Most of Calgary's oilpatch CEOs believe that familiarity breeds success and gravitate toward the comfort zone of operations close to home. But not Ed Sampson.

Sampson's idea of a comfort zone is a red-eye flight to India to oversee operations, with a side trip to a Bangladesh drilling site to douse the raging public relations fires stemming from two controversial well blowouts.

As CEO of Niko Resources, Sampson prides himself in being one of the oilpatch's elephant hunters, pursuing the industry's big-game plays in India and Bangladesh. That strategy has paid off handsomely as Sampson's $10-million bet on Niko Resources less than a decade ago has produced one of Canada's biggest international oil and gas success stories with a market cap of $1.7 billion.

And if chasing the high-stakes, high-impact quarry on foreign soil means taking the heat when something goes awry, the hard-driving, globetrotting Sampson will happily roll with the punches.

David Lazarowych, Business Edge
Niko Resources CEO Ed Sampson is proud of being named the Ernst and Young entrepreneur of the year in the energy sector.

1. What initially appealed to you about the oil and gas business?

"I originally got into the furniture business at the age of 24 with my wife (Sheila). We were extremely successful with a store in Melfort, Sask., called Sampson Furniture and that allowed me to start investing in the oil and gas industry. Once I got into oil and gas, I found it exciting and a niche area. In most businesses, you spend 50 to 60 per cent of your time servicing your customer and looking after your customer. The oil and gas industry is a little bit different in that you're a little bit like a farmer. You're at the whim of the market, but nobody brings back a barrel of oil or a cubic foot of gas."

2. How did you initially get started with Niko Resources?

"When I got involved, it was up and running and heading off to India, but with very little money. It was extremely strapped on the ability to raise money or to go to a financial institution for financing. Basically, I put $10 million of my own money into the company, and that basically allowed us to bootstrap ourselves through the drilling of the first well in India. The early years were certainly a struggle. India is halfway around the clock from here and, in terms of travel, communications and culture, India was then really just opening its borders up to the free-enterprise capitalist system for the first time. Niko was the first foreign company to produce oil and gas in India."

3. Why did you set your sights on India?

"We felt that the Western Sedimentary Basin (Canada's major oil and gas region) had sustained a lot of drill bits and India, on the other hand, had not been explored very much. The technology that was being used in India was certainly not what was being used on the western side of the world ... there was tremendous upside because there were basins that hadn't even had a drill bit put into them."

4. What's been Niko's formula in successfully tapping oil and gas prospects in India?

"It hasn't been a process that's happened overnight. It's one where you've constantly had to have your shoulder to the wall, pushing and learning. When you go to a different country, you've got to adapt to their culture and at the same time adapt the things that you know to the industry that you're in. India has changed tremendously over the past 10 years. When we first started in India, it took eight months to get our first phone hooked up to operate a business and it took us six months to open up a bank account. It was a process that was slow and arduous, but you saw the light at the end of the tunnel and you just kept going for it."

5. What's the status of your operations in India?

"Over the past 10 years, we've continued to add and continued to diversify through the country. We're not only on land but we're offshore in shallow water and we're deepwater drilling. With the block we were awarded a few weeks ago, we're looking at drilling in 2,500 to 3,000 metres of water. For a company the size of Niko, that's an exciting project to be involved in. In our D6 Block in India, which was the largest discovery in the world in 2002, we currently carry about 12 trillion cubic feet of gas reserves. And that's just a very small portion of it. That's a 1.9-million-acre concession and we would be maybe 15 per cent towards exploring it to date. The ministry has identified that block as the hydrocarbon province of India. It certainly has a tremendous amount of upside from where it is today. We also have a block called D4 that exceeds four million acres and we're extremely excited about the seismic data that we've received from that area."

Niko Resources Ltd. chairman, president and CEO Ed Sampson.

6. How are your operations in Bangladesh progressing?

"We have three properties spread through the country of Bangladesh. We've had two successful exploration wells there that we're very excited about and we've just completed a well on our Chattak field that we're very excited about. The first well was a blowout that has created a little bit of activity on the press side for us. But now that we've got it under control, we're moving on with the drilling and it looks like a very successful exploration play as well."

7. What is the status of the two blowouts that you've had at a well site in Bangladesh?

"We've got two very small fires continuing to burn. We were successful, we believe, on the relief well (program). It would be similar to shutting off a barbecue at the house and, after you shut the barbecue off, it still takes 10 or 20 seconds for the flame to stop in the barbecue. And that's where we are with this now. It wasn't much of a flame to begin with."

