I
`
`I ENTREPRENEUR or THE YEAR
`NATIONAL WINNER
`
`Packers Plus
`Energy Services Inc.
`
`DAN THEMIG, KEN PALTZAT, PETER KRABBEN
`
`FPM: Why did you and your partners decide to go out on your
`own, to start your own business?
`THEMIG: Working for a large company has benefits and disad-
`vantages. Most large companies are very rigid, siloed, whereas a
`smaller company typically has more latitude. VVhen I was with
`[energy-senvices provider] Dresser In-
`dustries, it was a big company, but the
`divisions fiinctioned more like small
`
`companies. I had planned to spend my
`career with Dresser. What caused the
`
`three of us to leave was the merger of
`Dresser and Halliburton. All of a sud-
`
`3‘ NO. OF EMPLOYEES IN 2000: 3
`> 2009: ABOUT 350
`> NO. OF OPERATING
`LOCATIONS IN 2000: 1
`3‘ LOCATIONS IN 2009: 25
`
`INJANUARY 2000, Dan Themig, Ken Paltzat and Peter Krab-
`ben abandoned the security of their jobs at oil-services giant Hal-
`liburton to start their own firm. Based in Calgary, Packers Plus
`Energy Services Inc. aimed to help the industry tackle the thorn.i-
`est, hat-dest—to-reach deposits. When a client from Texas presented
`the upstart with one such challenge in 2001, Themig
`used his time on a flight to a meeting to sketch out the
`idea for what would become Packers’ StackFrac system.
`The technology unlocks previously unviable deposits,
`maximizing production in mature oilfields and tight rock
`formations. Now, with the help of a partner — interna-
`tional oilfield giant Schlumberger —- Packers is rapidly
`expanding overseas. Here, founding partner and presi-
`dent Dan Tl-iemig shares the story.
`FINANCIAL POSTMAGAIINE: VVhat drew you to the oil-
`and-gas industry? You’re a farm kid from southern Illi-
`nois — not exactly oil country.
`DAN THEMIG2 My dad worked for Unocalh pipeline
`division, but not in exploration. I didn’t know much
`about the oil—and—gas business until I graduated with a civil
`engineering degree from the University of Illinois and got a job
`at Halliburton. I ended up in Texas for four years, then I talked
`my way into being transferred to Canada.'I love to snowboard,
`ski, climb and whitewater-kayak, and they just don’t have many
`mountains in Texas. Also, the Canadian oilfields are known for
`fostering small companies and innovation. Someone once told
`me that at an oil~and-gas conference in Europe, the first thing
`[a presenter] said was, “If the technology isn’t born in Canada or
`Norway, it’s probably not worth talking about.”
`
`With Packers Plus technology,
`the Bakken oilfield went from
`producing 100 barrels of oil a
`day in 2006 to 60,000 now.
`
`den we moved to a company that was
`completely structured. Throughout
`my career, I’ve always been a bit of a
`renegade —— looking for new ways to
`do things — and I’d been rewarded for
`being innovative. And all of a sudden I
`was working for a company that didn’t
`want you to do anything other than what you were tasked to do.
`That was like putting me in a cage and locking the door.
`FPM: What were the early challenges in getting off the ground?
`THEMIG: The whole process was really scary. I’d only worked for
`two companies in my whole career. So starting a business of our
`own was like jumping off a cliff and hoping that the parachute
`would work. You’re putting everything you have at risk. Doing that
`with Ken and Peter was good because I didn’t have all the skill
`sets to build this organization, and neither did Peter nor Ken, but
`together we had a good balance. The three of us have transitioned
`
`42FPM DECEMBER zoos
`
`Inrnnvmw xv JOANNA PACHNER >1>no'roe.ns1>1nr in Court WAY
`
`1 of 2
`
`Exhibit 2006
`IPR2016-01517
`
`
`
`

`
`PACIFIC WINNER
`
`EOY
`
`
`
`> REVENUE GROWTH: 500% OVER
`PAST DECADE
`INDUSTRIAL
`3' INNOVATION:
`STRATA DEVELOPMENTS IN B.C.
