David Evans says he has trouble with math, his memory is failing him and his advice is worth a nickel less than the price of a latte.

The chief executive officer of Defiant Energy confesses that he’s not even sure exactly how old he is. But Evans kindly gives his date of birth and tells you to do the math.

The one-time CEO of Barrington Petroleum also delights in playing down his role in the company, but does confess to having “occasionally bought beer” for the gang down at Defiant.

Of course, if you’re a Defiant shareholder, it doesn’t really matter how old the CEO is – he is 56 – or how good his memory is, as long as he remembers to show up for work.

David Lazarowych photos, Business Edge
David Evans heads Defiant Energy, whose shares have tripled in the last year.

Evans’ junior oil and gas outfit has made shareholders piles of dough with the stock tripling in the past year, and this upstart company boasts a 95-per-cent exploration success rate on 21 wells drilled this year.

As far as we can tell, there is only one problem with Mr. Evans. The boss shouldn’t be buying beer for the gang of a company whose shares have rocketed from $1.35 to as high as $4.30 in the past year.

Bartender, make that a round of champagne. Extra dry to match the boss’s sense of humour. 1. What vivid memories do you have from your boyhood in the United Kingdom?

“I’m 56 or 57 years old. I don’t have any clear recollection of memories. All my memories start really here (Calgary) in 1977. I don’t have a long enough memory back that far and anything I did I’m sure would be of little relevance to your readers.”

2. How do you think your parents (Peter and Marjorie Evans) have influenced your life and life’s values?



“I’ll never know until the day I die. It’s genetics and then the upbringing. Whatever they were, I am and I can’t objectively see that yet. I might in the next world. A lot of people in those eras had life-changing experiences. My dad was in the Second World War and the D-Day landings. When he came home, his priority was to have a quiet life, stay alive and work. He had no aspirations of greatness, my dad. He got a Military Cross in the Second World War and I think he felt he was lucky to be alive. And that’s all he wanted. And he’s still alive. Both my mom and dad are still alive.”

3. What were your career aspirations when you were at university in the U.K.?

“I didn’t have any career aspirations. I did a degree at the University of London in geology and loved it. I loved it so much I did a PhD in geology at the University of Wales. I never thought more than a few months ahead, and when they finally threw me out of there (university) unceremoniously in 1972 when my government grant came to an end, I was approached to work in the oil and gas business doing geology in Libya (with Amoco). And I jumped at it. Like most things in my life, they happened by somebody else’s initiation – and I’ve come to be a believer in opportunities. When an opportunity seems to make sense and it presents itself, I tend to do it.”

4. Did you have a mentor in your early years in the oil and gas business?

“No, I don’t think so. I’m not a big fan of universities. Universities don’t provide much in the way of steering and mentorship in my experience. I found that I was very pleased with my PhD and my lofty position there with the purple gown. I really learned more working in my first six months with Amoco in Libya to make me feel apologetic that I gave away the last copy of my PhD thesis to a library.”

5. What brought you to Calgary in 1977?

“A two-year assignment by a British company (Robertson Research International) with a return ticket. I never went home because our youngest kid was born here in 1979 and our second youngest was only a month old when we arrived here. And within a few weeks of being here, they all spoke with a funny accent that we didn’t understand very much. We were here because there were not enough Canadian geologists to fulfil the requirements for the high level of exploration and drilling that was going on until the National Energy Program came in. This was a very hectic town. They were building three, four or five office blocks at one time. It was tough to walk down the road because everybody was diverted. You had the feeling that it was sort of a frontier town. But I don’t mean that. It was one that was full of get-up-and-go. It was bustling. It seems to have lost a little bit of that now.”

6. Did that environment suit you?

“Oh, no, I was pretty uncomfortable to begin with. But then, it was a sink-or-swim deal. And I was sent here to run a small company (Robertson Research Canada) with not much experience at running companies. It was a very difficult situation for me. We built the company up from five people in Calgary to 45 people in no time at all. We did extremely well. It was hard not to, because the industry was so buoyant. We had a wonderful time. The only reason I left that company was that a couple of lawyers here enticed me to leave and start up an oil and gas company (Interwest Resources) in 1981 with the lure of underwriting it for six million bucks – which they could never come through with, thanks to the National Energy Program.”

