Reward to Risk Ratio!?!

Reward to Risk Ratio! A calculation that should be ‘Exclusive’ to the Oil and Gas Industry, as we get little to no room for error, and we Never get a Bailout!

This industry of ours is not for the faint of heart, it takes a considerable amount of Moxy and the willingness to take a High Level of risks necessary to reap the rewards. Investing several million in the drilling, development, and production of just one oil and gas well has more risks involved than the average investor, even the highly educated investor, could possibly fathom. From my side, buying equipment in the millions, trying to calculate an appropriate return for each equipment investment, and all the while just hoping the market stays stable while I’m trying to sell it, can give me several sleepless nights. We all make our own financial calculations on what to do, when to do it, and in the end, we are just hoping we are close to being right and that the market remains stable when we need it to be! If you’re counting on a bailout when the chips are down, you best look to another industry, that simply does not exist in the Oil and Gas Industry!

I’m ok with the risks…What irritates me is this….in our industry, little credit is given to the Risks we all take on an ongoing basis. As a whole, our industry is scorned and penalized when we have successes, and not the slightest condolences on our failures, or the failures we endure when the markets turn to the downside. Nope! You won’t find anyone saying, “ahhh, so sad, all these oil people losing so much money”, you simply won’t see that. On the flip-side, consistent as the naysayers are, you will neither see any congratulatory statement, “great job on making America Energy Independent again, thanks for all the new jobs you’ve created” ….NOPE, Sorry, you will rarely find anything of the sort.

Our rewards are the returns we see for the individuals that have entrusted us to make things happen, through the good times and the bad times. Our reward is the work, the day to day struggle to drill a well, bring it online, and deliver the energy that so many take for granted. Most people will never see, nor do they care, about the risks we take in our industry to bring affordable energy to the world. We may have some good days/months/years, but we also have some very bad ones. The naysayers just care about a cheap tank of gas, a low utility bill, other than that, they really could care less.

Contrary to the Oil and Gas Industry, you’ll find many examples of Sympathy for the failures, market downturns, et al, for numerous other industries. The Housing industry, as an example, is riddled with examples on how the downtrodden were duped, lost their investment and left destitute. In the Banking and Financial Industry, you’ll find that ‘bailouts’ are not only commonplace, it’s pretty much a given factor. Agriculture, same thing…times are tough, no worries, Big Brother is there to bail you out. Never mind all the fruitful years/decades they all see, they get the at-a-boys for that too, but when the chips are down, they are all corrected and made whole with bailouts.

The Oil and Gas Industry? We don’t get this treatment. We take the risks, financial and otherwise, make the day to day sacrifices, and get little to no at-a-boys, and we Never get bailouts, just penalties on the few years we do see successes. You know what? That’s OK by me. I for one don’t want any accolades or high fives from the very people that take our products and services for granted. I don’t want government bailouts either. I’ll take my risks, I’ll pay my taxes, and tax penalties they use for other industry bailouts.... and I’ll suffer through the down times….I’m an Oil and Gas Industry Professional, and I’m beholding to no-one! I’ll just say this to all the naysayers, complainers, and environmentalists….You Are Freakn Welcome!!!!

We take Risks in the Oil and Gas Industry. We take more than our fair share! We do our Best to calculate a decent and fair Return for the risks we take. What’s a Good Reward to Risk Ratio? I’ll leave that up to you….for me….if I can keep doing what I’m doing, a job I absolutely love…keep the lights on and continue to feed my family…I’m more that satisfied with every single risk I’ve taken…throw in a couple vacations, and I’m very very happy!

For details on calculating Risk to Reward Ratio Analysis, I’d be happy to share with you are insights, how we do it, how it can impact you and ensure your success in this Industry of ours…Feel free to contact me, more than happy to help if I can.

Opinion by Jim Harvey/CEO PetroRigs.com