air travel etiquette tips to pack with you to make sure you’re not the one doing the annoying the next time you board a plane.
Be patient
It is always surprising to watch the crowds of people who hover around the gate when the first call for boarding is announced. The minute the attendant calls the first boarding zone, everyone seems to pop up and head for the gate—clogging the walkways and blocking access to the desk. Everyone is going to get on the plane. Wait for your zone to be called before lining up. And board with your zone!
Carry it carefully and make room
The rows on the plane are very narrow. As you make your way to your seat, carry your bag in front of you. Turn your rolling suitcase sideways and carry it in front of you to your seat. When it comes time to place your belongings in the overhead bin, ensure that it’s in such a way that allows room for others. If you have two bags, place the smaller one under the seat in front of you.
Think about the stink
This is where the term “Aromatic Passenger” comes into play. This seems like an obvious tip as you’ll be sitting next to someone for hours, shower before you head to the airport. And dousing yourself with a ton of perfume or cologne doesn’t count! Some people are very sensitive to smells, and it can even make them sick.
Leave out the liquids
Mind the contents of your bags—especially liquids. Carry-ons stuffed into crowded luggage bins have been known to shuffle: potentially leading to a mess or spill on your fellow passengers.
Respect the recline
It’s obvious that airlines have been cramming more seats into planes in recent years. Where there was once 33 – 34 inches of leg space, now there is 31 inches—hence the uptick in air rage. People are uncomfortable already, and when you fling your seat back all the way, you’re minimizing leg space for the passenger behind you.
The best—and most courteous—practice is to look behind you, and ask permission of the passenger before you recline. And then recline just a little, leaving them with a comfortable amount of legroom.
Note: Some airlines are now offering the option to “purchase” those three inches of legroom. For an additional fee, round trip, you can have more wiggle room.
Keep your feet to yourself
Seat Kickers were listed as the top onboard etiquette offenders in Expedia’s survey. Again, with such a limited amount of space in front of you, be careful not to kick the seat in front of you. And speaking of feet—keep your shoes and socks on!
Balance yourself
This headlines many passengers’ list of pet peeves: While sitting quietly in their seat, eyes closed, relaxed—and wham, their head is pulled back as the person behind them uses the top of the seat to pull themselves up! Use the armrest to balance yourself when getting up from your seat.
Tone it down
Listening to music or watching a movie on your computer to pass the time is great, but make sure you have good earphones! The same is true for talking too loud. If you’re carrying on a conversation with someone in an airplane, be discreet.
Keep your children in check
Even adults get cranky when confined to the tight quarters of an airplane for a long period of time, so it’s no surprise that children unravel in flight. Parents need to prepare for the flight as much as they can, depending on the child’s age—so that everyone, including the child, is as comfortable as possible while in the air. Games, movies, books, and a bag of tiny gifts to open every hour during long flights go a long way in distracting children from the fact that they can’t run free!
If there is disruptive behavior, talk to the parents—never scold another person’s child. That will not go over well in the air or on the ground.
Don’t be disruptive
Speaking of disruptive behavior: Adults, this should also go without saying, but profanity, excessive drinking, arguing with flight attendants, and other behavior that disrupts others will not go over well onboard.
Leave your inner linebacker at home
When it’s time to deplane, allow people in front of you to get their bag from the overhead compartment and make their way out first. The “hurry up and wait” doesn’t work anyway.
If you have a connecting flight, and there was a delay on your original flight, let the flight attendant know you don’t have a lot of time between flights. Typically, others have the same issue and they will make an announcement asking passengers to let those with connecting flights exit first. This is not an open invitation for you to jump the line, however. Be courteous.
There are certainly a slew of high-flying “violators” out there, but how you handle them says a lot about you, as well. In the Expedia study, when asked how they would react if a fellow passenger behaved badly on a flight, nearly 50 percent said they would remain silent and ignore the issue.
Just 22 percent of those surveyed said they would confront a misbehaving passenger and 12 percent admitted that they would record the bad behavior using their mobile phone or a camera.
This is the practice of “shaming” those passengers who are committing the etiquette violation in the sky. They are snapping pictures and posting the unflattering—and often pretty disgusting—photos to Facebook and Instagram—for entertainment purposes. How rude!
The next time you board a plane, keep these etiquette tips in mind. Common sense, and a little courtesy, goes a long way in making others feel comfortable.
About The Author
Margaret Page is a recognized etiquette expert, speaker and coach, who helps people and organizations be more professional. She is the author of The Power of Polite, Blueprint for Success, and Cognito Cards—Wisdom for Dining & Social Etiquette. She is the founder and CEO of Etiquette Page Enterprises, a leading Western Canadian training organization. To learn more about Margaret follow her on Twitter and Facebook or sign up for her Etiquette blog or Etiquette Edge Newsletter. To contact Margaret, visit her website at http://etiquettepage.com/, or call 604-880-8002.
Consumer Energy Highlights Permian
Located in the middle of the Permian Basin, Upton Country and its surrounding counties have seen incredible growth and economic opportunity in the past few years from the onset of the hydraulic fracturing boom. Originally founded in the late 19th century as a ranching community, the county and its economy have been transformed by oil and gas production since the first exploratory drilling occurred in 1925.
