*The names and work details of some individuals have been changed to protect their identity.
The office of geophysicist Matthew Candle* is a small cubicle filled with a desk, a telephone and three seismic monitors. Noticeably absent are family photos, diplomas and other personal effects. “I don’t want to have to carry out more than one box,” he simply states. Over the course of a twenty-year career in the oilpatch, Candle has seen immense changes in his chosen profession, changes that have left him disillusioned. “To me, it’s a job, not a career. There’s no up side.”
Candle’s point-of-view, and that of many other geophysical professionals, has been shaped by a cycle of periodic low prices, mergers and acquisitions, and layoffs. The latest cycle began in early 1998, when the collapse of the Asian economy left the world awash in surplus oil. Within months, the price of crude dipped to record lows of $11 per barrel, triggering a massive restructuring of the sector. Throughout 1998 and 1999, newspapers were filled with the announcements of international takeovers between major oil companies. The merger of Exxon and Mobil alone was touted to save billions of dollars, primarily through the elimination of 19,000 jobs around the world by 2002.
But it is at the national level, where small to medium sized companies offer the bulk of work opportunities for geophysicists, that firms are being swallowed up at an alarming rate. According to Sayer Securities, the total value of merger and acquisition activity in Calgary’s O&G sector for the first half of 2000 was $12.5 billion, 24% above the previous record of $10.1 billion set in 1998. Among a score of acquisitions with significant local impact; Husky Oil bought Renaissance Energy Ltd, Anadarko Petroleum Corporation snapped up Union Pacific Resources Group; and Canadian Natural Resources purchased Ranger Oil.
“We license both individuals and corporations,” says Al Schuld, deputy registrar of APEGGA. “In 1991, we issued slightly under 2,000 permits-to-practice. Over the last decade, it’s slowly risen to 2,500, but now the growth in the number of corporations has stagnated, and one reason is mergers and acquisitions.”
All these changes have left many geophysicists wondering what has happened to their profession. Under the old, unwritten contract between employees and employers, the geophysicist loyally stuck to one company and went where he was told. In return, the company guaranteed a job for life and supplied continuing career development.
The new reality, many feel, is quite different. “Security these days is an illusion, and has been for a number of years,” says Doug Pruden. “I know only a handful of people who have been at one place over five years.”
Pruden, a past president of the CSEG, began his career as a geophysicist in 1980 at a major oil company, “They provided me with technological training beyond my university education,” he recalls. “Today, there are very few companies that can make that claim. The consequence is that there is a generation of geophysicists that haven’t had the same level of training. It’s becoming tough to find good, technically competent geophysicists.”
Even young geophysicists are expressing a cynicism unheard of before. “In today’s market, many companies are not loyal to employees,” says Todd Burlington*, a recent graduate. “If they don’t show you loyalty first, you should not extend it yourself. When push comes to shove, it’s all about cash.”
But has the professional environment for geophysicists really polarized to such an extent? “Few geophysicists have been laid off by the big companies,” says Bob Johnson, president of Leader Search, a Calgary-based executive recruitment firm. “There’s plenty of demand, and good geophysicists will find work.”
“In June, 2000, the mean salary for mid-level (10-15 years experience) geophysicists was $82,000, compared to $78,700 for geologists and $76,700 for engineers,” says Schuld. “In our June, 2000 salary survey, mid-range salaries for geologists and geophysicists have risen 41/2 to 5 1/2% from June,1999. The average for executives and professionals is 3.6%, which indicates a bit of a growing demand for the geo-science professions
“We have had a grad program in place for 10 years,” says Linda Van Gastel, general manager of technology for PanCanadian. “We hire three new geologists and geophysicists each year, and have a specific oil and gas training experience in which we combine on-the-job training, work projects and mentoring.”
The attitudes that geophysicists have of their profession are largely shaped by personal experience. Few of the 1,400 geophysicists in the province have not been exposed to the pain and uncertainty of a layoff.