7. You had some challenging years as president and CEO of Barrington Petroleum in the late 1980s. What was the key to keeping that company afloat?

“I don’t know how we did it or why we did it. We moved ahead slowly. The growth was very slow and we never raised outside capital. We had a very difficult time until we reorganized the company in 1989. Two of the major shareholders, Crown Life and North American Life, both withdrew from the company and the company became a public company in a true sense. Things turned around for us in the 1990s when the market became a lot more buoyant toward oil and gas companies.”

8. What did you learn at Barrington that you’ve been able to apply at Defiant Energy?

“I learned a lot. I’m a slow learner. It took me 18 years at Barrington to learn what I did learn. You learn the importance of drilling wells, not buying stuff. You learn the importance of drilling successfully and not drilling too many dry holes. And you learn the importance of not getting involved in wells that decline too fast, and learning to recognize those aspects, I think. And you learn the application of the right amounts of debt without too much debt. If you applied too much debt in the difficult years, you didn’t survive it.”

9. How would you describe your management style?

“Oh, I’d be the wrong person to describe it. You’d have to ask somebody else. My management style is not what anybody would describe as a management style. We’ve tried to hire good people and let them do what we feel they can do best with a relatively free rein. We don’t run a very tight ship in terms of hours that people put in. We’re not clock watchers. We look at people’s results, not how much time they put in. We’re results oriented. We set ourselves targets at the beginning of each year for a two-year cycle and we work like heck to achieve those targets.”

10. What’s your strategy in continuing to grow Defiant?

“Well, we feel we can carry on with this method of growth, that is by drilling, until the company gets to around 10,000 barrels a day or so. We will be at 5,000 barrels a day by drilling late next year or the year after, most likely 2005. Probably, 10,000 barrels a day will be another four years or so beyond that.”

11. Do you think a takeover may occur before then?

“We don’t plan for takeovers but, if it were to happen, that’s fine as long as it’s at a premium price. We can’t control that. We can only control our pace of success at drilling. As we stick to our knitting and do a good job at home, we’ll eventually be rewarded in the stock market where we’ve done very well. The value will speak for itself. Defiant is a value play. We drill for value, for gas reserves with long life.”

12. To what do you attribute your company’s success with exploration wells?

“Exploration wells are about 30 to 40 per cent of the total number of wells that we drill. The rest are exploitation and development, those kinds of wells. In terms of true wildcat wells, where we’re going out and looking at new pools, that’s probably less than 30 per cent of the wells we drill, and we generally target that to about 25 per cent of our drilling program. When those are deep, high-risk wells, we generally lay off a part of the interest to other people, recognizing the risk involved. If those wildcat wells are relatively low cost and relatively shallow, in the half-million-dollar, three-quarters of a million or one-million-dollar range, we may keep the whole of it if we like it.”

13. How do you explain the success rate?

“We’ve had some wildcat exploration projects or projects that started as wildcat projects in the last 24 months that have worked very well for us. How much is luck and how much is good science, I won’t argue. I used to think that luck is 50 per cent of the business and good science is 50 per cent and then, over the years, I’ve come to recognize that perhaps I understated luck and luck was 80 per cent and good science 20 per cent. If I expound that down the passageway to our scientists in geology and geophysics, I get roundly shouted down and explained to me that it’s good science. So I wouldn’t cloud their experience with my previous experience.”

14. What’s your outlook for natural gas prices?

“I don’t know where natural gas prices are going. I just know that in terms of supply and demand, we live in a very mature basin in the United States and Western Canada. It gets harder and harder to find reserves, particularly light oil reserves, and gas reserves are not far behind that. I’m quite skeptical from that point of view that we can discover a large number of new larger-sized gas fields. Supply and demand are also driven, of course, by industrial cycles in the United States, and Canada to a lesser extent. Prices are also driven by weather. We can’t foresee any of those things. We just try to do as good a job as we can do at drilling as cheaply as we can, and hope that that fundamental picture of declining supply and more expensive finding costs results in higher prices.”

