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FT REPORT – WORKING IN THE OIL & GAS INDUSTRY 2008: ‘You can jump to the top very quickly’

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FT REPORT – WORKING IN THE OIL & GAS INDUSTRY 2008: ‘You can jump to the top very quickly’

By Ed Crooks
Published: May 06, 2008

Three years ago John Schiller, chairman and chief executive of the Nasdaq-listed US oil independent Energy XXI, put himself and his career to what is perhaps the ultimate test. He asked investors to put money into the start-up company purely on trust in him and his team.

Energy XXI was formed as a special-purpose acquisitions company: essentially a cash shell with plans to build a business by making deals.

“All we had were the three people in the management team and our background,” Mr Schiller says.

But with the contacts they had built and their records of achievement at US independents, including Burlington Resources and Devon Energy, they were able to raise $300m.

Mr Schiller grew up in an oil and gas family. His father graduated from Texas A&M university – “the best petroleum engineering school in the US”, he says – and worked for Exxon, although in accounting rather than as an engineer.

Showing an aptitude for maths and engineering, he followed his father to Texas A&M, and was going to be a chemical engineer. His interest in petroleum engineering was kindled, however, when engineers from Shell came to the university to talk about what they did.

“They said every day is different, because you never know what fires you are going to fight,” Mr Schiller says. “And I had professors who wrote books on reservoir engineering, talking about going round wells and the things they had seen.”

In his first summer at university, he worked for an oil rig company, drilling wells for $5.68 an hour. “We would work 10-hour days and then go and drink for three hours and tell stories.”

In subsequent summers he worked for Amoco and Mobil in reservoir engineering, travelling around the oil fields of the US, and graduated in 1981. With the price of oil close to an inflation-adjusted high point that has only recently been exceeded, Mr Schiller had the right qualifications at the right time.

“I graduated at the top 10 per cent of my class, and had somewhere in the region of 17 job offers,” he says.

He signed on as a staff engineer at Superior Oil.

“For the first five years, I was just blowing and going,” he says; in other words, working flat out.

“It was a real baptism by fire: there was no formal training, no anything. But I became a senior reservoir engineer.

“After three months on the job, I had responsibility for three of the four largest fields in the company.”

In 1984 Superior was bought by Mobil, and the following year Mr Schiller moved to Meridian Oil, the energy division of Burlington Resources.

“I spent five years living on rigs,” he says. “Then at 27 years old, I was working in a corporate environment when the oil price collapsed. That was an eye-opening event. Then you saw guys who are pretty much legends in the business for handling that.”

He spent the longest period of his career with a single employer at Meridian: 14 years in roles including a spell in corporate mergers and acquisitions, and two years putting in a settlement and accounting system.

“If you are going to be a CEO, you have to get that range of experience,” he says.

“I think one unique thing I have is the two years I spent on the finance side. There are not a lot of guys from the operations side, engineers, who can ask the questions I can ask in meetings about accounting.”

In 1999, he moved to be vice-president for exploration and production at Ocean Energy, where he gained his first international experience. He never lived outside the US, but was contantly travelling to Ocean’s fields in west Africa, Egypt and Yemen.

Then in 2003, Ocean was sold to Devon Energy, where he became vice-president for exploration and production.

That was a big step up in scale: Ocean produced about 165,000 barrels a day, while Devon did 600,000-plus.

But after a year he decided it was not right for him, and he left, spending some “time off” and working as the interim chief executive of a small oil services company, before coming back with Energy XXI.

For petroleum engineers starting out on their careers, he says: “It’s an absolutely brilliant time to be doing it. You can be a graduate with a six-figure income.”

The demographics of the industry favours ambitious young engineers, he adds.

“I just turned 49, and I am exactly the median age of professionals in oil and gas. So in the next six years, half of them are going to get to the retirement age of 55. So what that creates is a great opportunity.”

It is in the smaller companies, he adds, that the opportunities for progress at a young age can be greatest.

“You have to look yourself in the mirror and say: ‘Are you confident that you are a good engineer, and are you a self-starter?’ If so, you should go into an independent company, because the type of opportunities you get there are quite different. It is not that the majors are not good, but they make sure people have more guidance before they are on their own,” he says.

“In the independents, if you are a specialist in engineering with good leadership skills, you can jump to the top very quickly.”

Copyright The Financial Times Limited 2008

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