The Jewelry in the Coal

I have spent forty years watching operators give up on assets that were not actually finished. Some of them were small companies that ran out of capital before they ran out of upside. Most of them were big companies that decided an old field was not interesting enough to keep staffing properly, so they staffed it with whoever was rotating through that quarter. The asset would sit there, quietly producing less than it should, and after a few years somebody at headquarters would put it in the divestiture pile.

That is when the small operator shows up.

Not always. But often enough that I have come to believe it is one of the real ways money gets made in this industry. Somebody who is not in a hurry. Somebody who has the patience to look at the thing the major just walked away from and ask whether the asset was actually finished, or whether the people in front of it had just stopped looking.

That is the thing I kept hearing when I listened to Mike Richardson on the show.

Mike walked Kevin through the story of where the name Jetta came from. There is a kind of coal in England that polishes up so nicely they used to set it into crowns. They call it jet. Mike’s company is named after that. He told the story without making a big deal of it. But once you have heard it, you cannot un-hear it, because it tells you exactly how the company works.

Take a lump of coal nobody wants. Sit with it long enough to see what is actually inside. Polish it. Sell it as something else, or keep it for yourself.

That is a company.

Now think about how often the opposite happens. An operator inherits something good, runs it on autopilot, never actually sits with the rock, and quietly turns it back into a lump of coal. That story is more common than the polishing story is. We just do not put it on a podcast.

The Eyes Are Doing Most of the Work

When Mike told the Thompson Field story, the part that stuck with me was not the perforating trucks. It was the phone call before the perforating trucks. He was on the line with an Exxon engineer about a recompletion. Forty or fifty feet of beautiful sand. The Exxon engineer pulled up the log, took a look, and said the sand was below the oil-water contact. Mike knew right then the guy was reading a measure-depth log on a directional well instead of a TVD log. The pay was not below the contact. The engineer just could not see it from where he was sitting.

That is the whole game. Not the rock. The eyes.

I have seen this in every part of this business. I have seen it in reservoir reviews where the reserves report had been quietly copied forward for ten years because nobody wanted to redo the work. I have seen it in production data where an engineer had a model that fit the field three years ago and never updated it. I have seen it in deals where the people on one side of the table had read every well in the package and the people on the other side had read the cover memo.

A lot of what looks like brilliant deal sourcing is just somebody else’s tired eyes.

Why the Spreadsheet Is Not the Asset

When Bob and I were building Total Stream in the early years, we used to tell our engineers something I still believe. The spreadsheet is not the business. The spreadsheet is a map of the business. If the map is wrong, you are going to end up in a ditch, no matter how nicely you painted the car.

The same thing is true about asset evaluation. The reserves report is not the asset. The reserves report is somebody’s interpretation of the asset, and that interpretation is only as good as the time they spent with the rock.

Mike and his geologist Gordon Roberts spent the time. Gordon came over from Bass. Mike said it himself on the show, that he does not have the patience and persistence Gordon has. They sat with the Thompson Field. They sat with the Delaware. When Concho ended up sitting on the core area Jetta had originally drilled, the two of them spent four years working it back into their hands. Two years on Concho directly. Then Concho got bought by ConocoPhillips and the whole thing reset. Another year and a half on Conoco. Mike says straight up he would have walked away. Gordon would not let him.

That is what the polishing actually looks like. It is not a one-day perforation job. It is years.

The Other Side of the Metaphor

I want to say one thing that does not get said often enough.

The Jetta metaphor only goes one direction. Coal becomes jewelry. But every operator I have ever known has also seen the other direction happen. Jewelry becomes coal. An asset comes in shining, gets neglected, gets staffed with a rotation of engineers who never sit with it long enough to understand it, and gets put back on the market a decade later as something nobody wants.

The same eyes that fail to find pay can also fail to keep it.

If you are the kind of operator who can see jewelry in coal, you are halfway there. The other half is being the kind of operator who does not let your jewelry slowly turn back into coal because you stopped paying attention.

That second one is harder. There is no day when the field doubles. There is just the long, quiet, unglamorous work of taking care of what was put in your hand.

A Patch of Cucumbers in Montana

I learned that discipline from my father, growing up on a farm in Montana. Eighty acres, ten kids, a man who farmed and built houses and somehow read scripture to all of us at the dinner table every night. He gave me a patch of ground when I was in sixth grade and let me grow cucumbers on it. I sold those cucumbers door to door, which is not exactly the kind of professional origin story most petroleum engineers want to lead with, but there it is.

What my dad told me along with that patch of ground was simple, and I am still using it fifty years later. If you don’t take care of your customers, you’re not gonna have the results of it.

Cucumbers and oil wells are not the same thing. The discipline is. You take care of what is in your hand. You sit with it long enough to know it. The work either pays out or it does not, but the work itself never changes.

Final Thought

I keep coming back to the fact that Jetta named the company after a rock that fools people. Not after a strategy. Not after a platform. Not after some made-up word a brand consultant put together. After a thing you can hold in your hand. A thing that looks like nothing until somebody does the work, and then it looks like something nobody walking past would have guessed.

That is a name with conviction in it.

It is also, if you sit with it long enough, a quiet challenge to the rest of us. What are we walking past? What have we written off because the spreadsheet at our scale said it was finished? What is in our own portfolio that we have not actually looked at with fresh eyes in years?

I do not have a clever answer to that. I just know that the operators I have watched build something that lasted, across every cycle of the last forty years, all had the same trait in common. They did not give up on assets early. They did not give up on people early. They did the patient, unglamorous work that nobody puts in the trade press, and somewhere down the line the work showed up as a company worth talking about a generation later.

That is the higher standard. It is one worth taking seriously.

Mike Richardson is the President of Unconventional Strategy at Jetta Operating Company. He started his career with Mobil in the Delaware Basin in 1989 and has spent the last twenty-five years at Jetta acquiring and developing the assets other operators walked away from. On Wisdom at the Wellhead, Kevin Fischer and the team from New Tech Global sit down with him to talk about the Thompson Field, the four-year persistence behind reacquiring a Delaware asset from ConocoPhillips, and the Jetta philosophy of seeing what other operators stopped seeing.