Dore Law - October 2020

Dore Law - October 2020

THE D or É R eport

D ore L aw . com

OCTOBER 2020

THE CUP IS HALF-FULL

The Good News. Energy demand is again rising, including liquid fuels, natural gas, electricity, coal, and renewables. Inventories of crude and natural gas have not been rising due in part to voluntary curtailments of marginal wells, and due to the decline in drilling/completion activity. Spot prices for crude have become relatively stable. Domestic producers are slowly bringing back production volume. The Bad News. Based on reports from the Energy Information Institute at EIA.gov, along with similar articles by Bloomberg and others, energy demand is not expected to reach pre-pandemic levels for at least another year because of reduced economic activity and travel/ transportation. Inventories are still high relative to demand (a condition that existed pre-pandemic). Energy prices are marginal for most producers and are below levels that would encourage new exploration. Bringing wells back to full production (worldwide) and completing gathering systems for wells not yet producing will need to take place before lenders and investors will support new E&P projects. When the good and bad news are weighed, what is the near-term forecast for oilfield services companies? Bankruptcies and mergers will continue to weed out some competition; however, demand for services is expected to be well below capacity through 2021. Exploration could gradually rise next year in anticipation of long-term energy demand and higher prices, but scarce capital and cost-cutting will severely limit budgets for some time. The economics of the marketplace look to be much more important than political or regulatory forces. Oilfield service companies must continue to focus on areas where they can be profitable. Already operating “lean” in resources and personnel, companies must eliminate any marginal operations regardless of future promise. Maintaining customer relationships and avoiding risky new sales is a sound strategy for the most difficult times. A healthy balance sheet puts your company in the best position to expand when demand begins its inevitable climb. For some, this is the best opportunity to rethink the entire Order to Cash concept and streamline the credit risk decision process in the unsecured world of the oilfield industry. If you are unfamiliar with the term “Order to Cash,” please stop and give us a call to discuss what it could mean to your financial decisions.

Making good business decisions, led by strong management, is the best medicine for today. Minimize risk, stop chasing ideas that look good tomorrow but are losing money today, and settle disputes before spending more than can be recovered. Jealously guard your most valuable employees and customers. Don’t get ahead of the industry trying to time the recovery. Take a long-term view. The market forces will eventually change, and good times are out there somewhere. Survival may be the key to success down the road.

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Bounce Back Fast and Effectively With Grit

As a business owner, you’ve had to face challenges that may have felt insurmountable at times, such as opening your business and dealing with the many ups and downs of the ever-changing economy. How do you bounce back after major setbacks or a particularly bad year for your company? How do you keep your business growing and build resilience when facing challenges? What’s the quality that keeps business owners moving forward, even when the going gets tough? Angela Duckworth calls it “grit.” You may have heard of her innovative research or her book, “Grit: The Power of Passion and Perseverance.” Duckworth zeroed in on this characteristic while teaching high school math. She noticed that some of her highest-achieving students weren’t the ones with the highest IQs, and some of her “smartest” students weren’t doing all that well in class. She went on to pursue this phenomenon at Penn State University. There, she studied several demographics: cadets at West Point, young teachers, and sales representatives. After numerous psychological studies, Duckworth discovered that grit was the common denominator in people who find success. Duckworth defines grit as “passion and perseverance for very long- term goals.” Gritty people don’t start a project and abandon it a month later. They devote themselves to an overarching goal that drives everything they do. According to Duckworth, someone who builds grit goes through life like a marathon, not a sprint. Based on her findings, she came up with a grit equation: talent x effort = skill, and skill x effort = achievement. What makes Duckworth’s equation so important is the fact that it shows how much more important effort is than inherent talent. People who have grit are successful not because they naturally excel at something, but because they put in the effort needed to achieve it. A gritty person sees challenges as opportunities, not barriers. It’s this type of growth mindset that can help businesses use grit to their success. How do you begin to develop grit in yourself or in your team? First , home in on what it is about your business or work that you are passionate about. Maybe your passion is giving every customer the best possible experience with your company, or maybe you love finding customers who need your service to fulfill a need. Whatever it is, find it and zero in on it. Second , practice that passion consistently. Have conversations with customers, find out what matters to them, take part in training, and have your team participate in customer success training. Do the work to fuel this passion. Then , develop the belief that your passion has a purpose. Concentrate on the fact that you want to give every person the best possible interaction with your business to contribute to a happier, more positive world. This belief should be integral to every move you make and every interaction your

employees have with your customers. When it’s a core principle, this work is unifying.

While it’s not an overnight transformation, these guidelines can at least give us hope, which is the fourth step : Hold on to the hope that you can succeed. Grit means being so strongly motivated by your need to achieve something that you continue to pursue it even when obstacles arise, and 2020 has had its fair share of obstacles. You may be exhausted, but now is the time to power your motivation. Along the way, look at failures as milestones on the journey to success. Don’t give up when something becomes challenging — getting “gritty” means failing and learning from it.

