Buying and Drilling: Aldon Oils

Weyburn– A year ago, Del Mondor, president, CEO and owner of Weyburn-based Aldon Oils Ltd., told Pipeline News, “We’re going to get good at this,” with reference to dealing with oil prices much lower that what we had seen during the boom.

He said, “This industry is full of innovators and entrepreneurs and people that stand up to challenges, whether it’s B.C., Alberta, Saskatchewan or Manitoba, we will get good at this. Whether that’s getting good at $35 or $75 or whatever, we will get good at this.”

Now, a year later have we gotten good at this?

Mondor replied, “I think it’s still a work in progress. As soon as the tough times hit – I’ve been doing this for quite a few years now – it’s all about a cycle. We are getting, and we have gotten good at this.

“We’re sometimes our own worst enemies. So that when we get to a price that everybody’s happy with, and we’re going to do a bunch of great things, then scarcity comes up again. We start losing the focus that we had that was necessary to be good at this, then the cycle starts again.

Openfield purchase

“We’re constantly looking at acquisitions and trying to get the right assets in the company,” Mondor said. “We bought a company called Openfield Resources. We took over Feb. 1. We bought them and their working interest partners out.”

It was a 210 bpd acquisition, a couple miles east of Manor. “It’s actually expanding our footprint. We typically have tried to concentrate our asset base, on the producing side, to west of Highway 47. We liked the asset. We went after it, even though it’s a little bit out of the ways.”

It’s Mississippian conventional, which is what Aldon primarily concentrates on, keeping it simple, so to speak. “We do have Bakken wells that we’re actively drilling, but we’re more interested in conventional production.”

He noted they are actively working on five or six deals at any one time, both buying and selling. “We recently sold a property, effective May 1, to Firesky Energy.”

That property was north of Estevan.

“My plan, for Aldon, is to put the right assets, in place. There’s going to be a rationalization. There’s going to be purchases, there’s going to be sales. We’re going to get to the point where we have the assets I have planned.”

Over the last year Husky sold much of its non-oilsands and heavy oil production throughout Western Canada, including southeast Saskatchewan. Aldon Oils tried to buy some of that, but was beaten out by a larger company.


Aldon has had an active drilling program going this spring. Mondor said, “We finished one well before breakup. We’ve got two more, right after breakup here. Then we’re going to evaluate and hopefully get drilling again Aug. 1 for a more extended program.

“Back in the good days, we used to drill every day. We’re certainly looking to get back into those days.

“That would mean prosperity, and we’re doing well again.”

The oil industry, as a whole, has cut back on drilling over the last 2.5 years, and with production declines, is that now an impetus for drilling?

Mondor replied, “There’s a number of different factors. We’ve got (lease) expiries, a number of different commitments to meet. I think for some, the whole maintaining production at a certain level is key to getting back drilling again.

“We’ve spent almost three years now evaluating our costs and really looking at all the processes we do, as an industry. I think we’re at the point where US$55, US$50 actually looks pretty good again.”

At what point can service companies start raising their rates?

“That begins with scarcity. If you start getting to the point where us, as producers, have to wait for, or can’t get, services, the word scarcity started to get used. That’s when you’ll see price escalation,” he said.

“Part of getting good at this is maintaining your discipline, and maintaining your discipline to survive. As soon as you’ve got a whim that you’ve all of a sudden got to do all this work, and you do it without keeping a focus on cost, you’re not going to be successful. As a producer, we have to stay disciplined. We have to realize that we are just not going to get US$60, US$70, US$80 a barrel. So we have to maintain our discipline.

“If that means we can’t do it, that’s what it is.”

Oil prices have fluctuated above and below US$50 per barrel in recent weeks, and at the time of this interview, they were near US$44 per barrel. Asked if that has impacted Aldon’s plans, Mondor said, “You have to weed out the noise. Whether its US$44 or US$55, to me, you’re going to have ebbs and flows of this industry that none of us that can predict.

“To me, that’s noise. We have to get through it. You have to maintain your plans beyond a week, and maintain your plans, have your plans in place. Move forward, have your discipline. You’re going to have US$44s. You’re going to have US$55s. We might have US$34s. We might have US$65s. I don’t know this. So you have to maintain what your plan is and forget about what’s happening this week, and what’s happening next week. Weed out the noise and execute your plans.”

Asked how Weyburn has been doing recently, Mondor said, “I don’t think we’ve seen the boom and busting that’s so famous in the oil industry. We’ve of course got our bust. But I think we’ve seen a fairly steady amount of activity within Weyburn. Crescent Point has got a very big operation, and is very good to this community. They have maintained the work. Albeit it’s a slower time for many, many oil companies, and for Weyburn, we’re adjusting. Like, with anything, we’re getting good at this.

“Nobody survived it unscathed. Producers, service companies, convenience stores, car dealerships – everything, from A-Z has felt the drop.”

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