`
`alone scary times. We’re going through whatb supposed to be the
`worst recession in decades, and we’ve added more square footage
`to our portfolio this year than in any other year in our history.
`AVOIDING TRAPS: Sometimes when you’re looking at a deal, the
`entrepreneurial spirit lcicks in and you want to go after it. At the
`same time, though, you don’t want to take unnecessary risks. You
`have to ask yourself, what are the consequences to the company if
`the project fails? Deals are seldom as good as they appear on the
`surface, and you have to remember that it’s not a sprint, ith a mara-
`thon. You never want to risk your foundation.
`PROUDESTACHIEVEMENT: Winning this award (laughs). Seriously,
`it's been wonderful to win, and the impact it’s had on our organiza-
`tion and our partners can’t be overstated.
`DEFINITION OF SUCCESS: To me, it’s very personal. Everyone has
`different abilities, skills and desires. You can be successful even if
`
`you’re not making a lot ofmoney. Ifyou’re achieving personal goals
`and know you’re doing your best, ifyou’re happy and contributing
`to society in some meaningful way, that to me is success.
`
`DECEMBER 2009 FPM45
`
`Exhibit 2006
`IPR2016-01517
`
`SINCE ACQUIRING the Beedie Group from his
`father a decade ago, Ryan Beedie has transfonned
`the formerly small, but well-regarded, company
`into one of British Columbia's largest industrial
`real-estate developers,
`increasing revenue by
`more than 500% in the process. Lately, the Beedie
`Group has branched out into Alberta, ex-
`panded into commercial and mixed-use de-
`velopment, and pioneered a number of envi-
`ronmentally friendly building practices.
`BUSINESS PHILOSOPHY: Treat everyone
`the same way, regardless of who they are.
`Satisfy and exceed the expectations of cli-
`ents. There should never be any reserva-
`tions on anyone’s part about doing business with
`us. At the end of the day, it’s about our name, our
`brand and our reputation. Those are our most valuable assets.
`INNOVATION: We don’t believe in conventional wisdom, and we
`don’t accept the status quo. People told us we were crazy tony de-
`veloping industrial strata buildings (multi-tenant warehouse-type
`stnictures) with units in the 12,000- to 15 ,000-square-foot range,
`which is approximately 10 times the size of units in traditional
`strata buildings. We went ahead anyway, and the property sold out
`even before construction began. Thath innovation on an industrial
`scale, creating a product type that didn’t exist before.
`BIGGEST LESSON: Always keep the middle man happy. The rela-
`tionship with those who bring business to us is of paramount im-
`portance, and we make sure they’re happy with what we’re provid-
`ing. Ith all about incentives. Treat people well and give them an
`incentive to want to come back and do business with us again. Be
`the best. Be the experts. Be the go-to guys.
`DARKEST HOUR: Frankly, we haven’t experienced one. Not in my
`memory. I’ve been running the business for close to a dozen years,
`and during that time we haven’t really had any real down cycles, let
`
`us on ended up with initial production of almost 1,000 barrels a
`day. And even though the production would go down somewhat,
`the long-term economics were still tremendous.
`FPM: VVhy did you partner with Schlumberger?
`THEMIG: We formed an agreement with them to represent us in-
`ternationally, because the international market is very difficult for a
`small Canadian company. Here and in the U.S. oil companies will
`
`through a number of roles at the company since. I wasn’t president
`when we started. But we’ve each picked a niche that fits our skills.
`Becoming a manager was tricky. I’d spent my career in sales, but
`by staying out of management, I watched and studied how others
`managed, and so figured outhow I’d like to be managed. Iwant our
`managers to be doers, not controllers. When we hire people into
`management positions, the first thing we do is remove all their ideas
`about managing, because we don’t want to man-
`age by profit-and-loss statements. We manage by
`operational excellence and innovation. We really
`encourage our people to be innovative. I have to
`look on sometimes as people try things that I don’t
`think are good ideas, and say, ‘I gotta let this guy
`try this because he might be on to something, and
`I don’t want to shut down that commitment.’
