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Bit player steals show by striking black gold

The Times: Entrepreneur of the year: Bit player steals show by striking black gold

“Gammell had bought the oilfield from Shell, the oil giant, after it had decided there was little there of worth. He paid about £10 million for assets now valued by the stock market at £1.5 billion.”: “The fortunes of the oil giant — shaken by its reserves downgrade crisis — are in stark contrast to the start-up rival thrown into the big City spotlight.”

By Elizabeth Judge

5 Oct 04

BILL GAMMELL is the proof that it can happen. Just as every spear-carrier might one day take centre stage, so every unexceptional, small company owner can enjoy their big break.

Gammell was last night crowned Ernst & Young Entrepreneur of the Year. His tale begins with a “company changing” moment.

A 5am phone call from the deserts of Rajasthan, north- west India, in January brought good news. Cairn Energy, the company that the 51-year-old athletic Scotsman launched 24 years ago and named after the mounds of stones commonly used as memorials, had finally struck black gold.

The story carries a further twist. Gammell had bought the oilfield from Shell, the oil giant, after it had decided there was little there of worth. He paid about £10 million for assets now valued by the stock market at £1.5 billion.

His energy-exploring company has since soared in value. Its shares, priced at 192p when the company floated in 1989, closed at £14.83 yesterday. Its success has prompted several oil and gas companies to join AIM, the Alternative Investment Market, this year, raising £232 million.

Gammell’s former minnow has gone further, entering the prestigious ranks of the FTSE 100 index, alongside those companies he dared not dream of competing with, such as Shell.

The fortunes of the oil giant — shaken by its reserves downgrade crisis — are in stark contrast to the start-up rival thrown into the big City spotlight.

Cairn’s history is relatively ordinary fare: Gammell launched the company with a friend after tiring of insurance broking. Oil, he decided, was what excited him.

But Gammell is no ordinary businessman. Few entrepreneurs can lay claim to being a former rugby player for Scotland, cite George W. Bush as a mentor or Tony Blair as a school chum.

Gammell spent a summer in Texas with the Bush family when he was a graduate. The eager young entrepreneur devoured the advice of the future US President. “I learnt two golden rules. Double what you are told are the technical risks and halve what you are told about the upside,” Gammell says.

The first risks taken by his company, then named Cairn Energy Management, were small. The renamed firm was then floated, but it took another eight years before Gammell began taking risks by buying his first stakes in the Rajasthan field, a desert area equivalent to 30 North Sea blocks. He bought the last 50 per cent of the field from Shell in 2002.

Cairn, the story goes, drilled 15 test wells and found nothing. Then it drilled again and struck oil. The company’s prospects, as Gammell says, are “tremendously exciting”.

He has reaped the rewards from Cairn’s success. His holding in the company is worth more than £30 million.

The Ernst & Young award is co-sponsored by The Times, Coutts, the private bank, and the London Stock Exchange. It honours Britain’s outstanding entrepreneurs. Gammell will now contest the international competition for entrepreneurs at a ceremony in Monte Carlo in May.

Entrepreneurship is flourishing both in the UK and across the globe. The number of countries taking part in the competition this year has swelled to 40.

The contestants would do well to show just a whiff of the drive, determination and sheer persistence that Gammell has exhibited in his progress from bit player to top billing.

“When I started I assumed that everyone was brighter than me. I no longer think they are,” he says.

But such success, as Gammell knows, must not breed complacency. He is wary of the tragedy that often fells the leading players in the third act. “One moment you are flavour of the month, the next you are an idiot,” he says.

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