Thursday, February 11, 2010

Interview With an Oil and Gas Contrarian

Great Article By Tobe Shute

Toby Shute: Ken, can you outline your operating philosophy at Contango, and describe how your current operations reflect that philosophy?

Ken Peak: I got a Ph.D. in the risks of too much leverage ... in my 26-year career prior to starting Contango in 1999. Three guiding principles from the lessons I've learned are: Only low-cost producers survive and prosper in a commodity business. Secondly, reserves and geophysical talent are log-normally distributed, but [Vilfredo] Pareto had it wrong. It's the rule of 95/5 not 80/20. Thirdly, "incentives drive behavior" is a fundamental principle of life, and thus everyone associated with Contango must have incentives aligned with our owners.

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