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IF A CUSTOMER WHO OWES YOU MONEY HASN’T ALREADY FILED FOR A BANKRUPTCY THEY (VERY LIKELY) WILL

TRADE CREDITOR GET TO THE FRONT OF THE LINE As a trade creditor in an oil and gas bankruptcy, there can be a lot to do. How are you represented on the Creditors’ Committee? How

With oil prices plummeting, the recent wave of bankruptcies in the oil and gas industry is sure to continue. Sooner or later, every oilfield services company will find itself as a trade creditor in a customer’s bankruptcy — maybe more than once. When you find yourself in this position, experienced legal advice can make all the difference in your strategy. WHAT DO YOU DO WHEN YOUR CUSTOMER FILES BANKRUPTCY? Doré Rothberg McKay are lawyers who focus on representing oilfield service and equipment companies. We help companies collect for the work they do. We help more in the O&G industry than any law firm in the U.S.

are you keeping up with the actions at the courthouse and with the bankruptcy trustee? Does your claim have reasons to be given priority? Our firm’s attorneys work in the bankruptcy courts full time to give clients the best possible outcome.

PREFERENTIAL CLAIMS ADDING INSULT TO INJURY

MINERAL LIENS PRESSURE WHERE IT’S NEEDED

Some companies find themselves being sued by the bankruptcy trustee and forced to repay monies they collected months before the bankruptcy was filed. Do you know all the ways to legally defend against such a lawsuit? Doré Rothberg McKay has spent over 30 years helping companies like yours get paid when a customer files bankruptcy. Talk to us about how we can help you.

Filing a mineral lien is a powerful collection tool for oilfield services companies. It is critical to act quickly when your customer files for bankruptcy because it is a huge advantage to be a secured creditor. Our firm files more mineral liens than any law firm in the country. Employ the most experienced and expert legal help.

ROASTED ROSEMARY BRUSSELS SPROUTS AND POTATOES Inspired by “The Oh She Glows Cookbook”

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If you’re having trouble getting the kids to eat Brussels sprouts, try this delicious vegan recipe as a side dish. Every vegetable tastes better roasted!

INGREDIENTS

1 3/4 lbs fingerling potatoes, halved lengthwise 3 cups Brussels sprouts, trimmed and halved

4 tsp olive oil

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1 1/2 tsp sugar

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1 tsp sea salt

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1/4 tsp pepper

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3 cloves garlic, minced

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2 tbsp fresh rosemary, minced

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DIRECTIONS 1. Preheat the oven to 400 F and line a baking sheet with parchment paper. 2. In a large bowl, combine all ingredients. Toss until the Brussels sprouts and fingerlings are evenly coated with oil and seasonings. 3. Spread the mixture on the baking sheet, then bake 35–38 minutes, stirring halfway through. Add more salt and pepper as desired, then serve!

APPLES

HORROR

SCARY

CALENDULA

MASKS

SCREAM

CANDY

OPAL

TREAT

HALLOWEEN

POPCORN

TRICK

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1 2 3

The Cup Is Half-Full

Is Grit the Key Ingredient to a Resilient Business?

What to Do When a Customer Files for Bankruptcy

Roasted Rosemary Brussels Sprouts and Potatoes

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Why Done Is Better Than Perfect

DONE IS BETTER THAN PERFECT HOW ONE SIMPLE CONCEPT CAN CHANGE YOUR BUSINESS FOREVER

THE DEVIL IS IN THE DETAILS When you obsess over a given task, it’s usually not something foundational to the success of the project. It’s more likely that you spend your time in the weeds of what is relevant to the consumer. Trying to find just the right shades of blue in an email or type of lightbulb for your office isn’t going to drastically alter the course of your business. Spending a disproportionate amount of time on menial tasks that do not move your company forward is counterproductive. PULL THE TRIGGER There comes a point in every project where you’ve reached the threshold of quality work. The measure of a great leader is knowing when this moment has arrived and marking the task as done. Every minute spent beyond this moment is time not spent on other important responsibilities — and that’s money down the drain. ROI ON PERFECTION To see if your business needs a boost in productivity, try running an analysis on where the time in a specific project goes. You’ll find that the more time you spend chasing perfection, the less profitable that project is. Done is better than perfect because it’s efficient and cost- effective, but most importantly, because it’s done .

In the modern realm of business, you’ll find attention to detail and high standards are required for businesses to be successful. With multiple markets oversaturated with similar products, marketing, and services, the quest for quality has turned into a necessity for survival. But somewhere along the line, the focus put on providing superior amenities becomes more of a hindrance than an assurance. The pursuit of perfection in daily tasks creates a paralyzing effect on productivity. The concept of “done is better than perfect” has rapidly circulated in business over the last couple years. Current times require on-demand delivery of knowledge; paralysis by analysis can make a company less relevant if they can’t keep up. This fixation on the minutiae of a task not only hinders customer engagement, but it also has a negative effect on a business's bottom line. ISN’T PERFECT ALWAYS BETTER? Detractors of the “done is better than perfect” mantra suggest that going the extra mile makes all the difference in a client-based relationship. And they’re right, but their interpretation of this philosophy is wrong. “Done is better than perfect” is not about churning out mediocre work. It’s about not wasting money.

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