8. So are the media in Bangladesh concocting all the stories about how devastating these blowouts have been?

"The fire never left the (project) lease. Our administrative houses are within about 20 or 30 metres of the original blowout and we use them on a daily basis. All of the residences are being used on a daily basis and we're continuing to drill. The stories of villages being burned and people being killed are completely and utterly false. When the fire occurred we evacuated in the immediate area - about 700 people. All of those people were compensated. As you could imagine in a country like Bangladesh, one of the big problems is that people are compensated at a level that is not large on a Canadian context. But in a Bangladesh context, it would be about three to five times what they would normally be making (in salary). So, all of sudden, you've got a rush of people into the area in that situation."

9. Was the water contaminated in the area as reported?

"The water is pressurized right around the immediate area of our lease and with methane gas, which we have, you do have arsenic levels. We don't know at this stage what those levels are because there was no previous monitoring of the wells in the villages.

"But we presume that (arsenic levels) would have come up with the blowout.

As the blowout subsides, the arsenic does go away. Arsenic is a problem throughout Bangladesh. It is a delta and the entire country has very high arsenic problems with their drinking water."

10. Considering how the reports out of Bangladesh over the blowouts have impacted Niko's credibility, are you taking any action against those who disseminate these reports if you believe them to be untrue?

"From our end, we've taken a position that over time the facts will bear it out rather than actively going after the press side of it. The facts are that there was no one hurt, there was no one maimed or killed, there was no fire outside of our lease itself and, for our market here, we continue to post on the website what actually occurred. The damage that occurred, when we look at situations in North America, was very, very marginal in nature. There were no buildings that were burned outside of our lease. There were trees scorched and, after a monsoon, many of those trees are actually coming back. But for every tree that might or might not have been lost, we'll probably plant 10. We've asked the press to come and ask the villagers what their state is. Basically, I think that if you went through the villages you'd find the people that were affected are extremely happy with Niko being there. We've put in roads and bridges into an area that was completely unserviced. We do have a doctor on staff and provide free medicare to the people around us, providing they're not working for us. If you follow the clippings out of the papers in Bangladesh, it's definitely politically motivated."

11. What went awry to cause the blowouts?

"If we take a look at Canada, in the same period (since the first blowout in January) we've had 15 blowouts here. If we take a look at the world as a whole, this year we've had 300 blowouts and that's the annual average for our industry. It's part and parcel of the industry that we're in. Hindsight's always 20-20. If you look at things after a well is drilled, you can always say that you could have done that much more. But there's always a tradeoff. We've drilled a total of five successful wells in Bangladesh without a problem and here we had a problem."

12. How are you responding to the $250-million US lawsuit filed in Texas as a result of the blowouts?

"We've been served this lawsuit and we consider it frivolous and without merit. First of all, we believe it's filed jurisdictionally wrong and, secondly, the charges are completely unsubstantiated. The (Bangladesh) press articles say things like, insiders stated, government officials said, anonymity requested and so on. Then, you get Bloomberg or Reuters (news services) picking it up and printing it verbatim. All we can do from our end is ask them to show us where the three villages are that were burned or give me a name of a person who was injured."

13. Do you attribute a lot of the weakness in Niko's share price to the controversy over the blowouts (Niko shares have plunged 36 per cent from their all-time high of $71 in February)?

"You can't look at it on a monthly or a quarterly basis. It's what the long haul holds for the company, and we're in there for the long haul. If you look back at India, we had our bumps and grinds there, too. One of the things about operating in a foreign environment is that you have to just keep your shoulder to the wall and head down the path you're comfortable with, knowing that the facts sooner or later will bear you out. And in Bangladesh and particularly India you know that jurisprudence does prevail and the system does work. But, you know, we didn't give up on India and we certainly won't give up on Bangladesh.

"Our most recent discovery before Chattak in Bangladesh was a field called Bangora. Just to put it in perspective, that's a 1.7-million-acre concession. Independent engineering gave us for a single well there (an estimate of) over 100 bcf (billion cubic feet) of potential gas. There wouldn't be a well in Canada that I'm aware of that currently has in excess of 100 bcf for a single well. It's that prize that certainly for us makes it worth going after and that's what has made the company. We're looking for the prize and we'll take the risks to get there and we see India and Bangladesh as having the ability to create that prize."