`
`FPM: Did you start with specific technology ideas,
`or were you just three guys looking to market
`your experience and enthusiasm?
`THEMIG: We knew what we wanted to do. We
`
`
`
`
`
`Inrmrvnsws
`av Mam: Anmsason
`
`RBdeadle
`
`THE BEEDIE GROUP
`
`wanted to innovate and to work in the high end
`of the market. We thought
`that even though our
`re-
`sources were very limited, if
`we focused, we could become
`world-class at a couple of
`things. In fact, we created the
`StackFrac system because we
`got a request from a Houston
`firm that had heard about us.
`
`ONE OF MY PROFESSORS TOLD ME,‘BE
`A SAKS FIFTH AVENUE OR A WAL-MART.
`
`DON'T GET CAUGHT IN BETWEEN.’
`
`We had developed enough
`expertise in two years that
`we’d gained a reputation.
`FPM: How is your company’s solution different from alternatives?
`THEMIG: I can remember telling my partners when we started, I
`don’t think we’ll ever be set up in the U.S., a lot of the plays there
`are exhausted. And I’ve eaten those words a number of times. It
`
`goes to show that every time the end is near for the oil-and-gas
`industry, it finds new resources or a new way of extracting old ones.
`And we’ve been right iii the middle of those changes. We have
`four focus areas, and one of them is horizontal open-hole comple-
`tion. We developed a technique of using very inexpensive devices
`to divide up a horizontal well into segments and then individually
`fiacture each of those segments. To put it in laymanh terms, ifyou
`drill a mile down and a mile horizontally, we developed a way to
`divide that into 20 different segments, and to make each segment
`produce oil or gas.
`The Baklten formation in Saskatchewan really put that to the
`test. It’s a formation that people have drilled through for the last
`40 yearsbut nobody had been able to make it produce in commer~
`cial volumes. They’d drill a mile through it, produce 30 barrels a
`day for a month, then it would produce five barrels a day, amounts
`that you couldn’t justify pumping. The industry first started to drill
`horizontal holes, which would produce 30 barrels a day long term,
`but these were fairly expensive to drill and weren’t economic at $40
`a barrel. “Then we came along, some of the first wells people tried
`
`MFPM nrctrrasn zoos
`
`work with a small oil—services company, they’re savvy in deciding
`who’s best for a job. Internationally, it’s a diiferent story. First, big
`foreign oil companies like to deal with very large firms and limit
`the number of companies they work with. Plus thereh an issue with
`having to have agents abroad. Schlumberger is the largest oil-ser-
`vices company in the world, with offices in every country where
`oil and gas activity exists. Our business volume internationally this
`year is set to be up 50% by year-end.
`FPM: Your right focus has been critical in your success. Do you
`think that’s important for start-ups in general?
`THEMIGI ‘When I worked in Oklahoma, I picked up an MBA. One
`of my professors told me, ‘Either be a Saks Fifth Avenue or a Wal-
`Mart, don’t be caught in between.’ I told this to my guys before we
`even started: We’re going to try to be Saks. The real gut check is
`that you have to be willing to walk away from some work. Early
`on, we had lots of opportunities thrown at us that were attractive,
`because we were short on cash flow and credit. But on the really
`tough decisions I told my partners, ‘If you find it in the business
`plan, we’ll do it. If itb not there, we’re not.’ When you start, you
`have very limited resources, so you only have the ability to produce
`10 widgets. If you dilute that by doing things that aren’t in your
`core focus, you’ll only do two or three ofthe things you intended to
`do. To live your vision, you have to stick to what you planned. FP
`
`PHUTOGRAPHYBYNICKWESTOVER
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