CDX Gas: Into the Light
Energy Executive Spotlight
Written by Eric Slack   
Tuesday, 01 April 2008
CDX Gas: Into the Light - Energy Executive - RedCoat Publishing
Bob McBride and Steve Mueller brought this E&P company’s unique technology to the forefront.
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With heavy competition and demand for production of domestic energy resources, it’s no wonder CDX Gas kept its drilling techniques close to the vest for so long. But as the company expanded into coal bed methane exploration and production (E&P) projects, bringing the technology out of the shadows started to make sense.

“The old view of the company was that we were internally focused and difficult to work with. Our new vision is centered on building a cooperative company, a classic E&P, dedicated to developing collaborative relationships with other companies,” said Bob McBride, CDX’s president and CEO. “We just happen to use our technology as one of our keys to success. Now we want others to benefit from it as well.”

Bob McBride, President and CEO - CDX Gas: Into the Light - Energy Executive - RedCoat Publishing
Bob McBride, President and CEO
Completely unique
CDX uses its patented horizontal drilling and completion system that allows one location to access up to 1,800 acres of coal bed, whereas traditional recovery methods average one well per 20 to 80 acres. The technology was originally developed by engineers in the coal industry to solve certain problems of degassing coal ahead of mining operations. CDX kept the technology to itself for years, but that has changed over the last few years as the company expanded use of the technology to include exploration and development of natural gas resources.

“We decided there was an opportunity for us by opening the technology up for use by others in coal and in E&P,” said Steve Mueller, executive vice president. “As such, we recently set up a group internally whose whole goal is to promote our patents and technology.”

The company certainly stands to benefit by no longer keeping its secrets to itself. Through the proliferation of CDX technology, the company is developing a new business segment complementary to its E&P business that can further its reputation in the industry at large. In the near term, Mueller and McBride don’t expect the technology segment to become a huge piece of business outside of its core E&P business. But it will give CDX an edge by allowing the company to consider acquisitions and projects other companies cannot.

“Most oil and gas companies think about strategies as a three-legged stool—exploration, development, and acquisitions. We have a fourth leg with the technology,” said Mueller. “While most of our effort will go into the exploration, development, and acquisition, our technology can help us look at projects differently.”

CDX can work in areas where normal horizontal and vertical drilling techniques aren’t feasible, with about 300 wells mostly in West Virginia. The company can target plays where coal bed methane production isn’t economically viable for other companies. This reduces the entry costs of land. Companies regularly pay $100-plus per acre for land explored with conventional drilling techniques. CDX usually pays only $10 to $20 per acre because of the challenging nature of drilling in unconventional situations.

The company’s technology also allows it to get involved in projects where environmental concerns may keep other companies away. For projects close to towns or in sensitive areas, CDX can keep the number of wells to a minimum. “We can work around areas with cultural, housing, and other environmentally sensitive areas because we do so much of our work underground,” McBride said. “Vertical development is usually eight to 16 or more wells in one square-mile area for conventional coal bed methane development. We generally put one surface location for every two square miles.”

Making connections
One of the company’s biggest concerns going forward is continued access to the brightest minds in the industry. The engineering expertise CDX developed over the years drove the company’s drilling technology forward, getting the company to where it is now. CDX has apprenticeship-style training designed to bring new people up to speed as quickly as possible. This is important for the company’s future as it hopes to expand well beyond its current size.

CDX recently relocated corporate headquarters from Dallas to Houston. The decision to move into the heart of the American energy industry should help the company with staffing issues as well as building relationships with other companies in the industry. With corporate offices in Houston, Dallas; Charleston, W. Va.; Farmington, NM; and Hoover, Ala., the company is able to oversee its various projects whether they are in West Virginia, Alabama, Arkansas, the San Juan Basin, or elsewhere. Wells are monitored electronically, while local project leaders are given the autonomy they need to be self sufficient and report back to executive leadership.

During the next five years, CDX expects to have inventory to continue to grow the company with what it currently has in hand. But for the company to achieve its goals beyond that, McBride and Mueller believe CDX will continually have to reinvest in its technology to allow for further exploration of unconventional plays.

There is also the possibility of CDX expanding operations outside of the US. But in the short term, showcasing the change in company culture and attitude to the outside world is critical for CDX to continue its efforts to reposition itself in the industry.

“We see our budget progressing up significantly in the next few years, and owners and management expect growth. We have inventory to do that while we also explore new ventures outside of core areas,” McBride said. “But we need to shed the stigma we’ve struggled with and show the industry that we have become totally different over the last few years. Yes, we want to expand, but we want to do so in a cooperative way.”
 
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