Truly understanding your subsurface rock formation you’re drilling is crucial to successfully develop any field. Anadarko Basin geology is no different, and Trueblood Resources Inc. is on the job.
Our guest today is John Trueblood, President of Trueblood Resources Inc.
John has been in the industry for nearly 40 years. He began his career working for Amoco, which started out as a little company John D. Rockefeller founded named Standard Oil. Amoco was acquired and re-branded by British Petroleum in 1998.
John eventually moved on to found Trueblood Resources to focus on under-developed assets in the Anadarko Basin.
I would be remiss if I didn’t say I LOVE talking to John Trueblood.
He is the consummate oilman. One of the tens of thousands of small independent operators who produce nearly 90% of the oil and over 90% of the gas that’s produced in the United States. He is a shining example of someone who started with nothing, and turned nothing into something.
When John speaks you can hear the gears turning. He’s constantly on the move, and constantly on the grind. He’s a deal guy in the truest sense of the phrase, and an invaluable addition to any oil pro’s network.
John is Based in Denver, Colorado. He joins us via phone where we begin by discovering how he got his start in oil and gas.
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#065.5.1 Oil and Gas This Week Podcast: Anadarko Basin Geology with John Trueblood
Transcripts Courtesy Of
James: This is James Hahn II, and you’re listening to the Oil and Gas This Week Podcast, Brought To You By Red Wing. This is Episode 65.5.1. .5 episodes are my chance to speak with entrepreneurs, executives, and thought leaders from inside and outside the industry. To hear their stories. What inspires their work. What culture drives their company. What innovations they’re bringing to the oilfield.
My guest today is John Trueblood, President of Trueblood Resources Inc.
John has been in the industry for nearly 40 years. He began his career working for Amoco, which started out as a little company you may have heard of funded by John D. Rockefeller called Standard Oil. Amoco was acquired and re-branded by British Petroleum in 1998.
John eventually moved on to found Trueblood Resources to focus on under-developed assets in the Anadarko Basin.
I would be remiss if I didn’t say I LOVE talking to John Trueblood.
He is the consummate oilman. One of the tens of thousands of small independent operators who produce nearly 90% of the oil and over 90% of the gas that is produced in the United States of America. He is a shining example of someone who started with nothing, and turned nothing into something.
He’s a deal guy in the truest sense of the phrase, and an invaluable addition to any oil pro’s network.
John is based in Denver, Colorado. He joins us via phone where we begin discovering how he got his start in oil and gas.
Give us the 50,000 foot view of Trueblood Resources, where are you located, what do you all do.
John: I originally started the company in 1988. We’re a family company now. My father, Harry Trueblood, started his career in the late ’40s with a California company which now is Chevron. I brought him in to this small company at least 15 years ago, maybe 20, but about 15. So it’s really a family company. He’s had a variety of public companies but ultimately somewhat seen his activity in the public arena with publicly traded companies, really decided to stay private.
So we’re a privately held finance primarily with the joint ventures, with the outside partners that participate in our projects. Sometimes we operate. Sometimes we are not operator. My father and I are sort of the two sort of key team members. He’s background is engineering. My background is land.
We’re focused on the Anadarko Basin, and principally the Oklahoma side of the Anadarko Basin which is traditionally considered independent oil and gas operator. We also have a longtime partner. Trumark Production Company had done extensive amount of geologic and geophysical work together pretty much in our niche which is more of the shelf of the Anadarko.
James: Where did you get you start in the oilfield. You said your dad’s in the ’40s.
John: I started originally at Amoco Production Company. Amoco of course is owned by British Petroleum now. Some might call it a merger but they really were bought by British Petroleum in I think it was 2001. So 1980 I started in Denver, Colorado which at the time was considered the Denver Region. The company, Amoco, at this office in Denver operated from Oklahoma to Alaska. So it was a very, very great position to be in geographically, not only because you’re in Denver which is a desirable place to live, but you had the opportunity to work with a lot of different oil and gas basins and a lot of different business climates and the geographies. So that was terrific. I did have the opportunity personally to work pretty much from Oklahoma to Alaska myself.
