Gone Fischin’
With a 38-year career in his hip pocket, soon-to-retire Nexen CEO Charlie Fischer reflected on the company’s growth and what his own future may hold
For nearly four decades, Charlie Fischer built a career in the western Canadian oil and gas business that has taken him from the gas fields of central Alberta to the storm-tossed oilfields of the North Sea; from the frozen tundra of Canada's Far North to the searing heat of the north African desert.
Along the way, he's made countless friends, undoubtedly a few enemies, and, at various stops, has helped thousands of shareholders get rich-or at least a little more comfortable. He's also stayed pretty much out of the public eye, although for much of the past eight years his distinctive handlebar mustache has been the public face of Nexen Inc. in the same way that a similar facial adornment came to symbolize the Calgary Flames of the late 1980s.
Yet another Saskatchewan boy who made good in the Alberta oilpatch, Charlie was born in Saskatoon in March 1950 and graduated from the University of Calgary in the spring of 1971 with a degree in chemical engineering. He joined Dome Petroleum that spring, but his stint with what would become one of the most polarizing companies in the western Canadian oilpatch was a brief one: Dome wanted to transfer Fischer to its Sarnia operations. He was dating his future wife, Joanne Cuthbertson, and didn't want to leave the west. Fischer left Dome, married Joanne and joined Hudson's Bay Oil and Gas Company (HBOG).
It was one of the first of what would be many choices Fischer made in his career, and it was a choice that would eventually prove to be a career builder. At HBOG, Fischer started as a young engineer, helping build gas plants, compressor stations, and other field facilities, but he also spent some time in planning and operations, although the latter was not viewed as particularly positive by some of his co-workers.
"Guys told me when I joined operations I'd never survive because I didn't play gin rummy and I didn't curl, and they figured I didn't have much of a future," he says.
Besides being exposed to the many challenges, opportunities, and crises facing an oil and gas producer while at Hudson's Bay Oil and Gas (he had a ring-side seat in Dome Petroleum's fateful acquisition of the much larger HBOG in 1981), Fischer came to know two of the most iconic leaders of the western Canadian oil and gas business, Gerry Maier and Dick Haskayne, and both have had a hand in mentoring him along the way, not just in business matters but also in the broader Calgary community. Later, Daryl Seaman-founder of Bow Valley Industries, and known to the industry as Doc-was added to that list, and those three contributed foundational values that are still important to Fischer today.
"All of the companies I have worked for have had very good values, and that's always been important to me, because I think your values are the things that set your behaviours," he says. "When I had the privilege of getting to know people like Gerry Maier and Dick [Haskayne] and Doc [Daryl Seaman], they are wonderful examples of people who have great values and not only had great careers but they give a lot back to the community."
Besides a set of values that Fischer has carried with him-and added to-over the years, both HBOG and Bow Valley (he joined as manager of corporate planning in 1982 and became vice-president, planning and development five years later) provided learnings on the corporate side for Fischer, particularly in the way they carried the Canadian flag to the far corners of the global oil and gas business. From Brae and Buzzard in the North Sea, to Masila in Yemen and Usan offshore Nigeria, Fischer's career has had significant global undercurrents, and he credits his time at HBOG and Bow Valley Industries with showing him the importance of maintaining that global presence.
"The other thing I would say, Hudson's Bay and Bow Valley, both of them had international operations, and one of the things that brought me to Canadian Oxy [later to become Nexen] was the fact that [it] had some international operations," he says. "I think it's very hard to be sustainable if you are just in North America."
When Fischer joined Canadian Occidental (CanOxy) in February 1994 as vice-president, exploration and production for North America, the company already had a strong international presence. Its Masila operation in Yemen had come on stream the previous year, and while the contribution the billion-barrel field made to the company's production profile was significant, that international exposure didn't sit well with investors.
"When I joined, they had just brought Yemen on stream and they had dramatically changed the production profile of the company," he says of his early days at CanOxy. "In those early days, probably 60 per cent of the cash flows of the company were coming from Yemen, and the market wasn't all that happy with that because they didn't see it as a stable place, so we traded at discount."
With responsibility for North America, Fischer had little opportunity to affect CanOxy's global operations, but over time, other roles were added, including marketing and information technology, and in 1997 he was named chief operating officer with the elevation of Vic Zaleschuk to the presidency. One of his first actions was to re-examine CanOxy's worldwide activities, which at the time included assets in the North Sea, in Ecuador, and in a number of other places-the result of the early success at Yemen.
