American Oil and Gas Reporter - April 2016 - 108

IOGA annual meeting luncheon keynoter, William D. O'Grady (center), executive vice
president and chief market strategist for Confluence Investment Management, pauses
with IOGA Executive Vice President Brad Richards (left) and President Bryan Dicus
(right), owner of BJ Dicus & Associates LLC in Carmi, Il.

from its founding in 1932 by Abdulaziz
Ibn Saud to King Salman Saud, the sixth
and likely last of King Ibn Saud's sons to
reach the throne.
O'Grady said Saudi Arabia was a classic
rentier state, meaning it provided its citizens
with economic support, in return for which

the royal family had complete political
control. Saudi Arabia's three security
pillars, he said, have been support for
Sunni militant groups, which in turn have
served as proxy fighters for the kingdom;
an alliance with the United States under
which the Saudis have maintained relatively

stable oil prices and security of supply in
exchange for military security; and funding
allies such as Egypt and Pakistan.
Among the problems facing Saudi
Arabia today, O'Grady said, are that militant groups such as Al Qaeda and the Islamic State of Iraq are turning on it for
not being religious enough; shale oil has
made the United States less dependent
on Middle Eastern oil, and thus a less reliable source of security; and support for
regimes in Egypt and Pakistan has not
been reciprocated.
Furthermore, O'Grady suggested that
King Salman was threatening the process
of peaceful leadership transition created
by Ibn Saud by replacing Mugrin Saud,
the last "king eligible" son of Ibn, as
crown prince with a grandson, and by
naming his own son as deputy crown
prince.
Throw in the potential for social
unrest caused by low oil prices making
it difficult for the royal family to uphold
its social contract with the Saudi people,
and O'Grady concluded, "The changes
occurring in Saudi Arabia are rapid and
dangerous. A supply shock is a growing
possibility."
❒

Survival Choices Carry Consequences
EVANSVILLE, IN.-Decisions made
during a downturn can affect not only a
company's short-term survival, but its longterm viability when times get better. A
panel of attorneys addressed lease maintenance, dealing with creditors and investors,
and regulatory compliance during the Legal

& Legislative Committee session on the
second day of the Illinois Oil & Gas Association's March 3-4 annual convention.
Equally important, posed American
Association of Petroleum Landmen President Marc Randal Strahn during the
meeting's opening day general interest

Discussing legal and regulatory issues revolving around lease maintenance during the
IOGA annual meeting Legal Committee session were, from left, attorney C. Michael Witters
of Mt. Carmel, Il.; IOGA President-elect Craig R. Hedin, vice president and general counsel
for Gesell's Pump Sales & Service in Whittington, Il.; attorney Matthew L. McArthy of Mt.
Carmel; and Jarred R. Tynes with Black, Hedin, Ballard, McDonald PC in Mt. Vernon, Il.

108 THE AMERICAN OIL & GAS REPORTER

session, is one's personal reputation.
"Whether you are a geologist, geophysicist, landman or lawyer, you can
develop a reputation (for honest dealing)
over 30, 35 or 40 years, but the first set
of stuff you do wrong will be the only
part people remember," he expressed. "It
takes forever to build a reputation, and it
goes away in the blink of an eye."
The Golden Rule applies: "Do unto
others what you expect them to do unto
you. If you stab people in the back, expect
that type of response. You are responsible
for your actions, and your reputation is
everything," said Strahn, who is president
of The Wolf Haven Corporation in Story,
Wy.
Lease Maintenance
IOGA President-elect Craig R. Hedin,
vice president and general counsel for
Gesell's Pump Sales & Service in Whittington, Il., opened the legal session by
remarking, "When prices are down, the
first thing you are going to think of is
cutting costs. You are going to alter relationships and change the way you do
your operations."
It is important to consider long-term
consequences. Hedin posed, "When the
price starts to come back, do I still have
a lease? Do I still have a permit on this

American Oil and Gas Reporter - April 2016

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