Interview with Joe Dumesnil, Overland Oil and Gas: Innovators in Exploration-Based Businesses Series

American Association of Petroleum Geologists (AAPG)

Understanding the business side of oil and gas exploration and development is fundamental to success, especially in times of uncertainty and disruptive technologies. Welcome to an interview with Joe Dumesnil, Overland Oil and Gas. Joe will be speaking at the AAPG Annual Convention in the Special Session on the Business of Oil and Gas.

What is your name and your relation to oil and gas?

Joe Dumesnil, geologist and technical assessment director at Overland Oil and Gas, based in Denver. Undergrad in Geology from a small liberal arts college followed up years later with joint masters program at CSM and IFP School yielding 2 masters degrees in petroleum economics and petroleum management. I worked for 10 years with Halliburton in numerous roles encompassing responsibilities of subsurface interpretation, business development, technical team management, even human resources. Most of my experience has been domestic based in Denver but fortunately I have been able to look at reservoirs and work projects on all continents (sans Antarctica) and even do a couple of short term international assignments (Paris, Khobar, Vienna, KL, Kuala Belait, Bangkok, Jakarta) including a 3 year assignment to China.

What are your areas of special interest and expertise?

Petrophysics, core analysis and integrated interpretation techniques in unconventional resources and source rock reservoirs has been very intriguing to me along the way. Nearly all of the capex intensive development endeavors in my time have hinged on our ability to find resource endowment that lends itself to responding the technology practices, yielding economic returns. Can we pair mother nature with technology to meet or exceed expected returns? Piggy backing on this a bit, I am always intrigued by remote sensors and their proxy relationships to actual reservoir characteristics. These remote sensors all measure something but usually it is electrical resistance or gamma counts or travel time, not porosity and % silica. The scales and depths of investigation of these sensors all vary from SEM to full azimuth long offset 3D shoots. So what do we know and how do we know it? Tough questions, we have to keep asking all the time.

What is Overland Oil's mission?

Overland’s mission is to invest in and manage a portfolio of assets that yield what we feel is the best risk adjusted return out there. By doing so we seek to exceed the return expectations of our investor base such that we can provide for our families and ourselves. Family first.

Please tell us the story of Overland Oil -- what is Overland's business strategy?

Overland was started by 2 of my partner’s, one a recovering lawyer and the other 3rd generation landman. They met at a bar in Williston and started buying minerals together with their own money and gradually snowballed into needing outside investors to close more and more and bigger and bigger deals. Consistent with the mission, and over the past couple of years this has played out via investing in and exiting from the minerals that we purchase. One of the beautiful nuances to America that you can’t find abroad is that individuals can own subsurface mineral rights. We like buying and amassing these minerals on belief that they will appreciate with time. We can either continue to own and receive the residual royalty payments from exploitation of the mineral endowment or sell to someone what wants the revenue stream more than us. We think this provides one of the best risk adjusted returns in the upstream sector. It also serves as a solid foundation to continue looking at other things in the sector with an opportunistic eye, be they working interest opportunities in plays we know and like or innovative service and technology ideas.

How do you make adjustments to deal with volatility and uncertainty?

Ideally, we have the information asymmetry in our favor, limiting the detrimental effects of volatility and uncertainty on your returns. We accomplish this by knowing our niche and our place in the niche. The adjustments end up being actual dollars; amounts that we either buy and sell at. Its very similar to real estate, expect that we don’t ever get to do a literal walk through of the property. Just like real estate, we rely heavily on “Comps”, utilizing every bit of comparable information we can find to aid in assigning values to the minerals we buy and sell. This information could be geologic, drilling, completion or production metrics; it all counts toward helping one make sense about the value of something.

What are your favorite plays? Why?

We are a Rockies-focused company today with most of our activity mirroring where rig activity is. As a company, we like the Bakken and Three Forks as it is where we grew up as a company. We like the Niobrara and Codell in the DJ as it is our back yard, literally.

Personally speaking, I have worked lots of plays all unique and special in their own right but most memorable of it all are the cast of characters, not the geology.

Of note:

My boss who loved to close the door and pick some banjo at lunch and would occasionally hang a sign on the door, warning “DANGER: MAKING UP DATA” while doing neural network processing.

The team on a project in Elk Hills Field, Bako, CA that taught me about porcelainites in the San Joaquin Basin and coined a to-date untested stimulation technique we dubbed the “slushy frac”. The team that met with EGAS days before Arab Spring to discuss source rock reservoirs in the eastern plateau of Egypt and the dinner on the Nile complete with cheek cramping team manager belly dancing.

The team in Vienna that designed a frac in a formation so deep and high pressured, with a one penetration only halfway through it, thas it was going to require all the hydraulic horsepower in continental Europe at the time to put away. And then we discovered the all too un-skittish Mohawk Squirrels of Schonnbrun that would eat out of your hand.

I could go on and on: PTTEP tight gas sand team, Jakarta BP MIGAS regulatory group, KL EOR Consulting group, Khobar Government Relations and HSE groups, the day in and day out teams in Beijing and Denver. And especially the team at Overland, with whom over the past 2 years I have grown personally and professionally leaps and bounds and found new depths of gratitude for it all.

It’s all too good, I feel very fortunate to have them all in my life and to have such fond memories. I guess it’s no longer just about the rock for me. I think the rock keeps it interesting, keeps me challenged but the people keep me invigorated and together we meet the challenges.

Do you have any plans for the future?

Yes, we are busy at Overland and continue to grow at a pace we are all comfortable with. We are on track or ahead of schedule with deployment of capital from our current fund and will continue to methodically chart that path. Beyond this we keep an eye out for other opportunities that make sense for Overland and our investors. I tend to be vague here on purpose as we reserve the right to pivot. One never knows what doors will close and what doors might open.

Personally, I would love to eventually teach. I have always loved the challenges of teaching or conveying concepts and ideas to other. Someone, I can’t remember who, once told me, you don’t really know a topic until you can teach it.

What Can I Do?

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