Has anyone ever wrote or been a part of a real business plan?

[zachary]

I have been in my industry for 9 years and I think it is time to take a shot. This thought scares me to death, but if you do not try you will never know what can be done.

I am wanting to get a business plan down on paper to present to private money to get 5-10 investors in a start up company. Expenses will be minimal with 2-3 employees to start with.

I have no idea where to even start to write this up.

[slow99]

For starters: company overview, market analysis including sizing the TAM, your product overview, how you'll market it, capture, financial historicals and or projections (p&l, balance sheet, cash flow statement), details on your funding request, and details on company valuation.

[SMKR]

What do you want to start? ($5 says bar or some sort of food establishment, amirite?) Nothing personal, but every investor and/or corporate refugee I talk to daily that wants to start their own business wants this.

[Craizie]

What do you want to start? ($5 says bar or some sort of food establishment, amirite?) Nothing personal, but every investor and/or corporate refugee I talk to daily that wants to start their own business wants this.

I could never own a bar. I'd drink myself broke.

[zachary]

I am an exploration geologist who generates oil and gas prospects. I have generated over 20 proven deals in the last few years, and i am ready to try to get funding and open my own shop. Do not want big picture horizontal etc things, most people do not understand there are billions made every year by the smaller guys in the industry picking up small leases and drilling 1-5 well projects on the cheap. You do not have to spend a billion to make a hundred million like public companies do. You can spend a million and make 2 or 3 though.

i want to do some small acquisitions 1-3 wells find a way to improve their production drill a few more wells and flip for a short term profit. As well as generate, lease, and sell percentages of my own deals to misc other oil and gas companies(every day business for the lat 9 years), keep an overriding royalty interest and collect a finders fee(again everyday business).

as well as contract work for larger companies(which i think can be obtained)

yes i know its a downturn, believe me i am fully aware of this. Prices will come back, my current company is still making good profit as we sit today price wise. It is possible

[SMKR]

Alright, I like that..as someone who was in the oil/gas industry for 3 years I like it, and wish you the best of luck!

[SMKR]

BTW, what kind of money (ie-investors) are you looking for?

[03mustangdude]

Wouldn't you have to do your cost projections on todays price of gas not a future price?

[zachary]

i have 2-3 potential people already interested. Advantages of starting small is it is CHEAP to start small. 2-3 salaries, cheap office space, just a few subscriptions and we are off to work. total start up think will be around 350k per year for BASE salaries and expenses - beyond that there is more $ to be shelled out for whomever % of the lease cost, drilling expenses , etc if they choose to take part in the deals or they may want to sell their share for over ride royalty interest. Happens both ways daily!

i currently have 2-3 deals in my pocket that i know are sell-able(maybe not today but within 6 months) and 2-3 acquisitions i have had some engineers work that appear to be great deals also.

i am terrified to even think of this, but you do not make it big without risks. I am pay check to paycheck just like everyone else here but have confidence, eagerness, and drive to make things work.

[zachary]

Wouldn't you have to do your cost projections on todays price of gas not a future price?

when you run economics spreadsheet you put in proposed price for years to come in the future. all speculation now, but there are deals that will make money even at todays pricing. service companies have came down so much that there is profit to be made, maybe not as much as a year ago, but you can still make money. The big game in todays market is getting a producing well online and holding the leases and hope a "new resource" play(even though this has happened since the 80's just no one realizes this) sweeps through and buys you out.

a few of examples of this happening from what i saw at my current positions where 150-250k in leases and up front work made millions on the backside in under 2 years.

[Trip McNeely]

In this environment wells aren't worth much if you can't get your gas to the right market. You need the right gathering/compression and transportation for starters, marketing agreements, pipeline capacity, etc. I suppose if you have a bunch of small conventional wells pumping out a few hundred barrels a day of oil that would meet the needs of an individual looking to get paid. Not to rain on your parade, but If you are looking to get bought out or have good investors, you will need more than that. Just my thoughts. 9 years isn't a lot of industry experience to convince hardline investors especially in this market. I would look at a technology advantage or someway to streamline a process and go from there. Just my .02.

[zachary]

I am more than aware of how mid and upstream work, i deal with it daily. Some markets are hard to get into gas or oil wise with the influx of what has gone on lately. Several wont take lower quality hydrocarbons. We are aware of that also. All those expenses, thoughts and details go into our thoughts when working specific areas. Pipeline costs and fees are always accounted for in our AFE's.

I really do appreciate all input, even the negative may help me come up with answers to questions i have not been asked yet. There are new technologies out there that can help.

Oil and gas auction houses are making a killing flipping properties for people even in this down turn you will find an influx of bought and sold deals on their websites. From 1 well deals to 100 well deals. People love buying in this environment wait for it to come back and then rake in profits.

[Trip McNeely]

If you need any advice let me know. I don't know everything, but I have been in different sectors and have been in a few different plays. I've been on the Service side, Supply chain side, wellhead, etc, now I do purchasing for an E&P. Lots of reward to be made with lots of risk. Right now it's hunker down mode, however good time for opportunity if you see the right one.

[Ruffdaddy]

Good luck that sounds awesome. I know (a little too well) that funding is hard to come by right now for O&G and im not sure you would ever get it for straight salaries. Also, you can probably double the cost of what you expect it be. You obviously know the technical side, but maybe the business is more difficult than you realize...do you have involvement there?

Ive done some business cases and plans...and they are pretty straight forward like 99 mentioned. Maybe look over some of the governmental help stuff? Get a govt backed small business loan? I have a friend who did this for a small business loan.

Lastly...how are you in your position and living paycheck to paycheck lol

[Strychnine]

Geologists are so far upstream I don't know too much about how you fit in to the market, so bear with me. You're looking to be a petroleum geology firm and sell your work to an E&P? Will you be doing the land acquisition also and selling, or are you trying to sell data only?

It sounds like you want to be the first half of an E&P without doing the second half, which makes me want to ask who your target market would be?

I know some well owners in the Permian - small guys who have 5-20 wells. They aren't going out and drilling new holes though; they are going out and buying up old low production (like 20 bbl/day stuff) P&A wells that the majors didn't see the value in maintaining 20 years ago, bringing in a workover rig to drill out a plug and do some stimulation and see what happens... so they certainly don't need geologists.
And I also know a guys starting their own E&P right now, and within their group of 8-10 people they have seasoned geologists that will be in-house.
I'm guessing that for this to work for you there would need to be E&Ps without any geology expertise on hand, right?

Is the market really there to do boutique geology for "small guys" when the cost to drill a new well these days is not exactly low? I ask that because the one case I mentioned above the startup funding for their venture is $100 million. With that level of investment why wouldn't they just put you on their payroll?

There was a big study done at Pitt to understand the average cost of drilling a Marcellus well.

This was an EQT well in Washington County, PA

Land acquisition and leasing: $2.1 million
Permitting: $10,000
Vertical drilling: $663,000
Horizontal drilling: $1.2 million
Hydraulic fracturing: $2.5 million
Completion: $200,000
Production to gathering: $472,000

Remove the horizontal leg of the bore and remove the majority of the frac costs and you're still trying to sell someone on a $3,445,000 gamble - and they won't have any recourse if you're wrong.



Edit: I read post #5. I'll leave this post here since I typed it lol