Q and A: Bayswater Exploration CEO, goes from the cattle ranch to successful oil executive
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This article first appeared in Energy Pipeline, a sister publication of The Fence Post, which comes out monthly and covers energy development throughout the region. To learn more or subscribe, call (970) 352-0211.
Steve Struna’s ties to Colorado run deep, very deep.
No, not the kind of deep that you might associate with a successful oil executive.
The kind of deep we’re talking about comes from having been related to one of the earliest families to homestead in the state.
Struna, president of CEO of Bayswater Exploration and Production — a key company in the Wattenberg Field — says his uncle’s grandfather homesteaded in the late 1850s near what is now Buena Vista, about 35 miles south of Leadville.
Struna says the land continues to be a working cattle ranch, one where he spent a great deal of time during the summers of his youth.
“It’s called the Cogan Ranch, and I spent a lot of summers there,” he said, recalling horseback riding, herding cattle, and other work he did on the ranch. “It was a pretty good childhood.”
Not surprisingly, Struna says he comes from a family experienced in doing things with their hands – carpenters, machinists and ranchers. It even appeared for a while that might eventually become his calling, too.
So how did a person which such a background become a successful oil executive?
Struna says it began slowly, probably in middle school as he discovered that he liked to use his head more than his hands — especially when it came to math and science.
Those interests only grew when he got to Denver North High School.
“I had two teachers in high school — a physics teacher and a chemistry teacher – that kind of got me thinking about college,” he said. “They told me I should be an engineer … that (math and science) is what engineering is all about.”
By the time he graduated in 1977, his mind was made up. He was going to be an engineer. That decision led to a lot of excitement and a lot of “firsts.”
Struna’s first airplane ride was the one he took to New York City to attend Columbia University. Four years later, he left Columbia with a bachelor’s degree in chemical engineering, becoming the first in his family to have a college degree.
He wasn’t done yet. Struna followed that up by earning a master’s in petroleum engineering from the Colorado School of Mines in 1985, and an MBA from Harvard in 1990.
Today, Struna runs Bayswater Exploration and Production LLC, a 10-year-old oil and gas development company he founded. The Denver-based firm owns and operates oil and gas properties throughout the Rocky Mountains, the Midcontinent Region, California, and the Permian Basin in western Texas and southeastern New Mexico.
Although Struna travels extensively around the country and world to do business, we were recently able to catch up with the busy, oil and gas executive to talk about his career and plans for the future.
Energy Pipeline — You got your BS degree chemical engineering at Columbia University and MS in petroleum engineering from the Colorado School of Mines. Then you went to the Harvard Business School to get an MBA. Harvard is a pretty rigorous school to get an MBA from. Was there a reason why you went there and why you felt you needed an MBA?
Steve Struna — The oil business cratered in 1986. I only had oil and gas experience at that time. There were a lot of layoffs. I was working for Tenneco at the time and they put their E&P (exploration and production) division on the sale block. I thought maybe I would have to change my career direction. I also thought that if I got an MBA, I would have other options. So, I took a leave of absence (to get his MBA).
I realized how much I had learned about oil and gas but now I knew about finance and strategy. I knew that would help me.
EP — According to information on your website, you spent a number of years working for some of the top oil and gas companies in the world, companies such as British Petroleum (BP), Amoco, Tenneco, Graham Resources, and Schlumberger. What did you learn from those companies and how did the experience prepare you for Bayswater Exploration and Production LLC?
SS — I think … what you learn from these companies is that execution is everything. You need the synergy that is created by multi-disciplinary teams. It’s what we do at Bayswater. We all sit down shoulder-to-shoulder-to-shoulder and attack problems. When I worked at BP-Amoco, we had a triangle. This was our business triangle. At the top was results. One layer down supporting it was execution. One layer below that was planning and teamwork. Below that was opportunities and possibilities. And, below that was relationships. Relationships is the most fundamental thing in our business. It’s what we build upon. We need quality relationships. That’s been the great thing about Bayswater, we have so many great relationships.
