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Tom Jorden, President, CEO and Chairman of Cimarex

McDougall, Jorden, Terry, McPeak

Cimarex's Jorden speaks to Wildcatters

January 10, 2014
Cimarex President, CEO and Chairman Tom Jorden spoke at January’s Wildcatter Wednesday Luncheon at the Tulsa Country Club and delivered a stirring view of the oil and gas industry’s positive effect on the world.

“We are in the middle of an energy revolution that’s changing the world,” Jorden said. “And the amazing thing about it is it’s so obvious to those of us in this room, and yet the American public doesn’t see it. Politicians don’t see it. Policymakers don’t see it. The media doesn’t see it. And yet underneath us there’s a groundswell that’s changing the world.”

Jorden said big changes have happened in the industry in the last 10 years, in the last 5 years, even in the last 18 months.

“In conventional exploration, often it was about science and ideas. Somebody had an idea and the driller went over and tested the idea. Today a lot of our advances are empirical. Somebody hauls off and tries a well over there and then all of us brilliant scientists scurry after it trying to find out how it worked.”

Cimarex had 17 rigs running in the Permian Basin when the markets collapsed in 2009. The company laid down every rig. They went from 43 rigs company-wide to three. They told their Permian team to be innovative, be creative, and figure out how to make a living, and that team was the first mover in the highly profitable Bone Springs play in the Delaware Basin.

“Sometimes there’s a lot to be said for staying alive in this business. If you stay alive, you have the opportunity for opportunity to come your way. I’d love to stand here and tell you how smart we are — and we are — but … If you look at a lot of the advances in our industry, they’re made by trial and error.”

Jorden pointed to the arctic chill that swept the nation in the first weeks of the new year as an indicator of the kind of benefits the energy revolution can bring.

“We are in the midst of one of the coldest winters ever on record. And natural gas has moved from $3.80 to $4.30. Now that’s wonderful, we’ll take that 50 cents, but five years ago we’d be looking at $6 or $7 gas or higher.

“So what’s changed? There’s a perception of long-term supply. If you look at oil you see every bit as remarkable a story. You can see oil in the United States peak about 1970, decline, and then it turns around in 2009 or so.

“Depending on where you take your baseline … in the last four years oil production in the U.S. has gone up 50 percent. Think about that. The third largest oil producer in the world has increased its oil production by 50 percent at a time when the rest of the world is struggling to stay flat.”

He said the rest of the world’s major oil producers — Libya, Iran, Venezuela, Mexico, Africa — are struggling to keep their production at current levels.

“But we’ve increased our production by 50 percent, not by government decree, not by regulation, not by design, but by the ingenuity of our industry and by the free market of our economy.

“It’s an absolutely incredible story, and it needs to be understood and told. We as an industry need to tell it and the American public and policymakers need to understand it, because it’s changed the competitive landscape of this country, and redrawn the future of America.”

It’s a story of technology, of perseverance and innovation, of unfettered progress, Jorden said. It’s a story of the entrepreneurial spirit, of people wanting to make themselves better.

“Look at all the little advances that have made this happen. Not everybody succeeded. A lot of people failed along the way, and yet people stayed at it and they made this happen.”

Jorden said the U.S., the largest economy in the world, has the cheapest energy of any modern economy, and that’s a remarkable American advantage.

“That’s helped the poor most of all, because high energy prices are regressive,” he said, pointing to a recent article (“Fracking and the Poor,” Sept. 6, 2013, The Wall Street Journal) that described the billions of dollars in savings because of low natural gas prices. And, he said, the energy revolution has totally redrawn America’s security map.

“The funniest thing about all that is, none of us got up on any morning during this process and said, ‘You know what, I’m gonna make the world a better place.’ We got up and said, ‘You know what, I’m gonna try to get rich.’ And we shouldn’t apologize for that. That’s why America has the strongest economy in the world.

“There’s a reason why this is an American story,” Jorden said. “There’s a reason why this hasn’t happened in the rest of the world. It’s the story of free markets. It’s what happens when people are allowed to compete with one another and achieve those goals. It’s also a story of property rights. And the rest of the world stands with their mouths open gaping because they don’t understand it.”

He said the world is taking notice. Manufacturing is leaving Germany and coming to the United States. Climate change legislation in Britain is crippling the U.K. economy. The U.S. did not join the Kyoto Protocol, but America is the world leader in reducing greenhouse gas, he said.

“Our greenhouse gases are back to 1990s levels because of the benefits of natural gas. Germany has 30 percent of their energy coming from renewables and their greenhouse gases are going up because they have to burn coal (to make up the difference).”

Jorden said because of the energy revolution, we have economic development, we have national security and flexibility, and we have a bridge to the future.

He said it was fitting to tell the story of the energy revolution in Oklahoma, because the Sooner State has been a real champion of energy.

“Our business has changed, the future of America has never been brighter, but we can’t blow it.

“What’s happened in this energy revolution has happened not in spite of us being Americans but because of what we have here in America. It’s given us a competitive advantage unlike any country in the world right now.

“It’s something our industry ought to be proud of. We ought to hold our heads high and we need to communicate to the public, our policymakers and our politicians. I’m very proud to be in the oil and gas industry and I hope all of you are proud as well.”
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