Given the current state of the energy markets, being a large company is not necessarily a good thing. Flexibility is a distinct advantage. Mid and larger energy companies tend to focus on larger properties where capital costs can be extreme, limiting the ability to adapt to changing conditions. As the book says, “small is beautiful.” In a variable market, a company that can adapt quickly is one that will be profitable.
Savoy Energy Corp., an oil and gas extraction company, works to extract and sell oil and gas primarily in the United States. The company recently signed agreements to explore for oil in Fiji.
Although the company is open to all potential properties, it is currently extracting and re-working existing wells in Gonzales, Texas. The company appears to be extremely structured in its operations with a particular focus on cost controls. Generally speaking, the company works with existing technology to bring closed wells back on-line. This process, and the way that the company approaches each well, allows it to keep costs low and cash flow moving in a positive direction. For the most part, the company has been working with smaller tracts of land, ranging in size from 82 acres to 485 acres. It also appears that the company is fairly choosy in the parcels it acquires, purchasing only those tracts it feels it can quickly and easily bring back on-line in short order.
The current state of the oil and gas markets dictates the need for flexibility and the ability to react to quickly changing conditions. In this sense, Savoy Energy is uniquely positioned. As the price of oil and gas move in an uncertain environment, the company is better positioned to react with less exposure if conditions worsen or improve. As companies in all sectors have found out, this is a particular advantage and one that can dictate success or failure. Savoy Energy Corp. has a very prudent and experienced team in place and appears to have found a plan that should keep it moving forward for some time to come regardless of conditions.
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