The rise and fall of an oil company. [Economic development, expansion, diversification, and stagnation of oil companies and the causes]
A tremendous amount of oil and gas reserves has been found. These reserves were discovered when geologists were in key positions. Exploration oriented leaders are not in key positions today. As with all living organisms, oil companies are governed by a life cycle which includes birth, adolescence, maturity, old age, and death. The life cycle of a company is characterized by its CEO/management team. During the birth of an oil company, a geologist and/or entrepreneur (leader) who has a desire to succeed is in charge. There are few tangible assets and the mortality rate is high. In the adolescence stage, the leader is willing to take high risks and is very receptive to new ideas. The discovery of company-making reserves are most likely to occur during this stage. During maturity, the key officer is usually an engineer who develops the newly found reserves. He has the desire to quantify exploration ventures in unrealistic, precise terms. Old age usually has a CPA as manager who prefers to take cash flow and transfer it to other businesses (diversification). The sale of properties starts in this stage. The last stage is death and the key officer is either a lawyer or a banker. The legal entanglement will start that inevitably plagues the cash-rich, asset-rich oil company. There is no residual expertise conducting exploration activity. We now have the liquidation of remaining assets and the company goes through mergers or sale.
- OSTI ID:
- 5571031
- Report Number(s):
- CONF-910403-; CODEN: AABUD
- Journal Information:
- AAPG Bulletin (American Association of Petroleum Geologists); (United States), Vol. 75:3; Conference: Annual meeting of the American Association of Petroleum Geologists (AAPG), Dallas, TX (United States), 7-10 Apr 1991; ISSN 0149-1423
- Country of Publication:
- United States
- Language:
- English
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