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Nigeria 2019 | ENERGY | VIP INTERVIEW

Depthwize's standing in the regional market, combined with high permeability rate for Nigeria's oil reservoirs, has allowed it to not just survive but also build through the 2015-2017 market downturn

Despite a declining market, how have you managed to repay your loans?

We have had to trim the workforce, and as a result of good service quality, we kept on working for our top client, who continued to make investments in field development despite the downturn. We were drilling most of our client's deep wells and a new hydrocarbon discovery. Moreover, we drilled some of the best wells in the country, as deep as 19,700ft, which is how we survived. We realized about six wells for our top client and were able to ramp up production from 8,000bpd to about 25,000bpd, with huge potential for further increases. For the oil and gas industry, 2015, 2016, and 2017 were difficult years. It is beginning to ramp up now, albeit with a lag in increasing prices and confidence amongst oil companies to commit to drilling.

Do you expect indigenous players to play a bigger role in the oil and gas industry in 2019?

I do, but there is confusion amongst the indigenous players on the E&P side with court cases. They seem to want to have their cake and eat it; they want to drill and explore, but with someone else picking up the tab. We can improve in these areas from a working perspective, at least in making business more forward. Funding is the key issue, and it is why many indigenous players have not attained their true potential.

What is the reason behind the lack of funding?

Many people are scared of doing business in Nigeria. One has to often get funding externally, from international investors, which requires local actors to inspire a certain level of confidence. In Nigeria, there are issues such as political risk, environmental issues, and insurgencies in the Niger Delta, not to mention the northeast, all of which makes raising capital difficult.

How does this situation reflect on the service side?

Service quality is one issue, and another is lack of funding. When the oil price bottomed out, the declining number of operational rigs continued to decline. Therefore, it took a while for that to correct itself, and the ensuing lag led to caution. One thing that can improve, from the E&P to the service side, is early payments for work done.

How competitive is the environment, and how do you stand out from the competition?

Competition is brutal. We stand out due to our people, intelligence, and solid assets, and through word of mouth. What makes competition even more intense is that many companies that should not be tendering are doing so. Another issue is that since many E&P companies have not been drilling, service companies have no jobs, so they continue to incur losses as their equipment depreciates.

How can Nigeria's oil and gas industry inspire greater confidence among international investors and banks, and bring a better business sentiment to the industry?

Nigeria is one of the world's easiest places to drill for oil. Once a company discovers oil, permeability is high, meaning the oil will rapidly move through the rock. These are key characteristics that aid crude recovery; however, there is a serious need for facilities to transport this crude from offshore locations. There is also a security consideration throughout the industry. Nonetheless, Nigeria has skilled professionals who can take a company from the first stage to the last, and this should give confidence to global investors.

What is your outlook for the year ahead?

I want to keep our three rigs working. In 2017 and 2018, I simply told my people that we needed to survive the downturn. We have to take risks because, quite simply, if nothing is ventured, nothing will be gained. Our plan was to have five rigs within five years, and we were well on our way to fulfill that before to the downturn. Therefore, at present, we are looking at alliances with key partners and a degree of expansion where we can leverage others' assets