BHP Petroleum's decision to acquire the remaining shares in Hamilton Oil Corp. and turn it into a wholly owned subsidiary of the Australian group immediately raised questions about the future of Hamilton's highly successful North Sea operations.
In the North Sea, Hamilton Oil & Gas is the original lean, mean operator turning in exceptional exploration results and making money out of small development projects that bigger companies with bigger overheads would have dismissed as uneconomic.
Hamilton's rivals wanted to know whether the small company's engineering and exploration flair could survive as a wholly owned subsidiary of a multinational company. Peter Willcox BHP Petroleum chief executive officer, has no doubt about that.
WHO WILL DO WHAT
Hamilton's North Sea operations will remain a separate entity in London. What's more, it will take over responsibility for BHP's European properties, including eastern Europe and possibly the east European part of the Soviet Union.
Hamilton's operations in the U.S., Canada, and the Far East will be incorporated into the appropriate BHP division.
Hamilton, Willcox said, is a highly efficient operator. "We have to be careful that we learn from Hamilton and preserve the things that made them very successful.
"That is a lot easier said than done. There are some people in my organization who cannot wait to teach Hamilton something."
In London, BHP and Hamilton will move into a single office to avoid administrative duplication. But there are no spare people in Hamilton, Willcox said, and one of the things that encouraged BHP to acquire the rest of Hamilton was concern for staff morale.
Reports frequently have circulated about BHP's intentions. Some suggested, correctly as it turned out, that BHP would become the 100% owner. Others said BHP eventually would realize the difficulty of trying to assimilate Hamilton's unusual talents and dump its holding.
As Willcox pointed out, Hamilton is the kind of company in which people are the most important asset. Its success, perhaps much more than in bigger companies, depends on the staff. So uncertainty about the future can be extremely unsettling.
BHP FINANCIAL CLOUT
Willcox sees BHP bringing more financial muscle to the Hamilton operation without encouraging the staff to abandon the current philosophy of being mean with money.
Hamilton was strong in selecting exploration acreage, then getting others to pay a large share of costs on farmouts. But because of financial constraints, the company was sometimes left with smaller interests in some of the better plays than, with hindsight, it would have liked.
"The difficult thing is selectively to retain higher interests while keeping the pressure on to farm out and be tight with money," Willcox said.
He cited a remarkable similarity between BHP and Hamilton engineers. Both were looking for low cost, clever solutions rather than throwing money at things.
One of the benefits of the final Hamilton purchase was the ability to even the load on British and Australian engineers. That has been overtaken by events. Hamilton engineers are very busy with a promising gas discovery in the Irish Sea, and BHP's team is running flat out on the Griffin development in the Timor Sea.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.
