It almost didn’t happen for Warrego, a small firm set up by two Aberdeen entrepreneurs who won a licence to develop a promising gas field in Western Australia.
But having survived a year through the financial crisis on wit and just enough investment to stay afloat, the company has raised more than £21million from investors to help them realise their dreams in a region with one of the largest onshore gas potentials in the world.
It started five years ago. Dennis Donald, a former military man and Shell engineer and Duncan MacNiven, a “retired” corporate lawyer, were working together as consultants, but with aspirations for more.
Mr Donald said: “Duncan and I realised if we wanted to be really successful we would have to own assets. As consultants we were actually delivering a lot of value to our customers but we were being paid a day rate.”
The pair’s eyes were drawn to the potential of uncoventional and tight gas opportunities in the Perth Basin.
Rising costs of diesel is threatening the structure of the industry. As a result of a predicted 40% shortfall in fuel supply, the Australian government is keen to see the area’s largely untapped onshore gas reserves used to fuel an American-style industrial renaissance.
Australian authorities invited them to bid for the field on technical merit and the pair jumped at the chance, founding Warrego – an aboriginal term for “river of sand” – and was awarded a licence for the West Erregulla tight gas field.
But just as the plan was coming together, the world fell apart as the banking crisis started. Any expectation that the fledgling firm would be able to tap markets to fund the venture dried up.
“In early 2008 we were awarded the requirement. Shortly thereafter the global financial meltdown arrived at everyone’s doorstep. It got real hard,” said Mr MacNiven.
But, with perhaps equal measure of bravery and foolhardiness, the pair decided to press ahead with the scheme. They both liquidated all their assets, including stakes in the consultancy they were working with called Leading Edge.
Both scraped together £3million tobring the Errgula field to the next stage.
In the meantime there were dark days for the Warrego founders, but there were still supporters in Aberdeen who believed in them – as well as the estimated 185billion cubic feet of gas in the 140-square-mile block, not to mention a further 3 trillion cubic feet of “unconventional upside potential”.
They had to persuade their families it was the right thing as both stopped paying themselves salaries. Mr MacNiven said: “It seemed like a good idea, but as time went on it got increasingly difficult and expensive – we were funding the whole thing during that time – there were questions asked in the house.”
Last week, the pair revealed they raised Aus$40million from two Dutch investors.
Dyas – part of SHV Holdings NV – and private oil and gas firm Mazarine Energy.
The firms have taken an 80% stake in the field, which means development can progress. Next the pair aim to raise a further £300million to complete the project – and perhaps even consider a stock market flotation.
But they have yet to take time to celebrate – there’s too much to do.
“Flat out is the pace we have to go at now,” said Mr Donald.
Q&A: Dennis Donald and Duncan MacNiven
Who helped you get where you are today?
MacNiven: Edward de Bono.
Donald: The people that said that I could not make anything of myself or Warrego. Friends, my business partners and that little persistent voice.
What do you still hope to achieve in business?
MacNiven: Gas to surface at West Erregulla would be a good start.
Donald: Take Warrego to the market as a major international player in the unconventional market .
If you were in power in government, what would you change?
MacNiven: That would be a very long list but three for now: 1) add “thinking” as a core subject to the school curriculum, 2) introduce meaningful accountability for politicians who get it wrong and 3) reduce red and green tape.
Donald: Anyone who was being considered for a government position would have to have had a honest career outside of politics.
If you were a character in a TV series or movie, who would you be?
MacNiven: Dexter
Donald: Can I stretch to say someone like Dexter?
What would your children or partner say about you?
MacNiven: Too stubborn and tenacious for my own good, and generally nuts with, apparently, workaholic tendencies.
Donald: They would say I am driven, annoying , and surprisingly a bit hunkier after we raised the cash.
Which charity do you support and why?
MacNiven: Macmillan and Marie Curie Cancer Support and Cancer Research – too many friends and family struck down by cancer, a number of whom didn’t make it.
Donald: I support several ex-servicemen’s charities because I came from a service background and we could be better at remembering our service people.