"What we did was we reduced the focus a bit. We're not big enough to be in 12 or 15 places around the world. I've always said that we could be in a handful of places-and a handful might be six or it might be four but it's not a dozen-so there were some places where we had been looking where we withdrew from those areas."
In applying his lens to international activities, Fischer looked primarily at the values held by CanOxy's international hosts, and one of the first assets to be trimmed were those in Kazakhstan, which held great promise, but were saddled with external pressures simply too great for any one company to overcome.
One of the major problems in Kazakhstan, Fischer says, were the shifting sands of the power elite, not just in that particular locale, but throughout the former Soviet Union. Agreements that were in place one day were frequently null and void the next, and each day, it seemed, brought a fresh set of bureaucrats to deal with, essentially setting all negotiations back to square one far too often.
"We deal with enough risk in our business; we don't need to deal with concerns about contracts," Fischer says. "We really focus on places where we have rule of law and sanctity of contract, so we have certainty once we have an agreement in place."
Other locales might have the appearance of stability, but much depends on exactly where in the sector you operate, Fischer says. West Africa, for example, has provided more than a few lessons: it's "oily," it has the right address, but Nexen will only work its offshore basins, preferring to stay away from the onshore and near-shore opportunities.
"If you look at Nigeria, [there are] huge problems onshore, but when you're offshore we can meet our standards, not compromise those, in a place that's noted for corruption," he says, noting that rigid due diligence guidelines are in place to make sure Nexen's partners and contractors hold the same values.
"That due diligence is pretty tough, but again, I guess our view has always been that if you want to be sustainable, then you have to live to a high standard consistently, and if you do that and don't just chase dollars for the sake of chasing dollars in the short term, and do that properly, you'll get invited into projects where you have good opportunities that are significant and you can build a sustainable company."
Almost from the day in 1991 that it drilled its discovery well, Nexen's development at Masila in Yemen has provided a textbook example of how to go into a foreign country and build a win-win project for all parties. With gross production this year expected to reach 40,000 to 45,000 barrels of oil equivalent per day this year (up to 28,000 boe per day net to Nexen), Masila is Yemen's largest oil project, and the last 15 years of production have cemented a strong relationship between Nexen, the Yemen government, and local communities.
"I think we had done a marvelous job of developing Masila, and the folks that did that, I just have nothing but praise for because they took what I call good old-fashioned Canadian values and carried them in to Yemen," Fischer says.
Not only were relations with the government solid-solid enough, in fact, to withstand a brief civil war that saw Nexen hold government revenues from oil production in escrow so as not to be seen supporting the government-but so were relations with every local community impacted by drilling or production operations. And forging those relationships, Fischer says, required no real talent-only a desire on the part of the Nexen people on the ground to do the right thing.
"Water was a big issue, so when we had water access, we made it available. We had to put clinics in place for the ex-pats that were there and the nationals that worked for us and so we just opened them up to the local people."
Fischer also played a key role in separating CanOxy from its American parent in 2000 and recreating itself as Nexen, and in 2001, the board chose him to replace the retiring Zaleschuk, providing a "smooth transition" to the corner office and a chance to put in place many of the values he'd picked up along the way.
One of those values-always in place at Nexen but strengthened under Fischer's guidance-is teamwork.
"The world's too complex for any one person to know how to solve all the problems or even to know what all the problems are," Fischer says now. "It's always been important to me to have a strong team around to make sure that the team shares the opportunities they see, shares the problems they see, because working together I think we come up with better solutions."
The search for better solutions resulted in Nexen taking something of a different approach in the oilsands, where its Long Lake project (in partnership with OPTI Canada) produced first bitumen late last year, on the way to anticipated gross 2009 production averaging between 15,000 and 20,000 barrels per day.
An early shareholder in Syncrude Canada (Nexen still holds a 7.23 per cent interest in the consortium), CanOxy trimmed its oilsands exposure in the late 1980s but kept a few key leases. Its acquisition of heavy oil producer Wascana Energy in 1998 added to CanOxy's knowledge base and led to the company evaluating a fairly diverse range of technologies aimed at more economically producing heavy oil and bitumen.
"We found the folks that were OPTI's parent that had developed the technology that we have at Long Lake and ultimately got a deal done with them that led to Long Lake," Fischer says.
While Nexen's Long Lake experience has not been quite as joyful as its Yemen adventure, the company is intent on sticking to its plan to sequentially develop the six billion or seven billion barrels of recoverable bitumen locked in those leases, replicating the first stage technology at each incremental step.
"It's interesting technology in that we're not coking, we're using the bottom of the barrel to create synthetic gas, which reduces our operating costs and will give us a margin advantage," Fischer says of Nexen's choice to wean itself from reliance on natural gas as a fuel. "In a carbon-constrained world, we can also use that technology to capture CO2 pre-combustion, where the other projects are really driven, in most cases, to capture post-combustion, which is just a lot harder and more expensive to do."
Over the last 15 years, Nexen has resolutely set out to build a string of world-class assets in virtually every jurisdiction in which it operates: Yemen recently produced its billionth barrel of oil; Buzzard, in the North Sea, has 700 million barrels of proved and probable recoverable reserves, and more still to be uncovered; offshore Nigeria, it has a 500 million barrel discovery at Usan; in the Gulf of Mexico, it has a major discovery at Knotty Head, which it hopes to more fully appraise this year.
Now, Fischer says, Nexen is positioned to reap the benefits of those development choices, even in a world of $40 oil and global economic uncertainty.
"The choices that we've made, our platforms are big and the cycle times are long, so we don't have quarter-on-quarter growth, but when the increments come on they have pretty big steps and pretty big impacts on the company," he says. "That's been our strategy-to have some diversity in terms of the things that we do but not be spread out all over the place and doing too many things, where that diversity would cost us a competitive advantage."
That level of diversity, combined with the way Nexen has gone about growing over the last few years, Fischer says, stands the company in "relatively good stead" to survive through the current economic situation. Maturity terms on its long-term debt average over 20 years, at interest costs of just over six per cent, and no principle repayments are due until 2013. Cash and unused lines of credit amount to close to $4 billion, and the company's major capital projects are pretty much done.
"We've got lots of financial capacity going forward, so nobody likes a downturn, but we're well positioned for it and part of that was we didn't get greedy when money was cheap," he says. "We said, ‘let's finance for the long term, not try to minimize the interest costs in the short term,' and that's holding us in pretty good stead."
Marvin Romanow, Nexen's current president and chief executive officer, says the Charlie Fischer era at the company can be characterized as one of preserving and growing shareholder value, building one the success achieved in Yemen by making long-term investments in other jurisdictions, like the North Sea, the Gulf of Mexico and the oilsands.
"During the Charlie Fischer era we saw the most rapid price rise that this industry has ever seen," he says. "Under Charlie, we took advantage of that by using our incremental cash flow to make investments that will provide long-term value to our shareholders. Charlie's a very good big picture thinker - he has a very good grasp of a breadth of issues. And he's a good guy to work for."
And what of life for Fischer after Nexen? For starters, he's not about to cross the street and start all over again, as many young-at-heart oil executives like to do. But he's also not about to hit the golf circuit either, although he may use some of his suddenly-free weekends to pursue skiing in the winter or hiking in the summer.
"What I want to do is take six months and actually see what it's like to slow down, and if that drives me too crazy then I'll figure out what I need to do to speed back up again to a level that gives me some personal time but still keeps me actively involved in things," Fischer says.
Life as a board member intrigues Fischer: "The nice thing about being a board member instead of an officer in management is you get to ask the questions instead of answer them."
So does supporting his wife Joanne, University of Calgary chancellor: "There's lots of things I should be doing to support her and I've got too many conflicts and I don't do it and she's been terrific in supporting me. It's my turn to play the other side of this, and she deserves that."
Or maybe he'll just see what comes down the pipe: "This is ground I've never covered before, but it'll be fun and I've got a lot of friends. Maybe I am a fatalist-I just follow what seems to be the right thing and I've always had great opportunities and I pursue them. I always find good things to do, and you meet interesting people."
But without a doubt, there will almost certainly be a fairly large community component to anything Charlie Fischer does from this day forward. He learned the value of giving back at the feet of Gerry and Dick and Doc, and he's intent on paying it forward, somehow, somewhere.
"Joanne and I have been fortunate that we live in a community that gives us the opportunities that we've had, but we feel like you always should leave [a place] better than you find it, and some of the nicest people I know I would never have met unless I had volunteered," he says. "If I only ran around with guys that did what I do, who can afford to pretty much do what they want, I might have a pretty biased view of society, but when you go and deal with Hull Child and Family Services and you see the challenges that those kids and families have, or work for the Children's Hospital and see the kinds of challenges people have to overcome, you know, it keeps you pretty humble."