Doug Pruden experienced his first in 1988, when the company he was working for, Canterra, was purchased by Husky. “I consciously began looking for a good, challenging position to allow me to develop my technical skills,” he notes. “My career development was as a geophysicist, not as an employee.”
Pruden took a buyout package and moved to smaller Bow Valley Energy, but the oil company was purchased by Talisman in 1994. “They didn’t want to keep anyone who didn’t want to be on the team,” says Pruden. He accepted his second package and moved to Remington, where he stayed until 1999, when they were taken over by Dominion. “I didn’t want to work for a big American company - I already knew what that was like.” He accepted his third package, and left.
Matthew Candle graduated from the University of Alberta in 1978 and began working for Dome Petroleum in 1980. “At the time, Dome was a big company, and I was hoping to move up,” he recalls. “I envisioned being there a long time, climbing the corporate ladder.”
In 1988, Amoco bought the troubled oil giant, and began to lay off employees soon after. “Mentally, I was worried,” says Candle. “It was the first time a major was laying off people, and it was very distressing, with lots of rumors.”
Candle was also disturbed by the lack of candor on the part of his employer. “When we were taken over by Amoco, we were told that everyone would be treated the same, but I found out it was not the case.” The geophysicist noticed that some employees were receiving extra training, and were being ‘groomed’ for upper management. “And when it came to layoffs, more Dome than Amoco employees were being let go. They weren’t treating us professionally - they weren’t forthcoming.”
When packages were offered in 1989, Candle made up his mind to go, and moved to Kerr McGee Canada. “I had a very good two years there, with 20 good wells being drilled, but there was a change of management, and my supervisor took over my project.” Candle was once again laid off in 1992.
From 1992 to 1997, Candle worked for a series of consulting companies, until he found his current position with a major independent. “Since I’ve joined this company, there have been two layoffs, and I’ve changed teams twice,” he says. “Anything can happen, anytime. If you don’t have someone senior looking after you, like a VP or whatever, you could be gone tomorrow.”
As an undergraduate student, Todd Burlington worked summers at the Calgary office of a multi-national oil company. When he graduated in 1999, however, commodity prices were at record lows, and the 24-year old considered himself fortunate to be offered a position with a junior oil company.
Earlier this year, Burlington’s company was purchased by a major independent in a friendly merger. “The takeover came as a surprise,” he notes. “Others have seen it happen, but for me, it’s the first time.”
When Burlington discusses the takeover with other company geophysicists his age, the mood is generally up-beat. “But there’s always that thought in everybody’s mind, “They’ll tell you that you have a job, but what are they really going to do?” You have to look after yourself first — I guess I’m starting to get a little bit cynical.”
The Other Side of the Coin
Gary Burns is the former president of Trilink Resources. The company was purchased for $340 million by Houston-based Seneca earlier this year. The new company is called National Fuel Exploration (NFEx).
Before the purchase, Trilink was a thriving mid-size oil company with over 50 engineering, geophysical, geological, land and accounting professionals on staff. “During the 1998 downcycle, we didn’t consider layoffs,” says Burns. “We try not to bounce people up and down with the cycles.”
Trilink was too small to train new graduates. “In the past, we’ve had younger guys with low experience that we’ve helped train, but for a company our size, it’s a big draw on experienced technical resources,” says Burns. “We tend to lean a little more towards experienced people.”
The company did have a comprehensive professional development program, however. “Generally, we sent our professionals on one meaningful course per year, something like a carbonate course in Florida, and to conferences in town,” says Burns. “It worked out to around three percent of salary.
Turnover among Trilink’s professional staff was relatively low until the company became a takeover target.
Bob Johnson is president of Leader Search, a Calgary-based executive recruitment firm. Before the latest M&A cycle started, Johnson found it difficult to entice geophysicists with new job offers. “If they liked where they were, we couldn’t get them out.”
As soon as M&A activity heated up, however, so did the urge to jump ship. “They get antsy when there’s a merger,” says Johnson. “The uncertainty bothers them, and it may be that it’s not the culture they like.”