15. Do you foresee coalbed methane becoming a more important source of energy?

“I see coalbed methane becoming a tremendous resource potential for future development, but we still have a lot to learn about it. We at Defiant have taken a small position in coalbed methane on the learning curve as a sort of indication of its future growing importance in Western Canadian supply.”

16. From your perspective, what’s the most attractive aspect of running a junior company as opposed to a larger company?

“Small-cap companies are very attractive because you’re dealing with a small group of people whose interests are all aligned with yours. They want to have a good time, they want to practise their scientific skills and they want to get rewards for it that you don’t get out of a big company. Another benefit is that you can do a small amount of good business that can have a tremendous influence on the bottom line. If you’re at a company like Barrington was, with 27,000 barrels a day, and you make a paltry 1,000-barrel-a-day discovery, you hardly get a slap on the back as you walk down the passageway, let alone a financial reward out of it. We’ve become a group of friends (staff of 20) here and over the four years developed a feeling of trust. We actually like each other most of the time. At Barrington, we had 150 people and probably a majority of them didn’t care about the share price too much.”

17. Would you ever want to run a major company again?

“No. Barrington was as major as I’d want to get. There, you spent a lot of your time on people problems and politics rather than on the operational issues that make the shareholders money.”

18. What do you think would make you a better CEO?

“Well, it would help to be smarter. I may sound like I’ve got a bunch of wisdom, but a broker friend of mine reminds me in Toronto at least daily that my opinion and five cents buys a cup of coffee. But at least it has gone up because it’s a latte and it costs you $3.50. So my advice is now worth $3.45 or whatever the difference is. I tend to admire a lot of people because most of them are smarter than me and do better. Let me say that this is very much a team effort here. Our COO Rick Ironside looks after all of the operational side and Ann Beattie (corporate secretary) runs the office side of the company. All I do is travel, tell a story and raise money when it’s necessary. And I have bought beer occasionally.”

19. What’s your favourite escape from work?

“Going home and having a cup of tea with my wife is my favourite escape from work. That’s the one I do most frequently. And then I don’t go fishing as often. The other thing I enjoy doing is going for a beer with these guys (staff) afterwards.”

20. What do you see in your life beyond Defiant?

“After Defiant, I don’t know. I don’t think that far into the future. Right now, we have to complete our 2003-2004 budget so we have a fairly clear picture through to the end of 2004, and it takes 99.9 per cent of our efforts and concentration to get that achieved without thinking beyond 2004. Before we think of anything else, we have to get to $5 a share first. We have a lot of friends who have become shareholders. They are friends we’ve come to know over the years – institutional investors and retail investors. That’s our next target, to get Defiant to $5 a share, which we hope will be in the next 12 to 24 months if not sooner.”

IN PROFILE: David Evans
* Title: President/CEO/chairman, Defiant Energy.
* Born/raised/age: Taunton, England; Wales; 56.
* Education: University of Wales, PhD, geology; University of London (England), bachelor of science
(honours).
* Family: Wife Ann, three children.
* Career: Prior to founding Defiant in 1998, Evans was CEO of Barrington Petroleum. He headed two other Calgary companies – Interwest Resources (1981-87) and Robertson Research Canada (1977-81). Prior to moving to Calgary, he was with Robertson Research International (1972-77).
* Moonlighting: Evans is chairman of Cavell Energy and a governor with the Canadian Association of Petroleum Producers.

THE COMPANY: Defiant Energy
* Brass: David Evans, president/CEO; Timothy Dunne, chief financial officer; Rick Ironside, chief operating officer.
* Profile: Defiant is an independent junior natural gas and oil producer with assets in Western Canada. Defiant was incorporated as a private company in 1998.
* Stock Price: $3.96 (year range, $1.35-$4.30).
* Website: www.defiantenergy.com
* Address: 1800, 800 6th Ave. S.W., Calgary, T2P 3G3.
* Phone/Fax: 403-266-5587, 403-266-5506.