Friday, November 6, 2009

From Perry Fischer, former World Oil Editor

November 5th, 2009

When I got up this morning, I decided not to pack my usual snack lunch--I thought that it would be my last day. I was right--I was fired.

On Oct 22, I received two emails forwarded to me via the World Oil Circulation Department. They were from DS and KR at two Houston oil and gas companies, and they both said that they were canceling their free subscriptions due to Art Berman's columns on shale plays. DS went further by faxing and then phoning to the president his feelings about Art Berman.

Let me be clear: The decision to pull Art's column was due to pressure from these two companies.

The next day, the president stopped by to tell me that we had to stop Art from writing about shale plays.

I said, "I'm surprised that there haven't been at least a dozen complaints. I've seen worse on other topics."

It was no use arguing. Ironically, I had already decided that Art should take a break from the shale plays for a while anyway, just because he was running out of new things to say, having written 8 (I'm guessing) columns on that one subject.

It was the 23rd of October and we usually have all of the columns in by the 15th of the month, but we have been so understaffed--just myself and 1.5 other people (we share one)--that we are now often late. So I called Art to see where he was at on his column. I quickly realized that Art's mind, and some of the work, were already committed. He felt that he owed it to his readers to comment on some of the recent rebuttals to his positioins on shale plays, so I decided that we'd go ahead and print what he had for the November issue.

Again ironically, Art agreed that going forward he was going to take a break from the shale topic, mostly because as he put it, "I'm not sure what more I can say."

Immediately after I hung up the phone with Art, the Publisher walked in, slapped down a fax from DS, and said, "We've got to stop Art from writing about these shale plays, we're getting too many complaints!"

I replied that I was aware of the complaints and said that the president was just in to discuss it, but that it was too late in the cycle to stop the November column but, in December, we would take "a little break." He said "Fine."

Normally, the magazine would be going out the door by then, but insufficient staff in both Editorial and Production departments caused further unforeseen delays. On Nov. 2, the magazine had been shipped, the "bluelines" were back (proof sheets), and they were about to go to press; we were minutes from being done done, when the Publisher walked in and said we had to pull Art's column.

I said, "I can't, I won’t; it’s finished, plus, we agreed that we'd leave November alone."

He said that it wasn't his decision, and that I was welcome to talk it over with the President, which I did. That conversation went nowhere. In his mind, there had been too many complaints (2), including 2 phone calls, and the column had to be pulled.

After three protests, including the fact that it would delay printing, I finally said, "This is a really bad decision, the best thing that you could do is nothing; there is no compelling reason to pull this; just let it go to press; the idea that we can please all of the people all of the time is impossible, unless we are careful to say nothing, print pabulum."

Obviously, I lost that battle. The last thing that I wanted to do Monday night (along with the Production Department person) was to write a quick column to replace Art's in two and-a-half hours; it was a step down in quality from his, and betrayed an incredibly thin skin on the part of World Oil management. I certainly would never have pulled it. A spineless Editor isn't an Editor at all.

It's important to know that Art left voluntarily. The decision was his alone. In my opinion, he was pissed. But then, if I worked my ass off on a good column, asked my friends for their counsel, opinion, and proofing, had the editor question a graph and ended up changing it, and then had it pulled and just set aside for the crummiest of reasons... well, I'd be pissed off too. If Art had stayed, he would have been under a magnifying glass. It's like breaking a pencil in half and then trying to put it back together.

I got through the night, emailed/talked to Art, and took two days of vacation. A minor brouhaha ensued on this blog and elsewhere and, when I returned, I was fired. I wasn't told why. Neither was I surprised.

In my 11 years at World Oil, I tried to take the "trade" out of "trade journal." The current management is trying to put it back in. Increasingly, decisions are being made for the sake of advertising. Unfortunately, the last vestige of “the separation of church and state,” meaning, between corporate and editorial, is gone. The marketing folks have won. Dilettantes’ meddling in day-to-day operations is now the norm.

I dare say that the last President, RM, who was summarily fired in April without explanation (so that's how he felt!), would have handled the situation much more deftly. (By the way, when you fire a president, aren't you supposed to trade up? I'd bet that not one employee feels that that is the case). But RM was old school (probably why he was fired). And so am I. My field experience and physics background will probably make me the last editor of World Oil with a technical background; part of a line of technically qualified Editors going back decades.

26 comments:

TechLimit said...

SO,
Just when the REAL scientific debate was getting intellectually stimulating one selected side gets the gag treatment? You'd think WO was now based out of Daley's and Roti's Chicago. Or is that today's DC.?? The tactics are quite similar, eh? I miss the old school roughneck'in and wildcatter's bold discourse in our business as it has evolved.

Many recent Q3 2009 reports purported "conservative EURs", prudent estimates "because we don't want to overstate" and the old cliche', "we'd rather be under than over in our estimates". Hey, these aren't IPs, they are 90 day production averages!!

Looks like the "skeptics" have touched in house nerves recently but is it time to silence BOA or Deutsche Bank Group et.al.,the many analysts, who early on had many of the same gut feelings on reserves and internal rates of returns even absent thousands of data points of "well driven" analysis?


Time will tell, truth will prevail.
Good Luck to the Grey.

Royalty Interest said...