After the announcement of the sales process at Trilink, the headhunters closed in, and Burns lost almost half of his geo-science staff. “I talked to different (former employees), and you never get all the reasons, but money wasn’t as big an issue as stock option opportunities,” he recalls. “Seneca (the purchaser) is private, so there were no stock options. Instead, they offered a nice bonus program. With some individuals, there seemed to be a preference for options. However, others that stayed have a long-term outlook with a well-capitalized company with good bonus incentives.”
Burns also noticed a difference in where his staff ended up. “Four or five years ago, geo-scientists were moving from larger companies to smaller publics that had high growth and access to equity capital. Now, there’s been a changeover. Some are going to larger, high-cap companies due to the uncertainties associated with M&As. They feel more comfortable, and believe they get wider experience. Others will take a risk and go to smaller companies with bigger stock options.”
Coping with Change
Not all geophysicists react to the disruption by seeking security with a new employer.
After facing a total of nine layoffs, Matthew Candle made personal adjustments to the way he viewed his profession. One of the most profound effects is the distance he now maintains between himself and his fellow employees. “You don’t try to develop some kind of relationship with your co-workers because you might never see them again. I’m not going to invest a lot of personal feelings into the job. It feels really bad to pack and leave.”
He has also taken a mercenary attitude toward his career. “I think, “What’s the best way to protect my job?” rather than the best way to advance my knowledge of geophysics. I have learned how to fix computer software and hardware.”
Some of the younger geophysicists have taken a wait-and-see attitude. Todd Burlington has talked with several headhunters, and has learned that a few more years experience will serve him in good stead before he begins playing the field. “There are a lot of jobs available for geophysicists with five years and up. They want people to come in and be impact players.”
Others have opted for independence. After Doug Pruden received his third buyout package in 1999, he decided to strike out on his own as a consultant. “I love the flexibility in working hours,” he says. “I can pick up the kids after school if I want to, and I don’t have to ask permission from anyone. It’s a good tax situation, which allows me to keep a little more of what I make.”
What does the future hold for the profession of geophysics? Most experts agree that there are many conflicting pressures. “Demand forecasting (for the professions) is tough,” says APEGGA’s Shuld. “Commodity prices go up and down, as does the need for new resources.”
There are several trends that are easy to foresee, however. The first is the ‘graying’ of the geophysical profession. “We did some work on demographics, and the Baby Boomer bulge, the 35-55 age group spike, is exaggerated in the geology/geophysics group,” says Schuld. “Five years from now, the first of them will start to retire. There will be a need to start replacing them over the next few years.”
The second is a move towards independence within the profession. “The geoscientists are more than twice as likely today as in 1991 to be self-employed, with 7.6% describing themselves as self-employed,” says APEGGA’s Schuld. “I see the trend continuing through the next decade.”
A third is the creation of new geo-science positions as the disposal of unwanted properties creates fertile ground for new, smaller exploration firms. “As you buy big companies, non-core properties automatically come up for sale,” says Frank Sayer. “The billion dollar companies take over a billion dollar company, and $100 million in properties comes up for sale. It’s a cascade effect. The Calgary oil patch is an incubator for small companies.”
While the above trends create job opportunities, other trends reduce them. The Western Canada basin is reaching a mature phase of exploration, for instance. “The basin still has some opportunities, but the focus is shifting more into heavy oil, which doesn’t require as much geo-science,” says Burns. “Frontier exploration does, but you need a particular level of experience.”
Funds are also being invested into non-petroleum dependent energy sources, such as fuel cells. For those who are concerned that the development of new sources of energy may eventually make the search for oil obsolete, APEGGA’s Schuld has some comforting words; “Geophysicists tend to be users of high-technology and have a very sophisticated understanding of math and physics. Skill sets like that are transferable, and they won’t be underemployed.”
About the Author(s)
Gordon Cope has spent many years working in the O&G industry, first as a geologist, then as a business reporter covering the sector for the Calgary Herald. He currently manages his own communications company.