And although the Permian Basin has been a regular leader in oil and gas production for almost a century, an energy renaissance in Upton and its surrounding counties over the past couple of years has brightened the region’s economic forecast for generations to come.
According to a report published by Texas Tech University, in terms of production, just the Texas portion of the Permian Basin exceeded 29 billion barrels of oil and approximately 75 trillion cubic feet of natural gas this past year. As a result, output in oil and gas is approaching the record levels of several decades ago.
Much of this production can be attributed to improvements in technology—hydraulic fracturing and horizontal drilling—directly benefiting the economy in the Permian Basin. Indeed, the report found that last year, the oil and gas industry in the Texas portion of the basin sustained over 440,000 jobs and generated $113.6 billion in economic output.
Given these staggering statistics, the region is an ideal case study on how the nation’s shale boom has brought not just lower energy and fuel costs to consumers across the United States, but also more economic stability, increased security, and stronger worldwide competitiveness.
As a result, Consumer Energy Alliance (CEA) has chosen to highlight the Permian Basin and its direct and indirect impact on Upton County and other surrounding communities for Part XII of its ongoing education series about the advantages of domestic shale development.
After all, as Bradley T. Ewing, a Rawls Professor of Energy Economics at Texas Tech University, said, the Permian Basin “is arguably one of the most, if not the most, important regions” when it comes to energy production, adding that the basin has “the greatest rig count of any basin or region in the world.”
Ewing says the resulting economic impacts derive directly from the exploration, drilling, and production of oil and gas, all of which require a multitude of support activities for oil and gas operations.
“These core activities, in turn, lead to a number of non-core but very critical midstream supply chain activities such as pipeline, transportation, refining, and equipment manufacturing,” he said. “The secondary effects of the oil and gas industry include the numerous expansions and continuing operations of suppliers to the industry as well as wholesale, retail, real estate and housing, and financial services, that benefit from the increased dollars generated.
The statistical evidence of the growth in Upton in the past few years speaks volumes to the importance of energy production as the main driver of its economy. Most strikingly, the median household income in Upton County has increased a whopping 79.6 percent since 2000.
But the benefits on nearby production expand well beyond Upton County’s borders,” Ewing says.
“These effects are not just limited to the Permian Basin but are key elements to the overall Texas, New Mexico, and national economies,” Ewing said. ‘What is going on in Upton County alone accounts for over a billion dollars of economic activity in the Permian Basin.”
Growth in cities in the surrounding area in recent years supports Ewing’s conclusions. Midland, Texas, for example, in nearby Midland County, was “the fastest growing metro area from July 2011 to July 2012.” Likewise, Odessa, Texas, located in neighboring Ector County, was the “fifth fastest growing metro area in the U.S. during the same time period.”
This population growth, coupled with large increases in median household income, has also upped median house prices in Upton County by over 50 percent since 2000. This increase comes at a time when many counties around the country saw median house prices adversely affected by the 2008 recession.
Furthermore, the awe-inspiring benefits of this boom reach far beyond the geographical limits of the Permian Basin. According to the Texas Tech report, last year the oil and gas industry in the Permian Basin contributed more than $60.2 billion to the Gross State Product (GSP) of Texas.
‘An analysis of oil production trends and cycles indicates these benefits include sustainable growth and a more stable economy than has been experienced in the past,” Ewing says. “So long as prices remain at reasonable levels and if the regulatory environment does not cause too much uncertainty for operators either in terms of uncertainty or undue burden, the stage is set for the Permian Basin to continue to be strong and a leader in energy production.”
The Texas Tech report on the oil and gas industry in the Permian Basin noted that, according to the Texas Comptroller of Public Accounts, “the state of Texas received revenue of $1.5 billion from gas production and $2.1 billion from oil production.” Previous studies have suggested that on a state-wide basis, royalties to state funds may exceed $1.3 billion. This means that “taxes on oil and gas production represent” 8.4 percent of the budget.
In essence, the profound economic effects of the growth of the oil and gas industry in Upton and its surrounding counties have produced significant portions of state GSP and state tax revenue. They have also led to the area having some of the lowest unemployment rates in the nation, an issue that has plagued countless counties across the United States for almost half a decade.
According to the Texas Tech report, the end-of-year 2013 unemployment rate for Texas was 6 percent, while in Midland County and Odessa County the unemployment rate was 3.1 percent and 3.6 percent, respectively.
The good news is we can expect more energy production—and its accompanying benefits—in the years to come, so long as geopolitical events and infrastructure concerns do not get in the way, Ewing says.
The former has already occurred. Crude prices have fallen dramatically since the midway point of 2014, causing much concern for American producers. But as opposed to slowing production—which would be a dangerous overreaction to a temporary event—CEA believes that we need to stay the course and continue promoting an all-of-the-above energy approach, in Texas and throughout the United States.
After all, what goes down must come back up, oil prices included. And when that happens, our job-creating, economy-boosting energy policies and markets, in the Permian and beyond, will be exactly where they are today: ahead of the pack, just as they’ve