14. Do you see your company as a takeover target?

"You can never comment on a takeover. I guess from Niko's position and as the largest shareholder in the company, you never say never to any situation. It has to be done in the interest of the shareholder. But right now we've got a very large portfolio of projects that has taken a long time to develop and get to the stage that they're at. And we're just about to see the fruits of some of those undertakings, so I think it would be premature to give the company up with the potential that it has."

15. You were recently honoured as Ernst & Young entrepreneur of the year in the energy category. What does that award mean to you?

"I guess for me it was extremely gratifying and humbling. Since the age of 24 I haven't had anybody to answer to from the boss end of it. I've been an entrepreneur and that's been my life, so to have that recognition is extremely gratifying."

16. What in your mind makes a successful entrepreneur?

"I think the key is never say never. You've decided it's the right way to go, you put your shoulder to the wall and, no matter what negativity might come, if you're comfortable you're doing the right thing, you just keep pushing. And you couple that with the people around you, whether it be your family, certainly your peers and certainly the people that work directly with you. Without the people that work directly with you, you couldn't get to where you are."

17. Has the controversy over the well blowouts taken a toll on you personally?

"If we were wrong, and if you found in any way, shape or form that you hadn't done something right, then I think stress would certainly kick in. But we know that we're right and we know that time will bear this out as being right."

18. How difficult is it running a company whose operations are in foreign countries?

"That's just part and parcel of a company like this. If you think you can go over and sign a deal in any one of these countries, particularly as a company the size of Niko, and come back with the deal and say you've done great, I think you're dreaming. I think it's a case where you have to give 110 per cent and that's the only way you're going to get there. You run pretty well close to a 24-hour clock because India's time is 12 hours different from here. Midnight is noon there and the phone basically rings 24 hours a day. My wife (Sheila) lives in Vancouver, so I try to spend weekends there. You get used to that life."

19. What do you see in your life beyond Niko?

"I can't imagine me retiring and I don't think my wife or my family could imagine me retiring. I think I've got a lot to look forward to in the forum that I'm doing."

20. If you didn't have Niko tomorrow, what would you do?

"On the private side, I'm involved in some other things in the business. My wife runs a couple of oil companies in Saskatchewan. One of them is called Hummingbird Energy, which we've had since 1980, and the other is Ebony Energy. I remember when I was 34 years old, before we were in the oil and gas sector, I was in the furniture business, I was in property development and I was physically not just drilling but operating oil wells. My wife figured that I should retire at that point. That lasted about six months. It was a wonderful retirement, but my wife realized that my foot shouldn't be pegged to the floor because I was just going in circles at that stage. So she felt it'd be nice if I went out and got a job. Would I leave the industry that I'm in? I suppose I would if they pushed me out. When I look back on things, I think that life has been very good to me."

Ed Sampson

* Title: Chairman/president/ CEO, Niko Resources Ltd.

* Born/raised/age: Melfort, Sask./54.

* Education: High school.

* Family: Wife Sheila, three children.

* Career: Sampson's entrepreneurial career spans 31 years, including 25 years in the oil and gas industry. His first venture was in the furniture retail business in which he operated Sampson Furniture in Melfort, Sask. Prior to becoming CEO of Niko Resources in 1996, Sampson was involved with numerous oil and gas companies, including Strike Energy which was sold in 1996 to Tarragon Oil & Gas for $135 million. He is also a director of another oil and gas company, Innova Exploration.

* First job: Participant in a wilderness challenge sponsored by the Saskatchewan government.

* Favourite escape: Fishing.

Niko Resources Ltd.

* Brass: Ed Sampson, chairman/president/CEO; William Hornaday, chief operating officer; Richard Alexander, chief operating officer.

* Profile: Niko is an international oil and gas company with a vast portfolio of interests in oil and gas fields in India and Bangladesh. The company operates its projects as a partner or wholly owned operator.

* Stats: Niko earned a profit of $74.2 million US or $2.03 cents per share for its fiscal year 2005.

* Recent stock price (TSX:NKO): $44.75 (52-week range, $39.75-$71).

* Headlines: Niko's operations have been marred by two well blowouts at a well site in Bangladesh this year.

* Website: www.nikoresources.com

* Head office: 4600 Canterra Tower, 400 3rd Ave. S.W., Calgary, T2P 4H2.

* Phone/fax: 403-262-1020/263-2686.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)