33 Secrets For Super Success

How To Make Quantum Leaps in Your Business Reveals 33 Secrets for Super Success
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SECTION 1
INTRODUCTION
OVERVIEW
Welcome to the Quantum Leap you Can Do That!
Seminar. The YCDT seminar presentation has been designed especially for you,
the entrepreneur and would-be entrepreneur.
The seminar covers what I believe are the most important tools for developing,
starting, and growing a business enterprise. In fact, I have attempted to organize
the seminar and this course manual as if it were a new business.
You wont find a lot of detail and analysis in these pages. What you will find is a
statement of a business philosophy and some guidelines for making business
decisions, which are in line with that philosophy.
THE PHILOSOPHY
The Quantum Leap You Can Do That philosophy is about dealing with the
conventional wisdom; its about making decisions in business and in life that go
against the tide of popular opinion. It isnt about anarchy or rebellion. Its just a
different approach to handling the often heard statement, You cant do that.
We hear this admonition may times a day. When it protects us from harm or from
committing a crime, we should heed its warning. After all, we live in a society of
laws and rules and must conduct ourselves accordingly.
But we also hear this phrase when it has nothing to do with harm or crime
prevention. We hear it all too often as the conclusion of other statements like,
Thats never been done before, or It just doesnt sound right to me, or the
worst, I dont know how to do that; therefore, you cant do that.
Philosophy is one thing, implementation and completion are others. This seminar
is about recognizing You can Do Thats. It is about differentiating between
legitimate warnings and ill-founded advice. It is about implementation, execution,
and completion of decisions made in the face of the conventional wisdom.
The YCDT philosophy is not for everybody.
If at any time during the seminar presentation you begin to feel uncomfortable,
dont be alarmed. Many of the precepts, concepts and what I call Pea-isms will
be very different from what youre accustomed to.
Mr. Pea turned $820 into a $400 million market-valued energy company in 8 short
years! Now hes coaching others how to duplicate his success. Visit:
http://www.DanPena.com
Copyright 2004 Daniel S. Pea Sr.
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SEMINAR PRESENTATION
There is no set presentation format for the seminar.
There is a beginning, so to speak, but there may not be an ending. It is my
intention to cover the materials in this seminar manual, but it is not absolutely
necessary that that be done. The beginning of the seminar will be comprised of
some introductory remarks and the introduction of the participants. After that, its
up for grabs.
Its up to you, the participants, to dictate how far we go down any path.
It is infinitely more important that every question be resolved than it is to
complete the manual. You will take this manual with you when you leave; you
cant take the participants and their unique experiences and observations.
You can always refer to this manual if you choose to do so; what you will not
have is the option to avail yourself to the minds and voices of the seminar
presenter and the other participants.
By the time this seminar ends, there will be no question in your mind about the
meaning of the YCDT philosophy. There will be no argument as to its application
in business, especially for the entrepreneur and would-be entrepreneur. Each
seminar group will simply find the answers using its own means.
THE SEMINAR MANUAL
This seminar manual has been written in an easy-to-read, easy-to-use manner. The
manual has been written, and punctuated, very much like I speak. This is not an
English composition book.
Although based on the events of my personal and business life, all of the names,
dates, personalities and other nice-to-know information and data have been
eliminated. All that remains is the hard technical information that the participant
needs to know about gut executive-level decision making in the face of the
conventional wisdom.
SEMINAR AND SEMINAR MANUAL ORGANIZATION
The topics covered in each section of the seminar manual represent homogenous
groupings of issues requiring the same or similar decision process. The sections of
the book from front to back represent a rough timeline of events that the
entrepreneur would face in starting, developing and growing his business.
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The YCDT philosophy is embodied in The Five Credos for Success. As was noted
earlier, philosophy is one thing, but implementation and execution fare another.
In the classic scheme of things, philosophy gets ready for action by being codified
into a set of principles, which in turn get restated into a set of operating
procedures, which in turn get restated into a set of day-to-day standard operating
practices. This is the normal implementation and execution process.
And this was the process I used to build Great Western resources inc. (GWR).
But many hours of describing how to fit a myriad of principles, procedures and
practices into each participants unique situation would get fairly boring, fairly
quickly.
For ease of presentation purposes, the PPPs have boiled down into what I term
Pea-isms. These are hardly akin to the statements of Chairman Mao, but they
are Words to live by if you are serious about entrepreneurial success for your
business project.
To illustrate how various Pea-isms worked in certain situations, some of the
conventional wisdoms I faced as I built GWR are covered in this manual and the
seminar presentation.
A current list of all Pea-isms is provided in Appendix A. As you will quickly
realize, these are not unique to me or to GWR by any stretch of the imagination,
and each seminar participant has probably faced the same situation before in his
own circumstances. What is unique, however, is how I handled the situation and
succeeded.
During my professional life I was told 86 times what could not be done. I know it
was 86 times because I kept a list! (See Appendix B) In all 86 instances I
accomplished what I really desired.
And in terms of Great Western, Im not talking about small triumphs, Im talking
about huge, insurmountable tasks like
TURNING $820 INTO $400 MILLION MARKET-VALUED ENERGY

COMPANY IN 8 SHORT YEARS WHEN THE PRICE OF OIL WENT FROM
$40 TO $10 PER BARREL!
GETTING A $20 MILLION CONTRACT WITH THE FEDERAL
GOVERNMENT WITH NO OTHER EMPLOYEES OR OFFICE SPACE
ONLY A PHONE AND LEASED FAX MACHINE!
ACHIEVING REVENUE OF $50 MILLION MY FIRST YEAR IN BUSINESS!
BUYING A FOREIGH SUBSIDIARY FROM A FORTUNE 200 SIZE
COMPANY OVER THE PHONE
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ON NEW YEARS EVE!

BUYING A $150 MILLION U.S. COMPANY FROM ITS MULTI-BILLION
DOLLAR FOREIGN PARENT WHEN THEY DIDNT WANT TO SELL!
the exciting details are in the subsequent sections.
CONCLUSION
This seminar manual and the seminar presentation in which you are about to
participate are about success in business in a free enterprise economy. Its about
choices; its about decision making at the business management level.
I believe my approach to the subject matter is significantly different that no other
how-to venues in one very important aspect: I have already achieved the
success.
I created the philosophy and developed the process. And, most importantly, I used
the process to start, develop and grow my company, Great Western Resources. I
have achieved implementation, execution, and completion.
Great Western Resources is a diversified public company in the energy business.
Its real you can go touch its oil derricks and coal mines; you can talk to its
management and its employees.
The YCDT philosophy isnt a get rich quick scam. There is no elevator to the
top. There is nothing beyond this seminar except for the audiotapes, which you
get at no additional cost. There is no magic computer software, no cute T-shirts
available for purchase.
Id like to see each and every one of you succeed. I did so can you. But if you
dont, well, you didnt want success bad enough better luck next time.
As you will better understand at the end of this seminar, being an entrepreneur
means there is always a next time.
This seminar is simply one form of opportunity. It is knocking now at your door.
But it is up to you to answer the door.
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SECTION 2
THE MANY FACES OF THE CONVENTIONAL WISDOM
INTRODUCTION
First of all, as Im sure you have already noticed, this manual is written in the first
person singular. I can do that since this is my seminar and my seminar manual.
That means that you, the reader, will see a lot of Is as you pour over the text.
Most English teachers would tell you to minimize the use of the pronoun I when
writing. And they are probably correct.
But Ive chosen to ignore that piece of advice, which is alright, because I also
ignored it back when I was still in school. Besides, if I ignored it back when I was
still in school. Besides, if I used Daniel S. Pena or Dan Pea instead of I,
you would get tired of that, too. So, I it shall be; the decision has been made. Is
it the right decision? Who knows, or more importantly, who cares because:
Pea-ism: the consequence of a misguided decision

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is de-minimis in the concept of eternity.
OPPORTUNITIES
As I stated in Section I, this seminar program is really all about choices:
recognizing opportunities, which present themselves to us at various times in our
lives and deciding what to do with them.
It is about getting on base no matter what, i.e. stepping into a pitch if necessary. It
is about getting hits and knowing when to swing away for a home run.
And even more important, this seminar and the YCDT philosophy is about getting
into a position for a Grand Slam.
But most of all, this experience is about feeling comfortable swinging away when
the bases are loaded. As result of what you learn at this seminar, you will know
when your special time comes and youll know what to do with that bet.
Before I started Great Western Resources, I had a lot of opportunities present
themselves to me. But I ignored them. Why? Because with
every opportunity there came seemingly a thousand You cant do thats. There
were always more than enough reasons for doing nothing.
The conventional wisdom always had plenty of support for any decision which
said, Do nothing.
In fact, as time went on, the conventional wisdom presented itself to me so many
times that every time an opportunity came up, the words You Cant Do That
would immediately float across my mind. It got to the point where You Cant Do
That seemed the natural and probable consequence for everything.
Remember the list of the 86 times I was told it couldnt be done! (Appendix B)
Then in 1976 a significant event occurred in my life that changed the way I
looked at opportunities. Between 1976 and 1978 I redefined my meaning of
success.
What was that significant event? Well, Im not going to tell you because 1) it
would be too much of a surprise; and 2) its personal and its my secret and I
dont go around telling secrets.
Some of you will experience significant events like mine, and some of you will
not. If you dont does that mean that you cannot possibly be successful? Of course
not.
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But Ill let you in on this little secret: this seminar could be a significant event for
some of you. This could be the proverbial knock!
SETTING GOALS AND OBJECTIVES.
Whether you are in an entrepreneur on the verge of brilliance or a seasoned
executive, you have already experienced some form of serious goal setting in a
business environment. That pro forma you prepared for your bankers in an
attempt to get working capital funds with which to start product development was
the quantification of an objective. The plans for the near term that you laid on
your partner or subordinated at the last meeting were really goals.
Do goals and objectives have to be realistic? If they are not, the probability of
achievement is low, and failure to consistently achieve goals can lead to
frustration and disillusionment. At least, thats the conventional wisdom.
Pea-ism. Always shoot for the moon. That way, even if you dont hit the
bulls eye, youll at least get eighty percent.
GOALS
As you will see on the pages that follow, I kept track of goals (in no particular
order). In some years references were set down on scraps of paper. In other years,
my wife wrote them down for me very neatly on a legal pad. As a family, we
normally choose the week after Christmas to sit down and list our goals.
I never assigned deadline dates, fearing that it might actually become a selffulfilling prophecy, since most goals can be achieved in less time than we believe.
For example, I decided I was going to buy an island with a castle in the Spring of
1983, less than a year after founding GWR. At that time, I hadnt bought a U.K.
company or even thought about going public. Some nine months later, GWR
purchased a UK company and sixteen months later, in August 1984, we went
public.
I cant tell you if we would have never gone public in the UK even by 1995 if I
had put a time limit on my big goal: the castle. I just know I had no time
constraint and did it in 1984. I was focused on buying a castle and I
subconsciously did whatever it took to fulfil my goal.
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You will see that definitive time limits act as boundaries for how fast you can
achieve something, not as a benchmark for achieving something in a timely
manner.
Castle Goal time Sequence
1)
Set castle goal April 1983
2)
Looked at castles in UK Thanksgiving 1983
3)
Bought UK subsidiary from large U.S. company in a totally unrelated
transaction New Years Eve 1983.
4)
Visited UK company (Spring 1984) and decided, while in the UK,
there was a huge opportunity for GWR to go public.
5)
Went back to US and found something to take public.
6)
Made first offer on castle June 1984
7)
Went public on my 39th birthday August 10, 1984
8)
Made final offer August 1984
9)
Moved in castle September 1984
While building Great Western I had two goals. The first was to become one of the
ten highest paid executives in the energy business. The second was to amass
assets at Great Western in the $2-3 billion range by the early 1990s.
My tenure at GWR ended before I could realize the latter, but I did achieve the
former. In fact, I was in the top five from 1986 to 1990.
You may be thinking that I somehow sacrificed the latter for the former. Nothing
could be further from the truth. Executives dont get big bucks unless they
perform, and I performed. And when I performed, everybody employees,
management, advisors and stockholders benefited.
I had no greater joy than when employees were able to buy a new house or
something of that nature when they exercised their stock options. I was especially
happy the day my long time administrative assistant bought her new house.
You may want to keep that idea in mind the first time you feel bad about how
much money youre making. Besides, always remember:
Pea-ism. Always, always, always pay yourself first.
DRAWING ON EXPERIENCES
We have all heard the old sayings, Experience is the best teacher and Those
who dont learn from history are doomed to repeat it many times. I firmly
believe in the teachings of these words, and so should you.
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Experience comes in two forms: there are good ones and there are bad ones. You
should build on the good ones and remember the lessons learned from the bad
ones. And once you draw up the rules of conduct for the future, stick to them, no
matter what.
Pea-ism. Dont, under any circumstance, ever

Ever second guess yourself.
Before founding Great Western resources, I was president and CEO at another
vertically integrated natural resources company, a company that I founded and
helped to build and position to become a real up-an-comer in the energy business.
Notwithstanding all of my well-documented successes there, there was one thing
that really bugged me. I was the number two man at this company, and, as such, I
didnt really have the final word on the big decisions. That one aspect of
corporate life was so distasteful to me that I vowed I would never do it again.
After I left that company, I had a seemingly fantastic opportunity present itself to
me. I was offered a position with a salary of $1 million a year. The position was
for the number two man at an emerging company.
That million dollars was more than a little tempting, believe me. However, I
turned it down and never looked back.
Just another dumb luck story? Not at all. I knew in my heart that I needed to
stick to my rule of conduct. I did, and so should you. It is one of the best pieces of
advice that I can give to you.
Speaking of sources of advice, try looking to the experiences of others.
Pea-ism. You wont always have all of the answers. Take seriously the
advice of others who you respect.
Periodically throughout this manual, I will say I went with my instincts, or I knew
in my heart, or I made a gut decision.
The difference between success and failure many times will be how you, as CEO,
feel about the course of action that should be taken.
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There will be times that this feeling will give you additional insight. Ive
learned the hard way to go with my gut feeling. Normally this feeling is
associated with bad deals. So when the feeling comes, dont
fight it. It is likely to save you a great deal of pain and heart ache.
You may develop the same gut feeling for good deals. I can only feel bad
deals.
One of the most influential people in my professional life was a man I met early in
my career. At the time, he was almost three times my age and looked like he
belonged in a retirement home. He had no formal education and was very rough
around the edges. Yet he ran one of the largest international corporations in the
world, with luxurious offices and accommodations in the heart of New Yorks
financial district.
I hung on his every word, thankful for the opportunity just to get close enough to
hear what he had to say. We formed a pretty close friendship and I would stop by
to see him whenever I had the chance. For whatever reason, as soon as I would
get to his office, he would say he had to go to the bathroom and we would talk
together in the mens room. Some of the best advice I ever got was given to me
while standing side by side with this elderly gentleman at the urinal.
Is there anything to pass along to you? Just one thing: simplicity. My friend ran
his international corporation from New York as if it was nothing more than a
vegetable stand sitting alongside a dusty country road. For instance, his entire
finance department consisted of one person: one man with a journal and an adding
machine whose job it was to count the money. Seriously. I never forgot that.
PERCEPTION IS REALITY
Never underestimate the power of illusion. Reality is in the eye of the beholder.
What seems real, is real; perception becomes reality.
Early on in the development of GWR it became increasingly clear to me that if I
and Great Western were going to go anywhere, we had to make ourselves look as
if we were already there. I knew that our business associates had to see me in time
now as I planned to be in time future, or there wasnt going to be any future for
either of us. I needed a quick transfusion of perception in order to acquire the
perception. Sound like double talk? Read on.
As Ive already said earlier in this chapter when referring to goals, one day in the
Spring of 1983 while running with my wife in Torrance,
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California, I had decided to buy an island with a castle. Yes, a castle, the ultimate
ostentation, clear evidence that one has reached the pinnacle of success. After all,
I knew from my Wall Street days that if you wanted to do business with financial
institutions, you had to prove to them that you didnt need their services.
So the castle was to become the perception which would cause the business
community to realize that we didnt need their help since we had already arrived,
which, of course, we hadnt. There was just one small problem:
Hey, Dan Pea, whats wrong with you anyway? You cant buy an island with a
castle. Youre a nobody and nobodies dont go around buying such things. Before
you can own a castle, you have to be somebody. You cant buy a castle! You
cant do that!
******************************************************************
The conventional wisdom was right, of course. Which was exactly why I ignored
it. I bought the castle, Guthrie Castle in Angus, Scotland. And as my wife Linda
points out, it is on an island called Great Britain! I bought it because I made
myself look like I didnt need it, like I already had two or three others tucked
away and this one was just a bauble.
So I manipulated perception to form reality to acquire the perception which would
form the basis of other realities. Guthrie Castle is now my permanent home, the
safe harbour for my family. It is no longer a perception, it is real.
In conjunction with our decision, my wife and I had decided we wanted to raise
our children in a different socio economic milieu.
This may sound like a strange example. But it really isnt when you buy a new car
or join a country club as a way to achieve business success, you are acting out
perception as reality. You are putting yourself where you believe people will
perceive you as being successful. The castle is merely an extension or a quantum
leap from the rational.
So where does all of this lead? Just where, you may ask, am I going with all of
this talk of choices, opportunities, experiences and
perception/reality. It leads to the YCDT philosophy; it leads to The Five Credos.
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THE FIVE CREDOS

The Five Credos is not a rock band from the 1960s. It is the operational arm of the
YCDT philosophy. Its where theory gets down to business, where the rubber hits
the road. The Five Credos are what enabled me to take $820 in cold cash and turn
it into a $400,000,000 public company in just eight years.
I have carried these words on my person since the late 1970s. If you dont
believe that, just ask me and Ill show you my DayTimer where I have written
them down every month since the late 70s.
The Five Credos

-
Yesterdays dreams are todays realities.
See your dreams ahead of time now.
Simulation: practice within when youre without.
Act as if there are no limits to your abilities.
Enthusiasm: comes from the Greek word, god within.
QUANTUM LEAP/HYPER GROWTH

In this seminar, I and you are going to cut tight to the heart of the matter. Im
going to show you how to Quantum Leap your career, your finances, your life
by concentrating on the one and only objective that means anything at all: your
real dreams!
And when I say concentrating, I mean a focus, a tight focus a laser beam
focus on the achievement of that objective.
There is only one path to success: absolute and total commitment. If you just think
you may want to be successful, then youre in the wrong seminar. And I can
guarantee, you will not be successful! If you came here just to see if I was even
half of what youve heard, I cant do a thing for you.
But if youre here because you have a dream, and you believe deep down in your
soul that your dream can come true, then you came to the right place.
As long as you have a burning desire to succeed, believe me, you will succeed.
You must keep those fires burning. And many times it will not be easy. In fact,
very often it will be almost impossible!
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However, as long as you have the will, But dont know the correct path, I can
provide the way. It doesnt matter that you may have failed in the past, no matter
how many times. (And perhaps it may be better that you failed a few times.) But
forget about those past experiences! Forget about those past obstacles! Im going
to show you how to ignore them completely or work around them or over
them or go through them!
Pea-ism. To achieve hyper growth, you must avert avoidable mistakes and
let your successes run their course.
All of this is possible only if you believe in your dream and are focused on it
becoming reality, Laser beam focused. Concentration.
When I built Great Western I lived and breathed its success. I believed in my
dream. I was obsessed. I was so focused on its achievement that I slept most of
the time in my office just so I could be near it.
I had often wondered why CEOs had showers in their offices. I found out why.
Well, its time to get going with that company you are trying to start and/or
develop and run. No more prefatory remarks, no more
introductions. Its time to put the pedal to the metal; its time to put the rubber on
the road.
Ladies and gentlemen, start your engines!
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SECTION 3
BUSINESS DEVELOPMENT: A HOST OF INITIAL OBSTACLES
ARE YOU AN ENTREPENEUR?
Websters defines an entrepreneur as One who organizes, manages, and assumes
the risk of a business or enterprise.
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The guy who started General Motors was an entrepreneur. But so is the young
lady who is just now starting her engineering firm, and that man who just retired
and is opening his own printing shop.
The concept of the entrepreneur has been blown way out of proportion. We have
attached to it a sense of grandeur and awe that simply does not belong. Maybe its
because entrepreneur is a French word.
Anyway, most people see entrepreneurs as gallant and determined dreamers who
must fight the establishment in the form of financial institutions and the industry
base. Its the little guy with the new idea against the big guys with the market
share. Its good against evil; small against big; new against old. The fate of the
world hangs in the balance!
Nothing could be further from the truth. Its simple. If you work for someone else
and get a regular paycheck, youre not an entrepreneur. If you organize, manage,
and assume the risk of a business or enterprise, youre an entrepreneur.
One more time. There are only two types of folks involved in business: those who
like the comfort of a paycheck, or those who like to risk everything on success or
failure. Pick one, but only one.
THE GREAT UNKNOWN
Year after year, the single largest cause of business failures is mismanagement.
But no one who ever had a failed business will admit to that.
Mismanagement may have caused everyone elses business to fail, but not theirs.
No, their business failed because the market went away, or the federal
government did something or didnt do something, or it was those cheap imports.
They could have made it, but external events simply overcame them.
As they say in the boxing world, I couldda been a contenda.
Two things cause businesses to never get started or fail once they get started. The
first is not having a full appreciation of the impact of the unknown, and the
second is failing to manage in known conditions of the unknown.
The sheer mass of the unknown is at its greatest when the business is being
initially developed. Each entrepreneur starts the race to grow his company from a
different position on the track. We all come to the race with different experiences
and capabilities. Some of us are more prepared than others.
Before starting Great Western, I had a lot of experience in the business world in
general, and a little experience in the oil and gas industry in particular. That
general experience gave me a head start in the race, especially because I knew:
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Pea-ism. Even when one thoughtfully and judiciously plans, more often
than not such plans are overcome by external events. Therefore, never
underestimate how wrong you can be.
At Great Western, we never underestimated how wrong we could be. We thought

over everything; we put every possible event, issue, and consideration into our
decision models. We ran every conceivable scenario, and then we ran them again,
and then we ran them one more time.
We discussed them at breakfast, over lunch, and at late night dinners. We talked
about them constantly. We planned for success but provided for detours
occasionally by one or more unknowns. We worked seven days a week, sixteen
hours a day. Its all part of being an entrepreneur a surviving entrepreneur!
Once you get started, you must continue to grow. The amount of time spent at the
business is the same, but the areas of focus change. It is now time to manage in
known conditions of the unknown.
There are many theories of management, and all of them have one or more
applications across the broad spectrum of different industries
products and services, utilizations of resources, and management styles.

The one universal dictum seems to be that financial return is directly proportional
to the assumption of risk (i.e., that which distinguishes the entrepreneur from the
guy who gets the paycheck).
The saying, high risk/high payoff is a very familiar one, indeed. But implicit in
this risk/return equation is the presumption that the management of a company
can, in fact, manage its affairs in such a manner so as to realize the financial
return accruing from the assumption of the risk in the first place.
In every business proposition there is upside risk and downside opportunity. If
these two elements are in a state of equilibrium, the company will perform in the
long term at some average, or normal, rate of return.
I thought long and hard about these management dicta, and applied them to the
natural resources industry in general, and to the operations of Great Western in
particular.
There is a lot of risk in the oil and gas industry. There are enumerable unknowns.
In fact, every prospectus you read from an oil and gas company contains the
caveat emptor, oil and gas exploration and development is a speculative activity
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which, compared to other activities, involves a relatively high degree of financial

risk.
I had to read that statement many times, but eventually began to wonder if it were
really true. There were unknowns, but if you managed a business in a manner to
account and provide for these unknowns wouldnt you otherwise be underwriting
its success? I firmly believed so. Besides, I didnt want the management at Great
Western to allow themselves the opportunity to fall back on a false premise.
If you accepted the argument that it was hard to make a buck in the oil and gas
industry because it was risky, then you could excuse yourself from not making
that buck for the same reason. If you allowed yourself to be overcome by external
events, you could excuse your poor performance due to these events.
I found such a notion abhorrent.
Pena-ism. Plan for success: no back-up plans, no rip cords, no fail-safes; or,
you will fail.
One final point on the unknowns. Each entrepreneur believes deep down in his
heart that his problems are truly unique. A lot of other entrepreneurs have
succeeded at their enterprises, but then, they never had the problems that I have
is a familiar lament.
Let me be the first to tell you that we all share the same boat. The problems and
the obstacles are the same, they just come in different guises.
I looked at the risk factors enumerated in the prospectuses I saw and came to the
conclusion that the oil and gas industry was really no different than any other
industry. Each of us had to deal with the same unknowns, they just came wrapped
in different packages. For instance:
Even if oil and gas interests are in areas of proven reserves, there is
no guarantee that a discovery would have commercial significance.
Was that any different than a pharmaceutical company trying to develop a new
drug? An agricultural company trying to develop a meatier tomato?
The appraisal of oil and gas interests is not an exact science.
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Is there any form of prognosticating, estimating, and forecasting that is an

exact science?
Unforeseen circumstances may result in drilling delays or lower that

expected production levels.
Was the oil and gas industry the only one having to deal with unforeseen
circumstances?
Movements in the market price of oil and gas or changes in taxation

or other government action may have adverse effects on income
levels.
What, the airline industry never had to worry about deregulation? The automobile
industry about air bags?
Different industries, same problems. We are all in the same boat. The unknowns
dont play favourites.
I am a firm believer in the adage, Things that start off wrong only get
progressively worse.
There is no better method of operating in the world of unknowns that to do your
homework. The more effort expanded before the decision, the less the pain when
things dont work out, or
Pea-ism. The more you investigate, the less you have to invest.
THE PEOPLE PROBLEM

The human resources of a company represent an ironic situation: they are the one
asset that counts the most but also the one that never gets counted on the balance
sheet. They are also a businesss greatest source of frustration.
My experience with the people side of organizations puts the issue into three
different, but related, categories: getting people, dealing with
personal/professional relationships, and getting rid of people.
Hey, Dan Pea. Whats wrong with you, anyway. You cant get top quality
professional people to give up their promising careers to come join you at Great
Western. What can you offer them? It will never work. Youre wasting time, both
yours and theirs. You cant do that!
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Its difficult when youre starting out to let go of any portion of your dream. Its
not that youre afraid someone else will steal it, its because youre afraid no one
else will embrace it with the same love and devotion as you do.
Pride of authorship has killed more budding business deals than anything else I
can think of.
Personally, I would rather have 50% of something than 100% of nothing. But
once you convince yourself that you cant do what needs
to be done alone, you need to find the right people to travel the long journey with
you.
How do you go about finding the right people? How do you pick your partners?
How so you form the team with the greatest probability of achieving success?
Before you make the final decision, ask yourself this: Could I be married to this
person? Because thats what you are going to be for an undeterminable period of
time: you are going to be married to this other person or group of people.
My two partners came to GWR from their professions, one from accounting and
one from law. We had met along the way of separate careers, finally joining
forces at my behest to pursue the dream called Great Western. They were A-1
performers at their respective firms, and both would have done exceedingly well
even if they hadnt done so at Great Western. They were both very well paid
partners at their respective firms.
The conventional wisdom was wrong once again. Both of my partners gave up a
lot to dedicate themselves to Great Western. Why? I dont know. I presume that
there were any number of reasons.
The lesson to be learned there by you is that it CAN be done. The means you
employ are up to you.
The question is often posed as to whether or not people in business can have both
a personal and professional relationship without destroying both relationships.
The answer is a resounding, yes.
My partners and I did everything together. Its all part of the entrepreneurial
marriage thing of which I just spoke. You spend so much time together that a
personal relationship is unavoidable; in fact, its a foregone conclusion. If you
cant be friends, you cant be business partners. We all became very close, as did
our families and circles of friends.
You are going to have to deal with your personal relationships outside of your
professional ones. These are easy if your entrepreneurial endeavours fail. Down
deep in their hearts, most of your friends want you to fail because that makes
Page 20
you look bad. If you succeed, then they look bad. When you fail, theyre happy
because they have the upper hand.
This revelation may shock you but, believe me, its true.
Its just human nature - jealousy and those other evil things.
Well, you cant control what others do, but you can control what you do.
Pea-ism Always maintain your personal relationships on the same plane

upon which they were formed. True friends will rejoice in your professional
successes; allow them to enjoy them with you. Do not ever reassess their
personal and professional lives in terms of your own.
One of the hardest jobs for a senior manager is to get rid of people. It doesnt
matter what you call it - work furlough, layoff, early retirement, reduction-inforce, a firing - it all leads to getting rid of somebody.
And dont think it becomes any easier just because you dont like somebody. You
may not like them personally, but they were probably very good technically, and
they are probably going to be hard to replace.
Regardless of your approach to this matter, there is one cardinal rule you must
follow:
Pea-ism When you get rid of someone, never ever give them a hook with
which to get back in. Always make it a clean, definable break.
Separations at the management level can be very expensive for a company,

especially if employment agreements are involved. But no matter what the cost,
sever the relationship completely.
Do not try and save money by offering hooks - such as stock options - to the
person who you want out. Get them out and keep them out. And money that you
think you are saving will be peanuts compared to the aggravation youll
experience later on.
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DOING YOUR FIRST REAL DEAL

In the early stages of the life of every business there comes the time when
you, the entrepreneur, must do your first deal. It may be your first financial
arrangement with a bank, an initial advertising contract with a real customer.
Regardless, how you perform at this juncture will have a significant impact on
the survivability of your business enterprise.
A lot of the topics discussed to this point will come into play during the
conduct of your first deal-making adventure. There will be real opportunity to
see how well you handle your first transaction.
If all goes well, will you build on the experience? If things go poorly, what
mental corrections will you make? What illusions will you create to maximise
your benefit form the transaction? Have you prepared yourself for success: no
fail-safes, no fall-backs? Have you covered the unknowns from every possible
angle? Have you identified and practiced (in you mind) all of the scenarios to
reduce the probability of error to its minimum; have you all but eliminated the
margin for error?
The game is on the line, so to speak. The fulfilment of your dream hangs in
the balance:
Pea-ism. The fulfilment of your dream is directly proportional to your

desire to succeed. How badly do you want to succeed, how much are you
willing to sacrifice. For if you are not prepared to die, then you are not
prepared to live.
I remember my first real deal with what was then called Great Western
Development Corporation, the company I started on Friday, July 13, 1982
with $820 cash.
***************************************************************
Hey, Dan Pena. Whats wrong with you, anyway. You cant get a major
contract from the federal government with no employees, no office, no money,
and a leased fax machine. They wont give an important contract to a
company like GWDC. You cant compete for that contract. You cant do that!
***************************************************************
Great Western Development Corporation had bid on and won a jet fuel supply
contract from the U.S. Government through its Defense Fuel Center
operations. I had found out about the opportunities (theres that word again)
for such contracts during my visit to Washington D.C. The original value of
Page 22
the contract was $20 million, but that would eventually grow to over $50
million.
How improbable was this deal? It is the conventional wisdom that one could
sell Amway products out of a spare bedroom in the home, but not fuel for
Uncle Sams war machine!
Was I scared? You bet!
Was I apprehensive about the transaction? You bet!
Was I comfortable with the situation? You bet!
Was I afraid of success? No way! Was I afraid to die? Never, because I
wanted to live more than anything.
SECTION 4
BUSINESS DEVELOPMENT:
RAISING INITIAL CAPITAL FOR GROWTH
Page 23
THE NUTURING PERIOD

Great Westerns fuel supply contract with the federal government came with a
slim margin, but it provided enough working capital to keep the business
going and also gave me breathing room in which to consider some candidate
opportunities for growth.
It was 1982 and the Tax Reform Act of 1986 was still four years away which
meant that tax shelters were still the rage with both individual and institutional
investors. As you may recall, the Tax Reform Act took away virtually all of
the attractiveness of tax shelters as investment vehicles.
For the next two years Great Western Development Corp. put together three
tax shelters in the form of drilling funds that performed fairly well, both
financially and technically.
Operating capital from the funds came in the form of the G&A fees payable to
GWDC. These fees paid for two things: The operations for the business and
the operations of the Daniel S. Pena, Sr. Household.
This was the nurturing period for GWDC. Every new business goes through
this period. During this period, the business enterprise is in its most fragile
condition. The slightest bump or jar will break it into a thousand little pieces.
It must be handled very gently; it must be coddled; it must be nurtured as if it
were a newborn child.
I nurtured GWDC with a velvet-covered iron fist. The velvet was for GWDC,
the iron fist for me. I knew that GWDC needed nourishment to grow, and I
also knew that selling a series of look-a-like tax shelters would not provide
that needed nourishment.
I knew that the second tax shelter had to be grander than the first, the third
grander than the second. I knew it was time to put myself under the threat of
the iron fist.
It was time to see what I was made of. Great Western was either going to live
or die, but either way, it was time to find out.
I knew that the road to the big time in tax shelters went through Wall Street,
but I also knew that you couldnt get there from a small office in Southern
California with a no-name product base. I went to work and put together a
series of illusions which put me on Wall Street with the third tax shelter.
It was a classic example of the perception/reality ruse, and it worked very
well. It was the first time that I had really done this trick with my own money
at stake, and I was surprised at how easy it was to pull off. As a matter of fact,
Page 24
my successes with GWDCs second and third tax shelters lead directly to my
decision to acquire what would eventually be Guthrie Castle.
As I mentioned previously, even though the drilling fund tax shelters were
successful financially, there was one aspect of this period in GWDCs
nurturing period that really bothered me. The revenue steam from GWDCs
operations had to fund both the business and my household. I was playing
with my own money.
The business decisions I had to make contained a variable that didnt belong.
There was a problem that needed to be taken care of.
Pea-ism. You cannot win at poker with scared money - it gives off a
stench that is repugnant to the winning hand. If you are going to play
poker, leave your money at home and play with OPM: Other Peoples
Money.
Most entrepreneurs find themselves in this same situation. On the front end of
the business development cycle, it is usually their money that is funding
operations. It is scared money, and scared money is very difficult to play hard
and tough with.
Remember, this is the nurturing period for the business. Everything is in its
infancy: the technical aspects, the organization, the human resources, and the
financing.
The entrepreneurs attention is needed everywhere. There is a new problem
occurring seemingly every minute. Stress is at its maximum pressure. Its time
to get some relief; its time to get some OPM.
FINANCING ALTERNATIVES
A business enterprise needs funds for working capital and for facilities capital.
Working capital pays for on-going operations, business development, and product
development. Facilities capital pays for the facilities, machinery and equipment
necessary to conduct the mission of the business.
The corporate business entity has three sources of funds available to it to finance
working capital and facilities capital requirements: earnings retained in the
business (capital surplus), debt, and equity.
Page 25
Debt can be in the form of trade debt (payable in the normal course of business
operations), short term debt (payable within a one year period), and long term
debt (payable in whole in part beyond a one year period). Equity can be in the
form of common or preferred shares to stock, or any hybrids and variations of the
two.
Financing the working and facilities capital requirements of a new business
enterprise with funds from retained earnings is not a viable alternative. First of all,
there probably isnt going to be an earned surplus, but rather an accumulated
deficit. Secondly, even if there exists an earned surplus, it probably wont amount
to enough to provide a serious source of funds for growth.
That leaves debt or equity as the remaining sources of funds for the new business.
With debt, you retain ownership but incur interest expense, a fixed charge of the
business which can eat up a lot of net margin dollars, thereby restricting
managements ability to use the funds from operations for its own projects.
With equity, there is no drain on the funds from operations but there is a dilution
of ownership and control. A detailed discussion of the pros and cons of using debt
or equity is beyond the scope of this seminar program. Each situation is different.
If you are really interested, let me recommend to you that you seek independent
guidance from professionals in this area. Unfortunately, most of the guidance you
will receive comes from people who never started or ran their own business.
In August, 1984 I chose to raise capital for Great Western Development
Corporation through the use of a public offering for equity shares in a new
corporate entity called Great Western Resources Inc. Another option available
was a private placement of
equity shares.
Once again, for those readers interested in the pros and cons of public vs. Private
offerings, I would direct you to the same appropriate professionals in this area.
GOING PUBLIC
On August 10, 1984, my 39th birthday, GWRI had its initial public
offering on the London Stock Exchange. Of 25,000,000 common shares
authorized, 20,000,000 were issued on this day, 5,000,000 to be traded by the
public on The Exchange. The stock was issued at 160p (about $2.00). At the end
of the day, our stockbrokers presented me with a check for $10,000,000
representing the publics 25% share of the IPO.
The remainder of this seminar manual, starting with the IPO, covers topics on
business growth and development as I encountered them at GWRI from 1984 to
1992.
Page 26
SECTION 5
THE INITIAL PUBLIC OFFERING
BACKGROUND FOR THE DECISION
By the time 1984 rolled around, I had accomplished a lot with Great Western
Development Corporation, the company I started with $820 cash. The
conventional wisdom had tried to dictate to me on a number of key issues and had
come up short on all of them.
My YCDT philosophy was now a permanent part of me. I didnt go around
looking for the impossible, but I never backed away from anything just because it
seemed impossible on the surface.
The conventional wisdom had declared:
You cant sell tax shelters on Wall Street from a little outfit in Los Angeles - I
did it with our third drilling fund in late 1983.
Page 27
You cant come out with new tax shelters and compete in a already saturated
market: I did it twice, and quite successfully, in 1983 with our second and third
drilling funds.
You cant get orthodox Jews to come out on the Sabbath and sign a contract: I
did it, In Israel, as part of a joint venture deal with the Israeli government, also
in 1983.
In early 1984 I was convinced of a number of things concerning GWDC as an
emerging company and about myself as an entrepreneur. I was convinced that
GWDC was in the right business sector (oil & gas) at the right time ( pre Tax
Reform Act of 1986 and with the Republicans in the form of Ronald Reagan in
the White House).
And I was convinced that I had the right stuff (the YCDT philosophy in the form
of The Five Credos) to recognize and take advantage of the right opportunities.
But I also knew that philosophy and theory were one thing, but implementation,
execution, and performance quite another. I took inventory of the things I had, to
see if they were enough to take GWDC out of its nurturing period and into an
accelerated growth period.
First, and most important by a mile, I had a dream. That dream was to build the
fastest growing and eventually the largest natural
resources company in the world.

I had the human resources. I had two partners who shared my dream and
believed in it. They were also very good technicians in their fields of expertise.
Additionally, I had hired arguably the best administrative assistant in the world.
She is still with me today.
I had seen the perception/reality ruse work with the second and third tax shelter
and with the purchase of Guthrie Castle.
I had established my credibility with the American banking system. I had
financial support.
Remember that federal government fuel supply contract that grew to $50 million
in value? Well, that money found its way into the banking system and became
what bankers call float.
Bankers like float and they liked me because I gave it to them.
Last, but by no means least, my partners and I had tasted success. We knew
how it felt and we liked it. It whetted our appetites for more.
Page 28
And I became even more obsessed with it!

UK vs. THE U.S. (THE PROVERBIAL KNOCK)
All of GWRs income-producing assets are in the United States. They have
always been in the United States.
I have been asked many times why we went public and are traded on the London
Stock Exchange instead of one of the American exchanges. Some of the major
reasons are listed below. They were valid back in 1984, and are still valid today.
Im not recommending that every entrepreneur run to the London Stock Exchange
as the only source of ready capital. But I am suggesting that there are numerous
opportunities beyond our home soil.
1. The fees available for merchant bankers, investment bankers, stock brokers,
lawyers and accountants were way too low to get U.S.
firms interested. However, we were big enough for the UK firms to take notice.
2. We were too small for the U.S., fees aside. It would have taken a monstrous
effort just to get somebody even to the point of remote interest.
3. In 1984, the U.S. oil market was simply wrung out. Besides, the U.S. was
going berserk with junk bonds and LBOs where fees generated were in the 10s
of millions of dollars.
4. The UK was new to the oil business. The first oil had been discovered in the
North Sea in 1975 and the British were still enthusiastic about exploration.
5. The regulations covering IPOs were not quite as stringent in the UK as they
were in the U.S., especially for natural resource companies. We were not
subject to the same scrutiny as were would have been by the SEC.
THE CHINK IN THE ARMOR
This last point was important, very important, to the quantum leap development
schedule I had established for GWR.
It took me eight years to run $820 cash into $400,000,000+ in market
capitalization for GWR by 1990. My goal was $2-3 billion by the mid 1990s.
Page 29
If I had tried to do that in the U.S., it probably would have taken me 20 to 25

years just to get to the first $400 million.
I did it in eight years in the UK for the five reasons listed above, plus one other
you wont find any mention of it in the text books on business management. I
found the chink in the armour of The City, the international cognomen for the
financial district in the City of London. The chink was the ego, arrogance, and
insecurity of the people who inhabited The City.
It was all part of the tradition, the lore of life in The City. It was as British as
kidney pie and cricket. It was in their blood; it was in their training; it was in their
entire sense of being. And I found that I could play them like a Stradavarius.
It was easy for me because the biggest ego in The City from 1984 to 1990 was
mine; it was easy for Great Western because on our worst day we were smarter
and more assertive than they ever dreamed they could be. They were no match;
they never had a chance; it was embarrassingly easy.
Whether we actually were smarter or not wasnt important. The issue was we felt
and acted a great deal smarter. We acted as if we had no limits to our abilities!
Okay, so where does that leave you, the reader of this manual? Im no Dan
Pea, you say? I have no desire to take on the financial institutions in London,
you say? You dont have to be or do any of these things to succeed with your
dream.
All you have to do is find your own version of The City. That may be just a
feeling of superiority you get when dealing with others in a certain way. Those
that find it will succeed; those who dont, wont.
THE PROSPECTUS
In early 1984 we had purchased for $60,000 an option to buy an equity interest in
a series of oil & gas properties with the right to drill up to twenty-four wells. We
still had some assets from our drilling funds around.
At the close of business on August 10, 1984, Great Western had issued and
outstanding 20,000,000 shares of common stock which closed that day on The
Exchange at approximately 2.00, or $2.50.
The market value of the company was 40,000,000, or $50,000,000.
We sold 25% of the company for $10,000,000 and the shares closed at a 25%
premium to the IPO price.
The company had $10,000,000 in the bank and the cost basis in the stock held by
myself and my two partners was $820.00.
Page 30
How could this happen? How could you generate $50 million in value off of hard
assets under $100,000?
Opportunity? To be sure. The prospectus for the IPO included a highly respected
petroleum engineers report on the commerciality of the oil & gas properties. The
engineering report indicated there was a good probability that there was
$50,000,000+ of oil reserves.
Anyone buying into the 5,000,000 shares put on the market for public
consumption was free to draw their own absolute conclusions.
Salesmanship? To be sure.
One of the things we always did best at Great Western was sell institutions on the
value of our stock and the promise of our company.
Perception/reality? You bet.
Works every time. All that really happened was I convinced The City I would
build a very large energy company. I acted as if I knew I would.
Did I exploit the chink in the armor of The City? Without a doubt. But I also did
build a large energy company.
How much of each of these types of things is necessary to be successful? Is there
a recipe?
There is no recipe. There is no requirement to incorporate all of these aspects into
every floatation. There are other aspects not mentioned here which may be
required. There are other aspects which may be present over which you will have
no control, such as general economic or market conditions.
But this is for certain: IPOs are gut decision making at its finest; its one of the
best ways I know of to separate the men from the boys and the women from the
girls.
The aforementioned discussion and methodology is no different when you, the
entrepreneur, decide to sell assets or your entire company as part of an exit
strategy.
If you dont act (sell) with enthusiasm, you will never command top dollars in the
selling process.
Page 31
SECTION 6
LIFE AFTER THE IPO
THE MANDATE
As an entrepreneur, probably the single most exciting event in your life is to
witness the initial floatation (IPO) of your company. You will want to pinch
yourself many times to make sure that youre not dreaming. It will all seem so
improbable.
An initial floatation is a true measure of success, but it is by no means the final
measure of success or the only measure of success. It is merely the most
quantifiable.
Because it is quantifiable, an entrepreneur should set going public as a goal.
Whether it ever comes to fruition or not is of no importance. The idea will help
crystallize many of your thoughts, vis--vis operations controls, financing,
marketing, personnel, accounting and most of all, how your business is valued.
You must have your store in order to go public because you are taking the
publics money. It is a good habit to get into.
Acting as if you are a fiduciary is especially helpful when dealing with banks or
other financial institutions.
An IPO is a major milestone along the path to making your dream a reality, but
its also a wake up call. Its truly the point of no return on your companys
journey to its eventual place in the annals of trade and commerce. You cant help
but wake up the day after asking yourself, Gee, what do we do now?
When the public buys stock in your company, they are buying into something.
They are buying into an opportunity they think will generate a financial return
that meets or exceeds their investment criteria. If it didnt meet or exceed their
criteria, they would invest their dollars somewhere else.
Financial investment dollars will always seek out the vehicle offering the highest
available return on invested capital.
Page 32
A companys opportunity statement(s) are included in the prospectus for the sale
of the shares of capital stock.
Each investor finds their own opportunity in the prospectus.

It may be the attractiveness of the current financial statements.
It may be the believability of the pro formas as the basis of the discounted value
of the business enterprise.
It may be the positive assessment of the downside opportunities in the face of the
assumption of the upside risk.
It may be the perceived strength of the companys management structure.
It may be the perceived leadership capabilities of the executives. Any and all of
these things can be quantified for purposes of making an investment decision.
But the prospectus for the sale of share capital is also something else, something
very important, especially to the entrepreneur. It is a mission statement. It is a
mandate.
The mission statement and the mandate may not be obvious from a reading of the
language in the prospectus. This is not to imply that the prospectus is written to
hide the true intentions of the company, or that it contains false or fraudulent data.
It simply means that the mission statement and the mandate may be known only to
the entrepreneur; that no matter how grand and effusive the disclosure in the
prospectus, it is not obvious to the casual or deliberate, reader. It is obvious only
to the entrepreneur because it can only be read with the heart and soul of the
person who has given life to the company.
In the introductory remarks at the beginning of this manual, I talked a lot about
the relationship of success and the burning desire to succeed. Wanting it more
than anything else in the world. Eating it. Sleeping it. Concentration. Focus tight
focus laser beam focus.
For the entrepreneur, how do you keep the intensity level up after the IPO, the
first real tangible indication that your dream has become, or is just beginning to
become, a reality/ how do you keep that fire in the belly going? Easily. You
treat it the same way you would a marriage,
Page 33
for those of you not married, the way you would a meaningful relationship with
another person. You work at it. You work at it damn hard.
Even in those times when its continuance is seemingly impossible, you work at it.
Never let down; never slack off.
Focus: laser beam focus.
There is no such thing as too much success; there is only more success, the next
sweeter than its predecessor.
Concentration
Hyper growth.
Quantum leap.
Dont stop, keep going. Your dream, only your dream. And in the infamous words
of Sir Winston Churchill (more recently borrowed by Ross Perot), never, never,
never, never, never ever quit.
WHICH WAY TO GO
As we commenced business operations immediately after the IPO, everyone at
Great Western proceeded under the assumption that the mission of the company
was to explore and drill the twenty-four wells on the properties for which we had
purchased options.
Everyone except me. I had a much larger vision.
Hey, Dan Pea. Whats wrong with you anyway? We just went public three
months ago. We had a prospectus. We had facts and figures. People believed in us
and what we said. They pushed our stock up to $3.50. And now you want to do
something different. You cant change direction from the IPO document so soon.
You cant do that!
My vision for GWR after the IPO was the same one I had always had. It was a
simple one. And it was an elegant one. In fact, I always marvelled at its elegant
simplicity: I was going to buy assets in a blending fashion as the means of
building the fastest growing and
Page 34
eventually the largest natural company in the world.

When I brought this to the attention of the board of directors and the management
(I was the Chairman, President and CEO in the post IPO corporate structure), they
acted surprised. They saw it as something different and a change of direction.
I saw it as being totally consistent with the mandate in the prospectus.
I never believed for a second that the public and the institutional investors paid
what they did for their shares of stock just to see how the twenty-four wells would
come out.
If you were conservative, you would have been better off putting your investment
dollars in a passbook savings account.
After all, we had no earnings and no track record in running a public company. In
reality, all we had was a vision. Albeit, a very clear vision, but clearest of all to
me!
If you are a gambler, you might have done better with the odds in Las Vegas.
AGAINST THE ODDS
I believed then, as I still believe now, that the overwhelming response to Great
Westerns IPO was a mandate for me to pursue my dream and my vision.
And I set out immediately on the road of implementation in performance of that
mandate.
Great Western was born in a hail of You Cant Do Thats. In retrospect, that
environment only served to strengthen its mettle.
August, 1984, may not mean anything special to you, but it did to the folks over at
Jaguar (motor car) because thats when they went public too.
I was told more times than I care to remember that GWR couldnt come out at the
same time because all of the investment dollars would be scooped up by Jaguar.
The British government was selling off to the public one of its cherished assets
Jaguar!
I was told to wait. I didnt wait; I knew it had to come off as planned or it would
probably never come off. As it turned out, I was correct. We did very well on our
IPO.
As I mentioned, our share price closed at a 25% premium to the IPO offering
Page 35
price. And the headlines of one major U.K. newspaper said, when referring to our
IPO the same day as Jaguar, Great Western resources, The One That Really
Roared.
Just another lucky shot? Perhaps.
One other thing about the advice I was getting. Some of it came from the
members of the most prestigious law firm in London, a law firm whose
representation I was told I would never be able to get. A law firm that was older
than the United States itself.
Thereafter, I would tell anyone whod listen that our firm of solicitors (as lawyers
are called in the U.K.) also represented The Queen of England, The Bank of
England, and Great Western Resources. Which they did!
I can still remember being told by their most senior partner that if there was ever a
conflict of interest between the Queen and Great Western, they would have to
resign. And they hoped I understood!
The conventional wisdom. Popular opinion. The tide of conventionality. These are
the entrepreneurs worst enemies. You need to constantly protect yourself against
them if you desire exponential growth.
SECTION 7
GROWTH VEHICLE ALTERNTAVIES
INTERNAL VS. EXTERNAL

Great Western had two ways to go. We could watch the performance of the
Page 36
current assets in the form of oil & gas properties, or we could pick up the mandate
and follow my vision, my vision. The conventional wisdom Vs. a dream.
Pea-ism. A number of years ago, the singer Kenny Rogers had a big hit
song called The Gambler. There is a line in that song that has direct
applicability to the business world.
The CEO of a company has got toknow when to hold them , and know
when to fold them. As a CEO, you will get more advice from your staff than
you know what to do with. Most of the time it will be good, sound advice. But
all the efforts of the people in the company will all be for naught if the CEO
doesnt know when to hold them, or when to fold them.
Only your instincts can tell you these things. And when they say hold them,
you hold them; and when they say fold them. You fold them. Do not eversecond-guess your decision.
The issue before me was a simple textbook case of internal vs. external growth
vehicles. We could expand our interests in our current oil & gas properties and
establish our out year growth curves on that basis, contenting ourselves to watch
the curve move up and to the right at some annual rate of increase.
Or, we could take a series of actions that would have the effect of taking that
curve and pushing it straight up a couple of notches. We could acquire growth.
My vision embraced the latter.
The name of the game here is revenue. Like success, you can never have enough
revenue. More revenue. More and more revenue. Tons of revenue. Tons and tons
of revenue.
My vision embraced more revenue; my laser beam focus was on more revenue.
Anybody can control and cut costs, but you can never experience hyper growth
and quantum leaps in business without generating more revenue.
Pea-ism: All managerial performance sins shall always be forgiven during

periods of rapidly increasing revenue streams.
One of the things that I always did better than other executives in my peer group
was know when to hold them, and know when to fold them. This time I was
going to hold them, and then play them with a vengeance.
The first series of wells on our properties didnt turn out so well (no pun
Page 37
intended). Mother Nature and some overly-optimistic geological data teamed up

to get us off to a rocky start.
But no matter, we were already looking at our first acquisition candidates. The
issue here was the timing. It had to be done quickly or the financial performance
of the initial well explorations would be cluttering up our financial statements.
We isolated the acquisition target and negotiated the deal. We took it to the
stockholders and got approval in June, 1985.
It was the wholly owned subsidiary of a Fortune 400 conglomerate that had gotten
it wrong trying their hand at oil and gas. We also got approval to increase the
authorized common shares from 25,000,000 to 35,000,000 on the basis that we
needed the flexibility to continue in our growth mode. Perception/reality.
OUTSIDE ADVISORS
This is a good place to introduce a cast of characters who fit the good news/bad
news description perfectly. These are people you cant live with and cant live
without.
They are the companys outside advisors: merchant bankers, investment bankers,
commercial bankers, stock brokers, petroleum
consultant engineers, lawyers and accountants.
Pea-ism. In order to really succeed in business, you need outside advisors.

These advisors must be trusted advisors. To have trusted advisors, you need
a very special relationship with someone at the firm. You need a mole.
The perfect mole is someone who is motivated, aggressive, ambitious and
bright enough, but not as bright as he/she thinks.
We had moles in each of the firms of our outside advisors. They took special care
of us and we enhanced their careers, all according to Hoyle. We made their career
enhancement Great Westerns business. When possible, we encouraged their
respective firms to promote them ahead of the curve.
Great Western paid a lot of fees to a lot of firms, but GWR is surely not unique in
that respect. All large business enterprises have large teams of outside advisors.
The lessons to be learned here are twofold:
1. As an entrepreneur, it is hard enough to let go of some part of your
Page 38
dream to your business associates and partners inside the company,

even those people who may have been your lifelong friends.
It is much harder to now let go of more of your dream to people
outside of the company; people who, but for the existence of your
company, you wouldnt give the time of day.
But you must do it or the company will simply wither away.
Exponential growth only comes from having less control, not more.
Outside advisors are merely a necessary evil; they are simply part and
parcel of the game.
2. All companies of any size have outside advisors. Many more
companies fail than succeed. Maintaining the stable of advisors is not a
dispassionate exercise. The mole-based relationship must be
established and maintained.
Admittedly, GWRs relationship with its advisors in The City was easy to
accommodate because of the existing chink in the armor. Being able to dangle the
carrot of power and wealth in front of the denizens of The City was a big help. A
little greed goes a long way.
But the mole-based relationships also worked quite well on this side of the
Atlantic. Greed is greed; it does not discriminate between dollars or pound
sterling.
A good example of greed and how it affects transactions is the U.S. junk food
fiasco of the 80s.
One final note on advisors. You will be awestruck at how much advice you will
get and how adamant the giver of the advice can be. It never ceased to amaze me
how determined people can be with their strong opinions, especially when they
are not responsible for the outcome of events should their advice and guidance be
adapted. Anyway:
Pea-ism. When dealing with the opinionated and/or egotistical, always give
credit where it is not due.
A TALE OF TWO ACQUISITIONS

Page 39
Great Western had made its first acquisition in June, 1985. It was a $10,000,000
deal and we had gotten our feet wet and learned a lot in the process.
Looking back to September 1982, Great Western did a 10,000 joint venture in
New York City to get its first drilling fund on the street. Thirty-three months later,
we made a $10,000,000 oil and gas acquisition from a Fortune 400 conglomerate.
As I will elaborate on later in this manual, were we ready to deal with a major
conglomerate? No! Were we comfortable with ourselves and the situation? Damn
right! It is the comfortability of the entrepreneur that is important, not his
readiness!
I would now like to turn to the next two acquisitions Great Western would make.
They are excellent illustrations of the process of building a company through the
external growth mode. The next two sections of this manual describe how to
assess the need for and then go after
assets, financials, diversification, people, capabilities and opportunities. They also

illustrate hyper growth at its finest.
Page 40
SECTION 8
ACQUISITION #1: HUMAN RESOURCES VS. PHYSICAL RESOURCES
BACKGROUND
The oil & gas industry in the U.S. was in the state of a serious recession. In
September, 1985 the spot price of oil stood at $28.00 a barrel; one year later it
would fall to $14.25, having dipped to $8.00 in the summer of 1986.
A lot of companies in the U.S. would dimply implode upon themselves, victims of
their debt loads. They had borrowed heavily for exploration projects and
expansion.
But remember banks and advisors were right behind these companies collecting
fees and telling them it was okay! Bad wells drove up finding costs, and
contraction in the industry caused prices to tumble. They could no longer stay the
course; there was no more money to fund operations, let alone exploration,
because for every company going down the toilet a bank had okayed the deals
would follow in the same flush.
Great Western Resources had not one penny of long term debt on its balance
sheet. Our finding costs were 23% below the industry average, and our lifting
costs were half of those of the average new field in the North Sea.
I was proud of our numbers and our performance to date, but we had to move
ahead quickly.
Page 41
THE STRATEGY
My strategy for the growth at GWR at this time had four major points:
-
We were not going to spend any more time on limited partnerships,

drilling funds, or tax shelters. We would concentrate on the core business
area of oil & gas exploration and drilling. We were going to get very
focused.
We were not going to spend any time analysing our financial data to see if
the actual rates of return were equal to or greater than the ones we had
estimated and disclosed in the prospectus.
Nobody cared, least of all me. The ultimate share price was the single criteria
by which the company would be judged.
- We were going to get our advisors to help us in a way which they were not
accustomed: They were going to learn how to sweat along with us; they
were going to learn how to invest in the future or GWR.
-
I decreed that we were not going to participate in the energy recession. It

was that simple: we were not going to participate!
I knew that what we were about to do was not going to be easy. It was going
to take an enormous investment in time and resources. It would take a heavy
toll on everybody, both professionally and personally. There would be
casualties, but it just had to be that way.
I had my dream. I wanted the next success. My dreams were becoming
realities. I was focused. I had to be focused because
Pea-ism. To succeed at anything, one must be focused to the exclusion of

family, friends, God and country but not necessarily in that order.
THE ASSESSMENT
I knew after our first acquisition in June, 1985 that we had to bring the
technical aspects of our business in-house. Here we were, in early 1986,
supposedly a big-time oil & gas exploration company, and we only had one
person in the company with the words petroleum engineer on his resume.
Up to this point in time we had used contract people to analyze the geological
aspects of our acquisition candidates. Contract labor makes sense up to a
point, but a good cost/benefit analysis should tell you when its time to change
operating modes. The contract people seemed to be around more than our own
employees. It was time.
Page 42
So, for purposes of our first major acquisition, assets and financials were
secondary to the need for facilities and capabilities.
THE TARGET
Company #1 would give us the necessary in-house technical capabilities, plus
other key people to man important operations, support and staff functions. The
company had a good reputation and some of the best people in the industry. In
addition to the capabilities, we would also acquire corporate and field office
facilities.
Company #1 would give us everything we were looking for at this time in our
growth program: good properties with producing wells and good reserves;
good people; good office space; and good operations capabilities.
But as far as I was concerned, all of these were incidental to what I really
wanted from this acquisition. I had a laser beam of focus at Company #1.
What I wanted you couldnt put on a balance sheet or cram down a well shaft.
The very senior management of GWR was lacking in one respect. We had a
solid base in operations and finance, but were weak in exploration and
business development.
The head of Company #1 had a real sense for exploration, but his strongest
suit was business development. He was one of the best I ever saw at sniffing
out deals. This ability, plus his natural abilities as a salesman, would serve
Great Western well in the years to come.
After the acquisition, I, as CEO, had three executive vice presidents reporting
directly to me: one each for finance, operations, and exploration.
THE DEAL
The deal for Company #1 was worth $56 million and had three major
elements to it.
$11 million was for the company which was comprised of the CEO
(who would become my EVP of Exploration) and his petroleum
engineers, geologists and landmen; oil & gas interests in Texas, New
Mexico, Wyoming and Colorado; a drilling subsidiary; and 44,000
prospect acres for future development and exploration, many of
which had already been structured into prospects for sale on a
promoted basis to third parties.
Page 43
$27 million for certain properties which were comprised of oil & gas
interests in Texas owned in part by Company #1. We bought out
these interests and the interests of the other partners as part of the
deal.
$18 million was to be retained by GWR for future operations.
Let me elaborate a little on this third element. I always made sure that we drug
a little idle cash out of all of our deals. This was somehow viewed by most
financial institutions as unholy and normally irritated them to no end. And,
of course, I was always told, You cant do that!
It was if we had made grand errors in our due diligence, but always managed
to err on the right side. Nothing could have been further from the truth. We
always put that extra cash to good use, and the eventual beneficiaries were
always the stockholders, including the financial institutions. For example, we
earmarked a lot of that cash to buy back our own stock, which always turned
out to be a good investment decision.
THE FINANCING
There are basically two parts to a transaction like this: First, the buyer and
seller (S) need to negotiate the price; and second, the buyer has got to come up
with the money, or make alternate financial arrangements, or some
combination of the two.
We covered the three primary sources of funds for a corporation in a previous
section. They are retained earnings, debt and equity. Great Western was doing
alright financially as a result of its operations, but we had nowhere near the
retained earnings to even remotely consider them as a source of capital for the
Company #1 acquisition.
We were in the middle of an energy recession and banks werent exactly
disposed to loan money. This was alright with me because it was one of my
personal objectives to keep any form of long term debt off of our balance
sheet as long as it was practical to do so. That left a new equity offering as the
remaining source of capital.
At the time, we were authorized 32,500,000 common shares of which
approximately 25,000,000 were already issued and outstanding. That left
about 7,500,000 shares available to raise $56 million at a time when our
shares werent doing too well because of the energy recession. Obviously, it
wouldnt stretch, which was again alright with me because I didnt want to
dilute the ownership of GWR any further.
We needed a new equity vehicle. But I wanted something different this time. I
convened a series of meetings with our financial advisors and instructed them
Page 44
to construct an equity offering which satisfied four criteria:

1. It was sufficient to raise the needed $56 million.
2. It would not change the current ownership profile of the company.
3. It would not dilute the current ownership of the company.
4. It was not tied to current market conditions, but rather to expectations and
increased risk assumptions.
In the end, we, not the financial advisors, came up with an equity vehicle
which met all of my stated criteria. It was a new approach, at least for Great
Western. The new equity offering would come in the form of 40.5 million
participating preference (PP) shares with the following characteristics:
1. The PP shares would be made available to investors through a rights
issue for 8 PP shares for every 5 common shares currently held.
2. The PP shares were redeemable and convertible to common shares for a
period of ten years.
3. The PP shares had no voting rights.
4. The PP shares were entitled to a 30% dividend of the companys profits
available for distribution of dividends.
BEHIND THE SCENES
In retrospect, business deals always seem so neat and tidy, so perfect, so easy,
so matter-of-fact. After you do enough of them, you begin to wonder why you
simply couldnt see the eventual outcome at the onset. The reason is because
the glamour of these things becomes visible only in hindsight; in real time
there is only drudgery.
Business deals are the culmination of the collective efforts of a great many
different people. There are accountants, lawyers, engineers, investment
bankers and related functions, stockbrokers and related functions, and all of
the in-house organizations of both parties to the transaction.
You analyze, re-analyze, and analyze again; you evaluate the parameters of
the deal over and over again; you game and predict and postulate and
prognosticate and estimate and theorize until you wish that someone would
put you out of your misery. And you do all of these things, mind you, while
Page 45
managing all of the aspects of the business base that you already own!
But the necessary result of these efforts is limited to facts and figures, data and
information. Dispassionate statistics. But, believe me, all of those are not near
enough.
Pea-ism. Business deals start and end with people: the interaction of
flesh and blood, bone and sinew, mind and emotion, heart and soul.
THE FINAL ANALYSIS

Every business deal is a win-win situation. Each party thinks they got the
better of the other party, even in the face of a personal defeat. It has to be this
way, or there would never be a handshake.
What kind of person would accept a deal (unless under duress) wherein he
truly thought he was getting the short end of the stick. Great Westerns
acquisition of Company #1 was a good deal for all elements of both parties:
1.
Great Western picked up the resources it needed to position itself for

future growth while increasing its assets by 330% (hyper growth!) to $81
million at the close of its fiscal year in September, 1986.
2. My two partners and I got twice the market price for our 2.2 million shares
that we sold to the CEO of Company #1 as part of the deal.
3. The CEO and majority shareholder of Company #1 got $7 million in cash
for his company, 2.5 million shares in a company which he knew had no
limit to its potential, and an executive vice presidency from which he
would have a direct hand in helping the company to realize its potential.
4. The market got the rights to 40.5 million PP shares offering a 25% return
over three years under the assumption that it was GWRs plan to redeem
the shares in that period of time.
This was a win-win deal. But as it so often happens, the ink on the papers
signed in February 1986 for the Company #1 acquisition was hardly dry
before Great Western would be overcome by events that would take it in a
new direction.
Page 46
SECTION 9
ACQUISITION #2:
DIVERSIFICATION AND THE QUANTUM LEAP
BACKGROUND
The recession in the oil and gas industry was worsening by the day. There was
a serious over-supply on the world markets; production had to be curtailed and
prices became volatile.
Everything was going the wrong way: the price of oil, the GWRI share price,
and even the $/ exchange rate. This is what we had to look at during the first
six months of 1986:
Oil Spot
Price
GWR Share
Price
Exch. Rate
$/
Page 47
January
$28.00
120p
1.4355
February
$25.00
50p
1.4715
March
18.75
60p
1.4850
April
$15.00
42p
1.5595
May
$13.25
40p
1.5440
June
$14.00
58p
1.5185
Great Western had dropped from a high of 3.00 or $3.50 in December 1984
to near 50 pence, to about $0.80 in late June 1986.
THE STRATEGY
HEY, DAN Pena. Whats wrong with you anyway. You cant continue to
build the fastest growing natural resources company in the world during
the worst recession in the energy business in the last fifty years!
Companies in this industry are dropping like flies. Its almost impossible
just to hold on, and you want to expand! You cant do that!
***************************************************************
It was still my firm belief that the company should continue to grow through
acquisitions (external mode) vis--vis exploration (internal mode). And
although neither the Great Western management and board nor our outside
advisors disagreed with that approach in the abstract, they all thought that
GWR should align itself with the conventional wisdom in force at the time.
The conventional wisdom was dictating that companies in the oil and gas
industry should retrench: hold on with both hands, bear down on your
abdomen, clench your teeth, and pray that somehow you might come out of
the recession with enough to start over.
That was the conventional wisdom, but it wasnt the obvious thing to do.
Pea-ism. You always need to reason to overlook that which is obvious.
The obvious thing to do was to go after acquisitions because there was

financing around for the right deal; because nobody wanted to expand, or
explore, or do anything else but hide under the boardroom table.
The reason for overlooking the obvious course of action was the recession: we
Page 48
cant go after acquisitions because of the recession. That was fine for
everybody else, but not for Great Western.
So if you found the right acquisition and believed in it, and more importantly
sold it with enthusiasm, you could get it financed.
We looked at a lot of deals after the Companys #1 acquisition and had a few
in the preliminary discussion phase. Although we had looked at a lot of deals,
nothing tickled my fancy.
I wanted a big acquisition; I wanted a quantum leap.
I wanted a minnow-swallows-whale type of combination.
I wanted something that would put Great Western on the front pages of the
international energy business press.
And then it came to be, out of the blue, so to speak.
THE OPPORTUNITY
Hey, Dan Pea. Whats wrong with you anyway. So now you want to buy a
coal company! A big coal company! Where is your experience base to
convince the coal people that you can perform.
They wont give you any consideration as a legitimate buyer. Youre an
unknown in the coal business. You cant acquire a major coal company. You
cant do that!
Its funny how major events sometime happen when you least expect them. In
the late summer of 1986, our CFO was on airplane headed back to Houston
from Denver. He struck up a conversation with his seat mate, an executive
with a huge conglomerate in the energy business.
The guy mentioned that he was working on a project to acquire the assets of a
company, