Philosophy
Our philosophy is simple and familiar to most businessmen, and yet it is a philosophy rare in the energy sector of the economy. The energy business is largely unbundled with many small companies providing specialized services or filling narrow niches, excepting the large integrated "majors" and integrated utilities. For many years these companies have been regulated by state and federal agencies, but "de-regulation," which is really "re-regulation," has provided a whole new environment from which to develop.
Unfortunately, most energy companies are doing business the same way they have operated in the past, under a regulated environment. The only difference for many of them is the faster pace of today and newer technologies.
New Business Models
Old energy business models have to be replaced or modified. The new business models for energy will seem completely normal to other traditional businesses. Traditional businesses are used to selling a product directly to a customer or retailer, but try to find an example of a small energy company selling raw natural gas directly to a customer, or electricity directly to a retail buyer. There are some examples, and we admit that they are rare -- but just for now. A new regulatory environment and new technology is changing the way customers buy energy, and it is changing now.
Instead of looking at natural gas as raw BTUs (British Thermal Units) to be sold as a basic commodity, we look at it as the foundation for a host of valuable products coveted by a variety of customers. New technologies allow conversion from the basic building blocks to valuable products in a smaller and more modular way than ever before in history.
Oil to Preserve Future Value
Instead of looking at oil as a basic commodity with price manipulation by an overseas cartel, or domestic commodities traders, we see it as a way to preserve future value. This is in stark contrast to the prevailing view of "oil as a depleting asset." We use net-present valuation like any other business with a cost of capital, but we hope to employ new strategies or tools which produce a higher future value for the energy we produce. These tools are different than the typical commodity price risk management (financial and derivative instruments) used by many oil companies.
When many energy companies are worried about adapting to the New Economy, we thrive in it. If you would like an opportunity to join with this philosophy, contact us at (817) 247-8308.