EP — What was your greatest achievement during this time?
SS — The one I reflect on was when I was with Amoco and BP-Amoco. We did a joint venture with Chevron. We consolidated all the natural gas gathering and production plants and built the largest midstream plant in Canada. It was called Central Alberta Midstream. I worked to turn three companies into one, significant, new business. It was lots of fun. It was challenging with all the different cultures – businesses used to doing things their way. But, it got done.
EP — How did the creation of Bayswater Exploration and Production LLC come about?
SS — I had just retired from BP in Houston and moved back to Denver. I got with a friend – my partner – Tim Hower and began to form Bayswater (in 2004). We got some help from MHA Consulting to make some deals. We had some early success. We also partnered with Elgin Capital in 2008. That was a private equity company. They put $400 million in our company which allowed us to acquire properties in California, Colorado and elsewhere.
EP — Part of your company’s strategy is to acquire low-risk, working interests in producing oil and gas fields in North America based upon a thorough subsurface study of the field and a plan to redevelop and improve the field performance, according to your website. Can you explain how that works?
SS — We call this our basic strategy – finding new opportunities in old fields. We look for fields where there is more oil and gas than is being recovered. There are lots of different ways now … to get more oil and gas out of the ground and often it’s just improvement in operations. The Wattenberg field is a great example. It’s an old field with new opportunities. It continues to be re-invented with new technologies.
EP — Your website also says Bayswater strategically partners with various companies and individuals to effectively implement its strategies. Can you talk about some of those companies and how that works?
SS — Partnerships are a big part of what we are. Elgin Capital … they give us capital for field redevelopment. The Bank of Oklahoma is a great partner who’s always there for us with low-cost funds. MHS petroleum consultants are our reservoir engineers. We also partner with geological and geophysical teams, too, like with David Brewster and Scott Lucas. And, John Dyer, of Denver, works with us in the Permian Basin. Then there’s Central Resources in California. We also have great partnerships in the Wattenberg field with companies like Diamond Pumping and Dinosaur Pumping. And, we have some very key partnerships with companies like Halliburton and others.
EP — Bayswater currently operates approximately 3,500 barrels of oil equivalent per day (BOEPD) of production, most of which is concentrated in the Wattenberg Field and DJ Basin. That sounds like you are pretty committed to operating in Colorado. Is that true?
SS — Absolutely, we’re committed to the Wattenberg Field. We have the capital to continue to operate in Colorado for a long time. We have about 30,000 acres. We’ve very committed.
EP — It also sounds like you have a lot of wells in Colorado. How many are there and what are your general long-range operation plans for the state?
SS — We have about 360 wells in the Wattenberg Field. From 2010-13, all of those wells were vertical. Now, we are transitioning to horizontal drilling. We will have 25 horizontal wells drilled this year. In 2015, we’re buying a second rig and will drill about 60 wells. I think we have about 1,200 drilling sites located so there’s lots and lots to do over time.
EP — Has the current flooding of the Poudre River in the Greeley area affected any of your operations? If so, to what extent?
SS — It has. We were just talking about that at our meeting this morning. We saw some flooding last year. As a result, we’re out there being pro-active now by shutting down some wells, emptying some tanks, and filling water tanks with fresh water … just buttoning up things … to make sure we’re being responsible on these issues.
EP — Does it bring back memories of last September’s flooding and did you learn from that event?
SS — Absolutely. We did learn a lot. We’re in a better spot now than last year.
EP — Do you use the new technology called “batch” drilling where you utilize a mobile rig on tracks?
SS — Yes. It’s kind of new for us. We just purchased a rig for batch drilling in April. It’s the kind of rig that allows us to go from well to well to well quickly and improve efficiency. It’s a five-well pad near Eaton. We just finished drilling. We really believe this is the way to go. ❖