Standing as a beacon in the energy sector, Karpathian Energy Development Agency S.A. (KAREDA), is renowned for its innovation and progress in the field. With the founding family and partners having long careers in the upstream segment before founding KAREDA, the company is committed to pioneering exploration ventures and strategic acquisitions in this sector. By constantly pushing the boundaries of energy exploration and expansion, KAREDA reflects its proactive approach to growth. At KAREDA, the founder and the entire team recognize that the future of energy lies in bold initiatives and forward-thinking strategies, and they are leading the charge toward a brighter and more sustainable future.
“For me, it was clear even before enrolling in my engineering degree that once I graduated, I wanted to run my firm, with our most dedicated team built over many years, and implement bold strategies. I think if someone wants to establish an upstream business they have to be geographically-agnostic. Opportunities will certainly arise, but they could be far away from home,” – Emilian, who is a third generation oil & gas professional, shares. Emilian Clipea, Founder, Managing Director.
The Beginning Of KAREDA
The founding family and partners of KAREDA, had long careers in the upstream segment, spanning from technical and consulting roles, all the way into management positions. In the past decade, the founders helped set up two small-sized E&P firms in Romania. One of the firm’s main business strategies is the implementation of production enhancement contracts (PECs) on mature assets that belong to OMV Petrom, while the other one is in an acquisition spree, taking marginal fields from OMV Petrom and trying to optimize their economics, as shared by the founder of KAREDA.
Proprietary Know-How By KAREDA
KAREDA has an integrated subsurface team that manages a wide range of projects, including early-stage exploration. After transforming the firm from a Romania-focused consultancy business into an E&P, Emilian’s self-defined daily role was to search for possible partnerships with other companies and evaluate the deals they were proposing. One of his shareholders adds, “We are aware of financiers’ criteria and as such, we decided that, at least at the very beginning, we should try to acquire and develop oil and gas properties in well-established hydrocarbon basins in stable jurisdictions – North America being a perfect location.” – Markus Harting, Director, Shareholder.
Regardless of the oil and gas price, some projects have lower breakeven prices than others and so the key is to find exclusive deals in the right places. Emilian further adds, “Infrastructure-led exploration and development is preferred in this field. But ultimately the firm’s management is eying some ‘exotic’ deals too. The internal and external subsurface teams include some experts in the fields of geophysics, petrophysics, and reservoir engineering, having practiced their skills for various IOCs and NOCs in the 2000s and 2010s.
Hopefully, sooner rather than later, we will get to the day when we will be able to finance our own exploratory drilling and draw on the lessons learned from the past. In essence, I think our teams can greatly reduce risks by committing time, effort, and ultimately financial resources, to projects that exhibit some level of similarity and familiarity with those already proven commercially.”
Navigating Through Challenging Phases
Every E&P business is unique in the way it is conceived, financed and operationalized.
“One such challenge does stand out – namely, the fundraising of oil & gas operations, but from what I’ve read and by analyzing other sectors, I believe there is underinvestment within the natural resources and energy sectors. Goehring & Rozencwajg give a range of 600 billion to 1 trillion USD underinvestment for the past decade.
Together with our partners from The Oryx Group International, an advisory firm, we’re constantly mapping out investors’ interests and how they plan to allocate money. We concluded that there’s truly a very limited number of people and entities that have both the financial capacity and technical understanding to venture into such a high-risk cyclical business. Historically, for strategic reasons, the largest developers of hydrocarbon resources have been state-owned companies and some giant IOCs originating in the 19th century.” The founder adds.
The team behind KAREDA is now developing a business model where they are trying to convince private investors to join them. Simultaneously, they believe that being in this field, it is crucially important to have a base in North America, which is the most oil-gas-supportive region. And, this will play a major role when they will pivot to other locations.
Embracing Digital Transformation
Technology is revolutionizing the energy sector. In an age of technological advancements, particularly in AI and cutting-edge exploration methods, KAREDA’s operations are highly impacted by the same.
Emilian mentions, “We are now in an age where we have access to unprecedented computing power and large databases, such as those created by Schlumberger (Delfi) and TGS. Once we have acquired and processed seismic surveys, then we can compare these datasets via machine learning with thousands of other prospects and reservoirs worldwide. Theoretically, one could reduce the risk of finding commercial volumes of hydrocarbons almost completely. And yet, despite getting better and better at predicting subsurface conditions, there are very few exploration projects globally. We are eager to get to this stage and drill our first wildcats!”
In terms of innovative practices for the geophysical part, KAREDA’s team never fails to see the potential. After studying the market the founder believes that there might be room for developing drone-mounted geophone technology for faster and wider-scale seismic data acquisition programs. He adds, “We are looking into this. Imagine all this data going through machine learning to try to spot and make rankings with the best drill-ready prospects.”
Positioning For Sustainability
Energy demand, including hydrocarbons, is growing and some important explorations are not sustainable, environmentally and economically. Emilian raises the point that oil & gas exploration can help in finding and eventually developing assets that will supplant those with the highest risk profiles, for both, environment and money.
“Right now we’ve mapped a lot of interesting, and credible, opportunities. This will be a gift to our geologists to practice their skills. And so, I would add another layer to the ‘sustainability’ of E&P businesses – how we motivate young people to join this industry. Exploration firms MUST operate with a long-term vision because our geologists and engineers only become experts in their fields if exposed to a myriad of projects. So staff retention and inter-generational know-how transfer are crucial.” He shares.
Words Of Wisdom For Beginners
Firstly, innovations in everything are crucial. Aspiring professionals should try to identify a problem out of the many present in this field. Beginners could simply try to optimize some field operations or improve equipment designs, counting as fairly easy innovations, or can start thinking about how to develop arctic resources with yet-to-be-invented technology, leading to many opportunities for thought.
Emilian reflects, “Entrepreneurs must establish working relationships with universities or research institutes. Investing in R&D through grants or venture capital is a must in order to stay relevant. I know a lot of investment funds wishing to deploy capital into innovative products or services. It’s just hard to find them because they also need to make sense economically.
Historically speaking, a lot of innovations found their way into the oil and gas sphere coming from other domains: Hydraulic fracturing was inspired by mining (controlled blasting), horizontal drilling is derived from precision guidance systems used in aerospace, seismic imaging was inspired by medical imaging (advances in ultrasound and MRI), drones came from the military, subsea tiebacks have a lot in common with fiber-optic technologies from the telecom sector, and the list goes on. Aspiring innovators need to look all around themselves and find new applications.”
Art Of Balancing Personal-Professional Life
Beginners in this field will find it extremely helpful to hear from the experts behind a company like KAREDA. Emilian believes that he would have not been able to work in any other industry, and although very difficult, especially now at an early stage trying to tackle the fundraising issues, his commitment is genuine. He shares, “Without the purest dedication it would be impossible to set up such a business. It is very time-consuming, but you are writing your job description, and above all, since we are a private firm, we have the freedom to develop our strategies and try to venture where we think it’s best.
We are working with like-minded people where everyone is cherry-picked and we foster a family-like atmosphere. Again, this requires a lot of time and effort, but it is the best moment to set up an E&P. Our assessments portray an optimistic picture for oil and gas and we need to start early.”
Find KAREDA on their website https://www.kareda.ro