Weyburn鈥� A year ago, Del Mondor, president, CEO and owner of Weyburn-based Aldon Oils Ltd., told Pipeline News, 鈥淲e鈥檙e going to get good at this,鈥� with reference to dealing with oil prices much lower that what we had seen during the boom.
He said, 鈥淭his industry is full of innovators and entrepreneurs and people that stand up to challenges, whether it鈥檚 B.C., Alberta, Saskatchewan or Manitoba, we will get good at this. Whether that鈥檚 getting good at $35 or $75 or whatever, we will get good at this.鈥�
Now, a year later have we gotten good at this?
Mondor replied, 鈥淚 think it鈥檚 still a work in progress. As soon as the tough times hit 鈥� I鈥檝e been doing this for quite a few years now 鈥� it鈥檚 all about a cycle. We are getting, and we have gotten good at this.
鈥淲e鈥檙e sometimes our own worst enemies. So that when we get to a price that everybody鈥檚 happy with, and we鈥檙e going to do a bunch of great things, then scarcity comes up again. We start losing the focus that we had that was necessary to be good at this, then the cycle starts again.
Openfield purchase
鈥淲e鈥檙e constantly looking at acquisitions and trying to get the right assets in the company,鈥� Mondor said. 鈥淲e bought a company called Openfield Resources. We took over Feb. 1. We bought them and their working interest partners out.鈥�
It was a 210 bpd acquisition, a couple miles east of Manor. 鈥淚t鈥檚 actually expanding our footprint. We typically have tried to concentrate our asset base, on the producing side, to west of Highway 47. We liked the asset. We went after it, even though it鈥檚 a little bit out of the ways.鈥�
It鈥檚 Mississippian conventional, which is what Aldon primarily concentrates on, keeping it simple, so to speak. 鈥淲e do have Bakken wells that we鈥檙e actively drilling, but we鈥檙e more interested in conventional production.鈥�
He noted they are actively working on five or six deals at any one time, both buying and selling. 鈥淲e recently sold a property, effective May 1, to Firesky Energy.鈥�
That property was north of Estevan.
鈥淢y plan, for Aldon, is to put the right assets, in place. There鈥檚 going to be a rationalization. There鈥檚 going to be purchases, there鈥檚 going to be sales. We鈥檙e going to get to the point where we have the assets I have planned.鈥�
Over the last year Husky sold much of its non-oilsands and heavy oil production throughout Western Canada, including southeast Saskatchewan. Aldon Oils tried to buy some of that, but was beaten out by a larger company.
Drilling
Aldon has had an active drilling program going this spring. Mondor said, 鈥淲e finished one well before breakup. We鈥檝e got two more, right after breakup here. Then we鈥檙e going to evaluate and hopefully get drilling again Aug. 1 for a more extended program.
鈥淏ack in the good days, we used to drill every day. We鈥檙e certainly looking to get back into those days.
鈥淭hat would mean prosperity, and we鈥檙e doing well again.鈥�
The oil industry, as a whole, has cut back on drilling over the last 2.5 years, and with production declines, is that now an impetus for drilling?
Mondor replied, 鈥淭here鈥檚 a number of different factors. We鈥檝e got (lease) expiries, a number of different commitments to meet. I think for some, the whole maintaining production at a certain level is key to getting back drilling again.
鈥淲e鈥檝e spent almost three years now evaluating our costs and really looking at all the processes we do, as an industry. I think we鈥檙e at the point where US$55, US$50 actually looks pretty good again.鈥�
At what point can service companies start raising their rates?
鈥淭hat begins with scarcity. If you start getting to the point where us, as producers, have to wait for, or can鈥檛 get, services, the word scarcity started to get used. That鈥檚 when you鈥檒l see price escalation,鈥� he said.
鈥淧art of getting good at this is maintaining your discipline, and maintaining your discipline to survive. As soon as you鈥檝e got a whim that you鈥檝e all of a sudden got to do all this work, and you do it without keeping a focus on cost, you鈥檙e not going to be successful. As a producer, we have to stay disciplined. We have to realize that we are just not going to get US$60, US$70, US$80 a barrel. So we have to maintain our discipline.
鈥淚f that means we can鈥檛 do it, that鈥檚 what it is.鈥�
Oil prices have fluctuated above and below US$50 per barrel in recent weeks, and at the time of this interview, they were near US$44 per barrel. Asked if that has impacted Aldon鈥檚 plans, Mondor said, 鈥淵ou have to weed out the noise. Whether its US$44 or US$55, to me, you鈥檙e going to have ebbs and flows of this industry that none of us that can predict.
鈥淭o me, that鈥檚 noise. We have to get through it. You have to maintain your plans beyond a week, and maintain your plans, have your plans in place. Move forward, have your discipline. You鈥檙e going to have US$44s. You鈥檙e going to have US$55s. We might have US$34s. We might have US$65s. I don鈥檛 know this. So you have to maintain what your plan is and forget about what鈥檚 happening this week, and what鈥檚 happening next week. Weed out the noise and execute your plans.鈥�
Asked how Weyburn has been doing recently, Mondor said, 鈥淚 don鈥檛 think we鈥檝e seen the boom and busting that鈥檚 so famous in the oil industry. We鈥檝e of course got our bust. But I think we鈥檝e seen a fairly steady amount of activity within Weyburn. Crescent Point has got a very big operation, and is very good to this community. They have maintained the work. Albeit it鈥檚 a slower time for many, many oil companies, and for Weyburn, we鈥檙e adjusting. Like, with anything, we鈥檙e getting good at this.
鈥淣obody survived it unscathed. Producers, service companies, convenience stores, car dealerships 鈥� everything, from A-Z has felt the drop.鈥�
