Strategy & Operations » Leadership & Management » SOCO’s CFO on why oil exploration is child’s play

When she left University of Edinburgh with a history degree in 1978, Jann Brown says she did “what every other female did at that time, had kids and stayed at home”. But after eight years of motherhood, an illness affecting her husband, “meant it was clear I was going to have to go and earn some money.”

Thus begins one of the more unlikely career starts for the SOCO International CFO and MD, one of the UK’s trailblazing female finance leaders, who has been a mainstay of the oil and gas sector for over two decades. After enrolling on a six week course back at the university “that supported women who wanted to get back in the workplace”, she opted for an accountancy conversion course- as the law version was in Dundee.

Applying to the Big Nine accountancy firms drew a blank after submitting an application form “with a female name and two very young dependents”, apart from KPMG. The firm took her on “as they had a policy at the time of having one non-standard issue graduate every year,” explains.

Soon after starting at KPMG, Brown moved out of audit “where you had to be quite mobile, which was not possible with two young kids,” into tax.  “After about 18 months the training partner then told me you’ll never make anything of yourself if you leave audit at this stage- so I take great delight in meeting him occasionally,” she jokes.

Tax work meant getting into deals and other transactions “as every deal comes down to tax”, without toiling away through the night as M&A colleagues did, and it set the tone for a career where deal-making has been a big feature. A decade at KPMG was followed by a brief move to rival Deloitte, before Brown received a a call to join Cairn Energy, a fast-growing oil explorer that had just made a major discovery in Bangladesh- that she describes as a kickstart for further growth.

Soon after starting as a tax manager at Cairn, which was headed by the swashbuckling Bill Gemmell- a former Scottish rugby international- new finance director Kevin Hart asked Brown to be his deputy. Given that her children were by now old enough for her to participate in the international growth of the business, Brown jumped at the chance to join a firm “as a living example of what the oil and gas industry can do with one discovery,” she says.

Although Gemmell cut a dominating figure publicly, Brown says he was “incredibly collaborative, every decision was worked through the group so it was a really nice culture to work in,” she says. Although the fast-pace of the ambitious group was demanding, Brown says that her broad life experience helped her manage what would be punishing hours in the years ahead.

In the biog for presentation packs she wrote:  “Just spent eight years at home looking after two kids, honing arbitration/time management/negotiation etc, still the hardest job she’s ever done”. Brown says: “There’s something about parenting that just rips up the rule book and you have to re-learn, especially when it comes to prioritising,” she says, “or as Bill used to say: It’s about common sense and judgment,” Brown adds.

Indian discovery

Brown remembers vividly where she was when news came through from chief geologist (and then deputy chief executive) Mike Watts- of a massive gusher- a breakthrough oil discovery that changes the fortunes of a business overnight. “I was standing in the supermarket queue at lunchtime on a Saturday when Mike phoned me up screaming down the phone- it’s absolutely massive,” she says.

Watts, who with Brown built a close-working relationship, had drilled 16 wells in Rajasthan- the desert region in north-west India- before the discovery. Things were looking bleak. “Plan B was to shut down the Indian office and make the staff redundant. It was close, but the board stayed incredibly supportive,” she says.

Although Brown says that they celebrated the discovery, she is insistent that its important not to get caught up in the rollercoaster highs and lows that characterise the oil exploration industry. She says although investors enjoyed the bonanza, she says Cairn always had a solid production engine, which meant it was relatively risk averse. “I think the important thing is to be very clear with your investor base about what your particular strategy is and follow it,” says Brown.

Although there were challenges around Cairn having to fork out to build the pipeline that required security in a strategically sensitive area, an engineering feat given the extremes of temperature in the desert region, the project was a multi-billion pound success. “The value was in how quickly you could get the barrels out of the ground, sell them and get the money in the bank,” says Brown.

Such was the success of the Rajasthan find that the Indian business was earmarked to be listed on the Indian stock exchange, as a result Brown was made CFO of the new Indian company. “It was 18 hours a day, seven  days a week. We were told by the advisers it was going to take 18 months, but it would have killed me if it had taken any longer,” she reveals.

The challenge of working in the sub-continent was encapsulated by the difficulties around delivering a banking transaction necessary for the project. After weeks of standstill Brown sat outside the responsible official’s office for three days. “I thought I’m not having this any more, and on the third day I walked into her office. She was absolutely charming and we got her approval the next day,” she says.

Her time as finance chief of the Indian business convinced Gemmell that Brown was right for the top Cairn finance role. “After becoming CFO I very quickly had to get half of the $2bn back to shareholders, and we had to rebuild our own portfolio,” she says. Her hands-on experience merited the additional title of executive director, reflecting her entrepreneurial streak. “You always need a really solid controller at your back, which I had at Cairn,” she says.

That desire to build a business from scratch resulted in Brown leaving Cairn after 17 years, setting up Magna Energy that was backed by private equity giant Carlyle Group with £500m and the same amount in reserve funding. “The other driver for deciding to leave was I was elected president of Scottish accountancy body ICAS. I could have done it alongside an executive role, but I thought just throw yourself into it and have a really great year, how often do you get to be president of the oldest accounting institute in the world,” she explains with great delight.

But the timing of the new venture was all wrong. The oil price had crashed and nobody was doing deals. After seeking deals for 18 months the pair threw in the towel at the point they were due to roll over the funds with Carlyle. Brown says after years of deal-making decisions like that come naturally.  “I know when to cut and run, you can invest too much time in flogging a dead horse,” she says.

Soco’s Story

The pairing of Brown and Watts was soon given a new lease of life, when Ed Story- the charismatic Texan asked them to join SOCO- which had recently pared down its portfolio after exiting interests in Africa but still had assets in Vietnam.

The liquidation of the assets in Africa, which were becoming a reputational burden on the group,  saw some capital returned to shareholders and the group become debt free. Brown says that a couple of hundred million dollars became available to seek out new prospects. “The company considered are we going to give it back to shareholders or are we going to reinvest it? Mike and Jann can you find us some destinations for it? So that was the brief and we looked at a lot of stuff again in the market that had opened up,” Brown explains.

As a team they bring experience of working in geographies that can be challenging from a regulatory and a business ethics perspective. “That’s where we both cut our teeth and it fits really well with SOCO. It’s about capital discipline, not spending a dollar unless you have to, and if you do need to, make sure 90 cents of that is going into the ground,” she says.

After what Brown describes as a pruning of the group’s portfolio, SOCO now has its eyes on a promising site in Egypt’s western desert which features varying levels of development, where a first rig is being joined by a second. “These are really good oil producing addresses,” she says, mentioning that bureaucracy that can stifle the payments process is improving. “There are a lot of territories that we would not touch because we recognise they are just too fickle, where we are in Vietnam and Egypt they are both business friendly, even though bureaucracies might take a while,” she adds.

In its 2018 full year results the SOCO delivered pre-tax profit of $80.1m, up from $22.7m the previous year, while revenues increased from $156.2m to $175.1m in the same period. The group’s president and CEO Story said at the time: “We have repositioned SOCO to support further growth in the wider Middle East and North Africa region, both organically and through additional mergers and acquisitions.”

As head of finance, Brown says that its vitally important to evaluate projects in terms of political, technical and commercial risk, but says: “With geoscientists you have to remember that they’re always very optimistic, so you double the risk and halve the reward, from what you’re being told- and if it still works, fantastic- you’ve got a project that goes,” she says.

When it comes to talking to the market, Brown says: “We have to get across that we’ve assessed and are managing the technical risk, but you can’t go into the detail of that, so we try to be as simple and straightforward in our story as possible. In investor meetings- it is about the words you are using and the slides you are showing, but it’s also just about them understanding- are you excited about it? Are you passionate about it? Do you really believe in this?”

As vice chair of Scottish Ballet, Brown says she is a big fan of the arts. “I’m far more likely to be seen at an arts venue than a sporting event,” she says. Brown is also a staunch advocate of diversity in in the workplace.  “We need to support our women and be nurturing talent all the way through their careers and recognising that women’s and men’s careers are not linear, especially if they choose to have families,” she adds.

 

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