Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com. And it's guest time on the show, I'm on the road today, in fact I'm at the headquarters of Geotrace visiting with CEO Bill Schrom. Bill, welcome to The BusinessMakers Show.

Bill: Good morning Russ.

Russ: Let's start by you telling us about Geotrace.

Bill: We're a sub-surface imaging company that works for oil companies around the world, we have eight locations, two here in the US, one in London, and then spattered around Norway all the way to Tripoli and Kuala Lumpur. We take a variety of sub-surface data, seismic data, core analysis data, wire line data, and integrate it into a sub-surface picture for oil companies, to help them recover more oil and gas.

Russ: OK. That does not mean that you go out and capture the data, correct?

Bill: That's correct, we don't have, as I like to call it, the big iron kind of tools, vibrator trucks or large boats, to acquire the data. We do that knowledge side of the business, taking the acquired data and putting it into an image with high resolution.

Russ: OK, now obviously this is very important given the challenges in the world these days with energy, but we're mainly talking about fossil fuels?

Bill: That's correct.

Russ: And exclusively fossil fuels?

Bill: We're focused on oil and gas.

Russ: OK. Now do you go out right after these surface companies go out and capture the seismic data or are we talking about later on?

Bill: We tend to work with oil companies that are already in the process of developing a field, so it's a field that they're going to take a second look at-how can I enhance the recovery, how can I move my decline curve of the field out further? The positive for them is this helps them to either increase their revenues or decrease their costs by pointing out, "Here's an area you can do this is and here's a way to drill it that makes sense for you."

Russ: OK. When you mention the age of the field, this could be a producing oil field that's many year old, the company that owns it has been pulling oil out for quite a few years and then suddenly they might come along and engage Geotrace to come in and say, "How can we enhance the recover of what's there?"

Bill: That's correct. Probably 60 to 70 percent of our business is on what I would consider to be development versus exploration.

Russ: OK, that's interesting. And actually Geotrace does not go out and capture, necessarily, new data.

Bill: No, there are times we may recommend to a client that they go out and acquire some new data if the data is of ancient vintage and there's no possibility of increasing its resolution for the client.

Russ: OK, so generally speaking, we're talking about existing data that they probably used when they first went out and explored this field and you go back and look at it in more detail.

Bill: That's exactly what we do.

Russ: It almost sounds like magic. (laughs)

Bill: (laughs) Sometimes I think it is. No, we have a lot of great scientists and what happens is, as we get a better understanding of the Earth, we develop new algorithms to look at it and examine it and to increase the ability to better resolve a structure under the Earth.

Russ: OK. I often contend here, on The BusinessMaker Show, that the rest of the world does not quite comprehend or appreciate the amount of technology that takes place in the energy business. I mean, a lot of it is really far out and it seems like, to me, in the case of Geotrace, being able to come back in and interpret better combinations of old data is quite interesting.

Bill: It's actually quite amazing what the industry does. I mean, if you look at dropping a drill stem 4 or 5 miles through water, drilling 4 or 5 miles into the Earth and hitting a structure-wow, that's a challenge. It's pretty amazing.

Russ: Absolutely. Well tell me what kind-you mentioned scientists, how many employees are there at Geotrace today?

Bill: We have 300. They are pretty scattered, we probably have a fourth of them here in the states and the rest are kind of dispersed in remote locations.

Russ: What kinds of scientists are they?

Bill: We have mathematicians, physicists, geologists, geophysicists, and we've actually gone as far as having an astrophysicist on staff.

Russ: (laughs) Goodness gracious, well now you mention mathematicians, are these mathematicians that were just deeply, deeply into that category, not knowinging that someday they might be working for an energy related company?

Bill: Absolutely, it's kind of an interesting career track for people in that if you have a good science background, the Earth part of it can be taught to you and you can take what you've actually learned in school and then apply it to that Earth part.

Russ: Approximately what percentage of the 300 are mathematicians?

Bill: Probably 15 percent.

Russ: Really interesting. Well I'm talking with Bill Schrom, CEO of Geotrace, and we'll be back with more with Bill after this. You're listening to The BusinessMakers Show, heard here and online and thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online and thebusinessmakers.com. Continuing on with Bill Schrom, CEO of Geotrace. Well, Bill I find it fascinating that this industry brings in experts like Geotrace-can you give us an example of a project that you guys have done that was very successful?

Bill: Absolutely. A good example is right here in the US, in the Gulf of Mexico, a field that was 15 years old, two wells, and if you looked at the way the data had been interpreted from the first processing, it showed the wells connected by a sand channel and it was very clear and that's the way the company had approached the development. Well, they started to have a problem with one of the wells, it started to water up and had a pressure difference, so they brought us in and we took a look at that same old data, ran the new algorithms on it, improved the resolution of it, and what we found was that the two wells weren't connected and the sand channel did not connect and actually pinched out. So that means it kind of came together in a v-shape and pinched out and was disconnected from the second well. What that enabled our client to do was to put a third well in between and remove what is commonly called "attic pay," which was in this pinched out segment, and increase their production by 35 percent.

Russ: Wow, pretty cool. Now what is it that enabled Geotrace to determine this, using the exact same data that was originally used, that the original developers did not see?

Bill: It's just an evolution of the algorithms and the mathematics as well as what happens with the wells. The information that's tied to the wells also gets fed into our model, which would be information they did not have before. And so you can get indicators of issues and address them.

Russ: Try to explain a little bit about what you mean with "evolution of algorithms."

Bill: As we gain more and more knowledge about the Earth and about an oil field, our assumptions about what we think is beneath the surface change, and so we have to adjust our mathematics so we can better resolve those structures.

Russ: It's really a fascinating business from my perspective, to see somebody that just focuses on the data. Are there other companies that do exactly what Geotrace does?

Bill: There are very few. There are some of the larger companies but they also tend to acquire the seismic data as well, we just stay focused on the knowledge side so we don't have an inclination to tell a client, "Oh, you've got to acquire new data." We tend to say, "Oh, let's see what we can do with your old data."

Russ: OK, well I think I learned from the history of Geotrace, back in the very beginning, which I understand was about 30 years ago, the company did acquire new data.

Bill: Yes, back in 1979, when the company was formed, we both acquired and processed land seismic data. That business is a difficult one, very capital intensive, and tends to be a distraction from the knowledge side of the business.

Russ: OK, I also understand that you were brought in in the CEO position about six years ago, right?

Bill: That's correct, yes.

Russ: At that time, there was probably some decisions being made by the founder of the company whether or not to sell this capability out to a larger company or to continue on, and you played a role in bringing in a private equity investor to continue on.

Bill: Yes, that's correct, Russ. The founder was ready to retire and his inclination was to sell, not to a strategic buyer, but to the management team, to allow people to keep their jobs and to move forward with the company.

Russ: That's cool, and that's what happened, right?

Bill: That's correct.

Russ: Now, if you take a look at the landscape here, in 2009, it seems like the kind of people who would be prospects for you are the big independents, Exxon Mobile, Conoco, and so forth, but these days it seems like there's a lot of nationalistic oil companies-Venezuela, I think, and Russia, in particular. What is the customer make up for Geotrace?

Bill: We work for both the large, national oil companies, the internationals, as well as the independents. Historically, the independents, both large and small, have been our core business.

Russ: And independents in this case would be the Exxon Mobile, Conoco-

Bill: No, independents would be the Chesapeake's and Ballard's and the smaller companies. The larger oil companies tend to have their own staffs that almost compete with us.

Russ: So you never do business with the larger-

Bill: We do do business with them but it's on a smaller scale.

Russ: Well that's interesting, but I'm also wanting to know, have you actually done business for some of these nationalized oil companies as well?

Bill: Yes sir, we've done business with Petrovas, with PetroVesa in Venezuela, before Mr. Chavez kind of cut everybody off from doing business, Suadi Aramco, Adnoc, Adco in the Middle East.

Russ: That's interesting that you say Chavez sort of cut it off, that means that he even cut off using your Geotrace's expertise?

Bill: Yes sir. What they've done is made it so difficult to get paid that you don't want to do business there. (laughs)

Russ: All right, we're talking with Bill Schrom, CEO of Geotrace, and we'll be back with more with him after this. You're listening to The BusinessMakers Show, heard here and online and thebusinessmakers.com.

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Russ: This is The BusinessMakers Show, heard here and online and thebusinessmakers.com. Continuing on with Bill Schrom, CEO of Geotrace, this fascinating scientific company that uses existing data to go in and help find more fossil fuels. Fossil fuels, speaking of that, I assume that your company is only focused on finding more fossil fuels as opposed to other alternative energies.

Bill: That's correct, we don't see an end of fossil fuels coming up very quickly.

Russ: I think that most people that understand the numbers involved don't either, but it seems to me like you're pretty passionate and enjoy what you do, am I accurate about that, Bill?

Bill: Oh yeah, absolutely love it, it's a great business, always urging young people to get involved, learn more about the business because it's a business that lets you see the world, we send people to a lot of different places, see different cultures, understand the world a lot better and it's always challenging.

Russ: Oh yeah, it also seems to me, though, it might be challenging because what you hear, at least about the education system in the US these days, is that we're not producing nearly enough scientists, mathematicians and people in that direction, so does that make it difficult for you to find talent?

Bill: It has been difficult, there's no question that the industry has not done itself any favors when there's been a downturn, letting a lot of the young people go has hurt. We're experiencing a downturn right now but I think we're being a lot wiser about it, truly trying to cling to our people and hopefully the young people in schools see this and they'll tend to want to get involved in the industry.

Russ: Speaking of that, before I let you go, we always like to ask this question of people in leadership positions like yourself. Say there's a young man or woman that's just now graduating, either graduate level or undergraduate level, and they're listening to this interview and they think, "Well, that's kind of interesting." What sort of advice might you give them for the future of their own career?

Bill: I believe that they would find the industry to be very fascinating, very challenging, you do have to work hard, it's not easy but it does push everything, from your mental abilities to your ability to travel and adapt to different situations, to their extreme. It's good, it's a great, fun business.

Russ: OK, Bill, I really appreciate you sharing with us the story of Geotrace.

Bill: Thanks Russ, I appreciate you coming out.

Russ: You bet. We've been talking with Bill Schrom, CEO of Geotrace, and you're listening to The BusinessMakers Show, heard here and online and thebusinessmakers.com.