Introducing Pontem Minerals (Part I)
Putting Our Money Where Our Math Is
Once Upon a Time…
When we started Assured Flow Solutions (AFS) in 2012, the founding premise was to bridge a gap that existed between engineering consultancies and laboratories within the oil/gas industry (Did you know “Pontem” is derived from the Latin word for “bridge”? More on that later…). Not only did we see the need to integrate these two separate, but related disciplines for a more holistic solution, we believed that more “hands-on” work for engineers - many who have never been to site - would drive a better appreciation for the nature of data (i.e. can we design/rely on “a number” found in a report? How was this sample obtained? How was it tested? Was it clean / representative of the field?) We also believed that similar exposure for laboratory or field personnel would drive a similar appreciation for the impact of data quality, many of whom often never saw how their data was used in engineering / design applications (i.e. how accurate does my data need to be? What are the consequences if it is wrong?)
So, we embarked on an ambitious plan to build a state-of-the-art fluids testing laboratory that would (a) make engineers appreciate the nuance in reported data and (b) make lab services better by understanding how test results were being used. The ability to put ‘hands-on-samples’, collect / analyze data, and ensure correct application by other disciplines was the focus. Bridging the missing gap between data and domain knowledge. The experiment (no pun intended) worked and AFS was born.
Throughout 10+ years in business at AFS, three challenges emerged:
Inventory: How to get access to more fluids, without which we cannot do more testing?
Data: How to get access to more production data, without which we cannot effectively evaluate field performance?
Business: How to maximize value from a business that is largely based billable hours (or number of samples), which makes scaling a challenge?
Most of our work was in the offshore (deepwater) space, so access to fluids “on-demand” always a challenge. We obviously could not just walk offshore onto someone else’s platform and pull a fluid sample. In addition, for our engineering offering, access to real-time production data became the Holy Grail, without which troubleshooting or optimization is difficult. We frequently were called in to evaluate problems after they occurred. Both of these became limiting factors to our service offering and growth. And both were related to not having direct access to our primary resources: fluids and data.
As we progressed more into the unconventional (onshore) shale business, we always threw around the idea of “We should just go buy some wells…” Yep, great. Good idea. That would be cool. Solves a lot of problems. And that is where the conversation ended. Until now....
As crazy as the idea of buying oil/gas wells (even for someone who has worked in the industry for 25 years), I recently came across these pictures of my grandfather. His story is pretty similar to many immigrants from that generation: poor, dropped out of school to work on the railroad, Marine paratrooper in the Solomon Islands during WWII, etc. Later in life, he started doing his own oil prospecting that he kept quiet. The original side hustle.
Not sure he ever made any money - in fact, I think he lost most of the time. So, it was probably pure gambling (not surprising, since I spent my 21st birthday with him - in Las Vegas - on a craps table learning to throw dice. He actually made me roll 1000 times at home and do probability/odds so I would understand the game. Very Karate Kid / Mr. Miyagi of him. “Roll the dice, sand the floor”…).
But, I guess this means I should update my LinkedIn bio to say “third-generation oilman” to give us a little more of that “dirt road street cred”. Dusting off my cowboy boots and hat just now for that updated profile picture.
And with all of that being said…
Pontem Minerals is Born (Est’d 2023)
Introducing Pontem Minerals, a subsidiary of Pontem Analytics. Pontem Minerals is our foray into the mineral Acquisition and Divestiture (A&D) space. Building on the idea of “We should just buy some wells…”, we have acquired strategic acreage, mineral rights, non-op, and, most recently, operating positions in wells across several of the most prolific US basins, including:
Haynesville, East Texas (gas)
Delaware Basin, West Texas oil)
Offshore Gulf Coast, shallow water (oil)…can’t stray too far from the offshore business
Value Add = Smart Money
Aside from living out our JR Ewing (“Dallas”) fantasy of taking equity positions in America’s energy production, Pontem Minerals furthers the Pontem ethos of “bridging the gap” between data and discipline. Clearly, there is an abundance of companies working within this ecosystem, be it on the ownership side or through to the land / service sectors that assist in finding, evaluating, and acquiring positions.
Rather than focus our attention on generating a better type-curve, or providing a more integrated life-of-asset financial model (of which there are several, well-respected providers in the space)…or even chasing the emerging ‘Energy Tech’ wave, Pontem Minerals’ value-add is focused on leveraging data to assist with production optimization. Specifically, we provide actionable insights through domain knowledge, rigorous data analytics, and physics-based models to:
Increase production rates
Decrease operating costs
Increase real asset value
This can come early (before we make a strategic acquisition when evaluating options for asset value, both now and in the future) or late (once we have real “skin in the game” and are looking to grow returns for ourselves and our stakeholders). While we look to invest in high-value assets, we intend to act as “smart money”, improving asset value by leveraging our domain and data expertise.
We are excited and eager to get to work, be a good partner, add value through our 25+ years in the oil business, bring the new, data-enabled analytics world to these assets, and hopefully grow our positions over time.
Case Study (East Texas Gas Wells)
Check out Part II for a case study where we put our data science and production hats on to drive value for our assets.