"I was fired" Surprised to hear if this happens to higher officials like you. Just wondering..

Alan von Altendorf said...

God, this horrible.

Anonymous said...

Art,

I do not know if your overriding conclusions are correct or if they are not, but the challenge to the proponents of these SG plays is warranted by the facts contained within the large, lengthy production data bases. I commend you for your honesty, hard work and courage even though for the sake of this country and the nat gas industry, I hope you are incorrect.

During my many years (decades)working with unconventional natural gas, I have been materially involved with at least 3 major plays in which the early results were very uneconomical but in which the end results were immense and economically-viable gas fields. One of these involved a few hundred sub-commercial wells before successful gas production was evident. Even then, it was difficult to offset the early investments.

Regardless, I continue to wonder why those who disagree have not been able to or have chosen not to disprove your relatively basic analysis. The differences between the purported EURs and PVs of the shale gas developments and the actual production are large. If these resources do eventually live up to the claims, the operators should have some understanding of the reasons for the very large extant gaps.

How many industry and financial professionals are now saying: "I won't bother to read WO again."
That is a shame. WO was an icon.

B Hanson

Miguelito said...

Absolutely disgusting.

While I don't agree with many of Berman's conclusions, there's been a world of good that's been coming out of his work: getting people interested in the topic and asking questions. It's led to rebuttals to help clear the air about such a young, emerging resource. Public discourse is good for a topic that has very little analysis in the public realm. Although, it doesn't happen nearly enough.

Otherwise, it ends up looking like companies are hiding behind the cloak of confidentiality on what might be a ticking time bomb of unsubstantiated recoverable gas. And now these companies are leveraging their weight against World Oil to get an editor fired because of some disliked columns, which certainly doesn't help in the court of public appearances.

Like I said, absolutely disgusting.

Anonymous said...

Old WO Editor
This is absolutely despicable and would NEVER have happened under WO's original ownership. The Brits now own WO and you will be able to watch it's certain demise, just like that of the Petroleum Economist. The sales department is now in charge, just as it is at Hart. Only Pennwell (Oil & Gas Journal) remains unbiased.

Grammy said...

Dear Mr. Berman

Could you please send to me the data for your results on drilling for gas in shale. PDF will work Thank you. Margery New York City:

Anonymous said...

Funny that no one seemed to want to believe those who predicted problems in the derivatives market.

The extensive debate would indicate that the potential for a downfall is there.

I'm betting on reserves writedowns.

Anonymous said...

I am working as a volunteer regarding the gas fracking in the Marcellus shale. The Berman and Fischer posts were not surprising. I just am sorry that we are going into another economic implosion. this time many people will be hurt. Check out the following groups.

http://www.nyh2o.org/
http://www.damascuscitizens.org/

Anonymous said...

To the poster who claims that no one is providing data to refute the EUR numbers provided by Art,

Actually, I have been actively following this and there are a few people who did provide data. Art actually have taken these new data points and includes them in his analysis. If you see Art's postings, you will see that he has increased the EUR from his earlier analysis. Art is still claiming the numbers do not add up, but that is due to disagreement over future decline rates that no one can provide data as it is in the future. Without these additional data points, Art's model was simply showing fraud being committed by the industry, but with these new data points, the numbers make more sense in my opinion with only disagreement over the latter life of these wells.

Grammy said...

I think it is time to say who I am. I am Margery Schab mschab@aol.com. WE need to talk to Arthur Berman or Perry Fischer.

Grammy said...

Where (links, available data bases) can we find out the EUR on any of the drilling sites in the Marcellus Shale in Pennsylvania and Ohio.

Anonymous said...

So Perry,

Maybe they replaced you with that computer program you were always talking about writing, you know, the one to replace all the hardworking production people who put together that friggin magazine every month.

Cheers

Raoul Drake said...

As Mr. Berman noted, the EUR figures need more qualifiers, or at least more data, before they switch from being "data" to being "information", the differnce is that data is without context. The connectivity, lateral as well as vertical, of a reservoir is more significant than demonstrated on PowerPoint slides of activities. The economics is paramount, despite having technological progress to backstop our current abilities to exploit an given resource. New technology does not seem to come at a lower cost; the incremental gain must struggle against the incremental cost. Raw data makes many a pig's ear appear to be a silk purse. Only when you have that "purse" in your one hand and the bill in the other can you really tell which you have.

Keep up the questioning. There are no such things as stupid questions, only stupid answers.

Pat Davis Szymczak said...

Was wondering how to get hold of Perry and or Art on the telephone to discuss a possible article on Shale Gas, the LNG market and how that is making Gazprom flip flop on Shtokman.

Pat Davis Szymczak, Editor, Oil&Gas Eurasia, p.szymczak@eurasiapress.com; www.oilandgaseurasia.com

Bill Morrison said...

As an unabashed "Marketing guy" I have been graced with two hemispheres in my brain...one that loves a really well crafted ad, the other a devout champion of editorial integrity. My advertising buying decisons are directed by my assessment of the editorial. Great circulation with crap editorial? I don't spend a dime there.

I buy what I respect. Yet that doesn't mean I have the privilege of always liking it. I certainly can't respect a publisher who compromises it's integrity because of an advertiser (even if it's me!)

Sorry this happened to you Perry.

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