James: You’re doing land?
John: In the land department. Originally I was hired as land. My educational background really was more arts and science. I started liberal arts in Lewis and Clark, a small liberal arts college in Portland, Oregon, and then ultimately got a business degree from the University of Colorado but, really, my background is really more sort of classical trained education.
I decided to go into the oil business because of two reasons. This is, again, 1980. I saw an opportunity as a young person in terms of a career. I think probably as much, I was very attracted to what I thought was the high quality of the people that I met, interviewed extensively. I never even considered the oil business as a career initially. My father had been involved in it for years. Really, at the time I didn’t even knew what a land man was or did but ultimately learned and ultimately was hired by Amoco, and then stayed there eight and a half years.
James: That’s something that I find with anybody in the oilfield, it’s always the people. It’s the number.
John: I think so. Obviously we’re in an interesting time right now for many reasons as far as whether it’s the carbon discussion, whether it’s the low commodity price, whether it’s the future of oil as an energy source or not. Ultimately because the business is so complex and so diverse both from the scientific standpoint as well as the business and regulatory side, I think there’s a real high quality caliber of individuals that are in this industry and had stayed in this industry, and of course you have characters as always that comes and goes.
I think it’s still a very small niche industry in many ways. I run into, constantly, different people that I either know somebody they know or we’ve done business with somebody together. I’m almost 60. Forty years, almost, not quite, it’s almost 40 years I’ve been doing this. Anyway, some parts of the industry are clearly different but I think the fundamental side is there. Anyway, that’s how I got started at land department, Amoco Production Company.
Amoco was a little unique. They were always two things. They were extremely about the team, that means geology, geophysics, land and engineering, as team members really working closely together rather than, I saw in many of the larger companies that we did joint ventures with at Amoco, the land department was segregated in one area and engineers in another and geology and geophysics were often together.
James: Why hasn’t the industry learned that lesson yet? That’s still true across the board.
John: We don’t know each other well but you seem to me be fairly current on how to employ the internet, social media and sort of how things are changing. Here’s just a quick overview of my small observation of that. The industry, I think, is better now but had struggled with change in many ways. It’s obviously an old industrial industry. It was dominated by males for many, many years, white males. That’s obviously way changed in the last 30 years or so. It was the coat and tie. Of course, that all changed too. It obviously depends on each company but I’ll just use Amoco because that was my example of a large legacy, big US corporation in the oil and natural gas business both upstream and downstream.
Amoco is really great at hiring really great talents and they’re really good at developing you, in other words training you and send you to official schools and giving you quite amount of autonomy. How to bring you along with what I call more matters of the heart? I don’t mean just sort of touchy-feely things, but how is it you motivate people, work environment, how you structure flexibility, how you use sort of modern changes and communication how the world is relating to with each other. I thought too much fortress building. Now, that still goes on, I think, in large companies.
Let me give you one other brief example of a historic company. We did extensive business with the 3M Company for a number of years developing an enhanced recovery product with the University of Texas with a guy named Gary Pope and then several people at 3M. So we had the opportunity as a small company to spend a lot of time at 3M. It was fun for me because this had been like 15 years or 20 years maybe after I’ve started Trueblood Resources. I’ve been a small operator in a small entrepreneurial role. My training and my foundation in Amoco always stays with me because I think it’s extraordinarily valuable. So I was able to understand how 3M was operating, thinking, meetings and the teams and the mangers and the hierarchy and the politics et cetera.
One thing about 3M that I noticed right away they did was all the new technologies that they developed — and 3M is more of really a product development company than they are a research company. They want to push products out to you and I as consumers or the industrial or retail if you will. All of the technology that any group or 3M ever developed was owned by corporate. So even though they had all these individual divisions that were competing with each other with budgets, et cetera, these sorts of new ideas and new types of products could flow freely between all parts of the company and all the different divisions.
So that’s exactly how those sticky notes were developed. It was really with collaboration somewhat by chance between the adhesives group and some other products division group. They put it together. It ended up being, of course, an extraordinary success financially for them. I really admire that. I told my Harvard professors that they should really used 3M as another business model because Harvard is really big on those case studies. They didn’t want executive management things with them. I thought it was unique. I never saw that in Amoco. Maybe they do it now. I don’t know. I don’t spend much time inside the big companies anymore.
That’s how I see it. Again, I don’t work at Google or Apple or something but I think it’s a different work environment, Under Armour, I mean these are different types of companies. I think it’s changing, sort of. I believe having more women in management capacities in our industry is probably good. It’s a little tricky in the field because the oil and gas field is still pretty basic. It’s the little frontiers we like still. I mean less so because you have much more comforts out there, and obviously communication is so much better. Anyway, we’re getting better.
I’ll give you another example. I know you’re big in SEO, search engine optimization. I don’t see that as much, really, in our industry. Again, I think it’s changing. But one thing that’s really good about our industry, I believe, and that is the amount of collaboration is still enormous and a lot of I guess just sort of traditional networking is still very deep, and you’re always dealing with other people. Maybe it changed a little bit because you have private equity now that seems to want to own 100% of what they do so they have a bigger exit, I’m assuming. But it wasn’t long ago, and we still do this to this day, we always want to get partners.
If I have a 25% interest in an oilfield I’m thrilled because the risk side of his business is still very much there notwithstanding the technologies, horizontal drilling being the biggest, that maybe has reduced risk but I still believe that if you really analyze all the capital that’s been spent in the last 10 years with a huge amount before the commodity price went down so fast. You still see certain areas that really are true business success and probably many that aren’t.
So that part really hasn’t changed because, again, I don’t think that in our business notwithstanding the technology, we really measure the earth as well as we think we do or even hope we do, and therefore we’re often wrong with our models. If you’re wrong with the models I think having diversification in your partners and some of the projects you do and really extensive local knowledge, that’s what we decided to do, just really focus on an area that we thought had the fundamentals geologically. For business climate, it really had a long-term possibility to develop a great business.
James: I’m curious to hear your thoughts because I run into this every now and again in the oilfield where I talk to a business owner who they’re a small independent, human being a small independent, it took me a long time to learn that everyone has different goals and not everyone wants to become Exxon or even mid level independent or anything like that. How has your business developed around the thoughts of leanness versus size?
John: Fundamentally we adapted somewhat to how the industry is changing. Now, the exception to that, and it may change, as an owner or the leader of the small company — there are five of us, that’s our size, and we have some other people that we bolt on that we’ve done business with but the core team is five. Because the projects are getting larger, the capital needs are greater, it’s a little unusual, however, there are still different niches.
My father is a little different. He’s built larger empires than I have. For me, developing this company, there are two things that are important. It kind of went back to my father. Maybe this sounds a little hokey. My father said, “Go out and create something for somebody other than yourself.” So the spirit of that, when we went into little small area of Oklahoma that was kind overlooked. I went into it originally because I saw it as being way underworked geologically with Amoco.
Our goal has always been, and I’m not completely remains there, I’m debating now, was to carve out a nice niche area where we’d be a moderate size company profitable. That’s been challenging. Sometimes we have great years. The tax laws in this country don’t really support small business owners to be able to keep their capital which is another subject. Really, we’re more interested in being smaller.
My father actually had gotten fairly large in some of his companies. He had a couple of deals that fell through that he really had done. I won’t go on into the details of that. My most important thing is quality people around me. So whether it was the landowners that I’m doing business with, you don’t always have choices with all that but sometimes you do and so are the landowners and how we got to know them well and how they were really bought into a partnership with us rather than I’m just going to go out and overpay him for a lease and give him a lousy piece of paper and flip it five times and too bad for whoever holds it.
It’s really more I’m going to come into your neighborhood with the strategy, but I think the fundamentals of your neighborhood are, as I said earlier, worth me putting risk capital in. I want to carve out a long-term relationship where I could continue to do business with you. That was probably driven by my land background because so much of that is out in the public, dealing with people, have relationships where people are mad at you, trying to stay out of issues where somebody doesn’t like it and they want to sue you or somebody disagrees with how you’re doing or something. That was really good people around us in a really good neighborhood.
How we carved out our growth, that was somewhat project-driven. We’ve gotten a lot bigger. Well, there’s a lot more overhead not in term of staff but in terms of projects to just put it in that perspective. At the beginning I drilled 640-acre section, gather up a few individual. We drilled some wells. A big project would be 2,000 or 3,000 acres. Finally, in the last project which was what we’re involved in now, we have a footprint of about 40,000 acres. That gives you this size. Part of that was driven also with what the industry was looking for.
The only thing we haven’t done, and we may still do this and we’re open to it, is do we eventually a partner up with another group and get private equity backing and then start pursuing projects. We might if it’s clearly a dominant source of income. Some really like it. I just talked to my cousin who is involved with Lime Rock and may do some work with him. They’re, I think, not really old. Maybe five years or maybe more but it had portfolio teams. He talked to one of his guys that he’d backed. He was just thrilled. And then I’ve talked to others that are very, very disappointed.
Again, our current strategy is why we haven’t worried about growing too quickly is that we want to have a little bit more say over what we do and who we do business with. Really, what we’ve been targeting, and that was our last joint venture, was family companies, larger than ours that probably have a larger operating staff, can take on real scalable project and see it through. We can put it together. We can initiate it. We can get it to a point where we’ve derisked it partly. We’re really not really at the point right now staff-wise. We can’t put on a drilling program where we’re drilling three wells a month or something. We don’t have the manpower.
That by itself limited a little bit of what we decided as far as growth. What could we do well within our limitations as far as capital and staff? We ultimately said stay in Oklahoma, stay in Anadarko Basin, principally the shelf of Anadarko but because it’s not so price-sensitive, it’s a moderate depth. So when the commodity price plummets our projects can still look attractive. That’s starting to be of interest. The industry, I think, is moving a little out of rigor mortis now being so tight with their choices in capital.
James: That was going to be my next question. How has the low crude price affected your decision making and your strategy over the last couple of years or even 12 months?
John: My grandfather used to say we load the truck so the asset guys could drive it away with something worth of value. Because we’re incubators and we’re early stage, it’s all about timing, really, on where you are in that phase. ’08, when it collapsed we were in the phase where we’ve actually sold a large project, had commitments. The company at the time struggled with meeting the commitments but we worked it through over time. So we were on what I call that side of the tray where we had the deal committed.
And then it was basically how are we going to develop it over time and how are we going to modify the deployment of capital, when we deployed, how much, et cetera, based on the market which at that time, again, as you remember, sort of a worldwide demise driven by the financial industry more. So that was ’08 and then it creeped out. We continued with that and never really got into the helter-skelter that the industry did with just nonstop drilling, some of which one can debate at this point and some of it was quite good because it developed new assets.
So then enter summer of ’14. We are in a great joint venture with Mewbourn Oil Company at the time, a great project, early stage, had some learning curve challenges on how to complete wells. It was alluring but it was sort of on the edge of what do we do next in terms of how many more wells we’re going to drill, how we’re going to change things. Then enter the fairly rapid decline in commodity prices. We had two other deals going to expand, really about to close, and we were in serious negotiations, they didn’t.
So then we found ourselves with projects that we kind of had back in our lap. That’s not uncommon in this industry. I’m sure other people you’ve talked to voiced out or they will if you haven’t heard it. How it affected us directly is what we did is, first of all, we got our G&A way under control. The first thing my father said is all you’re going to do is control your cost. We’ve always been glean but, really, how do we —
Every single part of efficiencies within the oil industry I think we struggled with. It’s either too much or too little. We struggled with how do we really budget things. What’s really true value for not only personnel but for services or even oil and gas leases for that matter? So we’ve got our G&A under control. And then we went back and we just strategically started to bolt on to our existing assets that we like, more pieces of it. So if we saw stabilization in oil prices then we’d be in a good position to begin gather up or show our projects to prospective purchasers. It would be even more interesting because potentially we’d own more of it or we did some more additional technical work to understand what it is we’d learn in the past and what we would do going forth. So that’s what we did.
The other part is we went back to some of the legacy assets of which are small. We sold a lot of our properties in ’08. We needed the capital at the time. We were fortunate because it was before the gas price collapsed. So it was pretty moderate amount. We went back and we took some of the new science we’ve learned on these big projects and went back to these old vertical wells. What could we do with them? There are some things we missed. So with a very modest amount of capital could we go back in and turn this into a much bigger asset? So that’s more what we’ve been focused on.
In the last summer, in ’15, when, again, oil got up to almost $60 or maybe into the $60 as I remember, we were starting to seriously discuss again moving forward — the prices in the field for services had finally come down. That was probably one of the biggest issues for many people that the oil price collapsed. The commodity price collapsed yet the price of doing business didn’t collapse as quickly. Over time though that has come way down. Everyone debates exactly what, but 30% is probably a number now depending on what service you need.
That began to make the whole cost of doing business more appropriate. So we purposely shot things down saying, “All right. Let everything settled down,” but then of course things have gone on at least longer than we had frankly anticipated or envisioned. I don’t know where we’re at now. All of a sudden we seem to see a little bit of tightening. My father believes that because WTI is really more of a financial instrument that an actual physical barrel anymore, but there’s some other pieces of this puzzle that have do with the shorts dominating the price of oil always going down. We’ll just have to see how that unfolds.
I think he’s right personally and I think he’s seen it because he knows Wall Street so well having had seven other companies. We’ll see. In the meantime those of us that are actually trying to do business now find it extremely hard to make any type of economic forecasting as to where we want to deploy capital wise. So those that haven’t I think are relatively cautious. Maybe the private equity guys that have “dry powder,” they’re all looking for the perfect deal. I haven’t personally seen one of those but I guess they’re there.
Ours surely is not a perfect deal but it’s extremely interesting. We’ve had huge interest in it in many ways but nobody step up in the last summer when we really had the deal pretty well done with, again, another — it wasn’t a family coming but it’s a small independent operator, well, not that small but they’re relatively small but really efficient and real great thinkers and had good capital and good access to partners and capital but, again, it wasn’t driven by investment banking. It was driven by people that were making money at the field level producing and selling oil and natural gas and operating their properties efficiently and doing good science and buying the leases right and not just throwing money and stuff, dressing it up, of course it looks good, flip it, and then whoever gets it, it may or may not be good for them.
We had it done. They weren’t in our niche. They were looking to shorten their entry, shorten their cost of entry, shorten their learning curve which is really what we have to sell because we have local knowledge in our area. We were whispers away from getting that deal underway. This is end of June in ’15. Between that and right after the Fourth of July the price had collapsed I think in a week, almost 20%. It was going down, down. They just say, “This is our niche. We’ll take this in a heartbeat but we’re not going to expand out of our niche right now.” Boom! Dead.
James: That must have been painful. What I love about the format that we’re doing this interview in, in podcasting. We started off talking about networking and the ability of a podcast to be able to network with hundreds or even thousands of people at one time when you’re not there. I guess I’ll close with this question. If someone was listening to this and wanted to reach out to you, what would be a good networking call for you to receive?
John: We have a website called anadarkobasinproducer.com. It is very, very robust and transparent. We have numerous videos on it tied into YouTube. It’s a great immediate view of some of the things we’ve done and who we are and some of our philosophies. We even have personal things on some of the philanthropic activity we’ve been involved in for many, many years. My father had a foundational for years.
Again, I believe the internet. I believe social media. I got my LinkedIn, probably not quite to your level but I got a LinkedIn. I started doing more Facebook with my landowners. It’s probably less with my business associates. Facebook, LinkedIn. I don’t do Instagram too much but big time on video. Video one reason I thought this would be beneficial for all of us. Content for you and exposure for us.
We’re really, really easy to find. Thank goodness. If you Google Anadarko Basin operator we show up usually on the first page. If you Google Anadarko Basin experts we’re usually on the first page. Anadarko Basin oil prospects, I can’t remember if we’re on those, but I think so. But Anadarko Basin production, we’ll show up a lot.
We’ve been, for 25 years, in this area. We have an enormous tactical database. We’ve got many, many relationships. We kind of continue to go around these different communities in Northwest Oklahoma as we come up with new geologic reasons to explore for something new. We’re around oil and gas fields. I don’t know if wildcats even exist these days. We’re in a very mature basin with extensive data, a lot of production, great infrastructure, pretty solid regulatory climate. We’re not in the earthquake zone so we don’t have that problem. It’s looming where they’ve been injecting brine waters into the basement down there by the Hunton in Central Oklahoma. We don’t have that issue in our area fortunately because we don’t do that.
Anyway, that’s how they could find us. We’re very, very transparent. Now, the flipside of that is I get seven emails a day from the guy in Zimbabwe or whatever and wants to put money to my account. It’s just annoying. It’s getting worse. The more I’m on YouTube and the more Google loves me — Google is pretty happy with us. The more Google loves me the more —
James: The more you hate your inbox.
John: Oh, my God. I tell my office do not open anything. They’re all frustrated. If you are on the internet and you are visible which we must be because we’re — it’s not so much trying to find somebody totally new always, but somebody we may have forgotten. I’m doing it right now. I’m seeing them next week, two companies. One in the next week or the week after that has been around for many, many years. One in particular is like third or fourth generation. I’ve done some deals with them and it was pretty serious a couple of years ago about another deal and sort of forgot about them.
All of a sudden, I think through LinkedIn, this guy pops up who I’ve never done business with who’s their BD guy, and I’m thinking “Shoot. I need to give those guys a call.” Again, it’s a very, very great legacy company, great reputation, needs an operated deal now. I talked to some people I knew that had work there that are now in a separate company than spun off to find out some more details because I’ve done a lot of work with this guy. So I networked with him and he said, “Yes.” Boom! Next thing you know I’m going to be in their office. They may not buy the deal but they’re the kind of company I’m looking for.
James: Anybody out there who wants to have a great conversation with somebody in Anadarko Basin, I certainly encourage them to reach out to you, Mr. Trueblood. We will have all of your contact information in the show notes. Thank you so much for taking the time. I really appreciate it. Great conversion.
John: Okay. Real pleasure to have the opportunity. Thank you.
James: Thanks for listening to this .5 episode of the Oil and Gas This Week Podcast, Brought To You By Red Wing. You can find the show notes for this episode which includes links to everything we talked about and John’s contact information at triberocket.com/twjtb. You can also leave any comments you have about this episode there. That’s triberocket.com/twjtb.
Join us again next time when we talk to Ben Facker, Senior Director of NOVOS Strategy and Development, and Tony Pink, Vice President of Dynamic Drilling Solutions at National Oilwell Varco about the outrageous efficiency gains you can make like giving your drillers autopilot.
Tony: We can do it because we have downhole data and we have controlled processes. So we take out the human error on the surface and we take out the differential between knowing what is going on in the well downhole and what’s going on at the surfaces. It’s so integrated. It’s really, really fantastic.
James: Until then, go find some grease, guys.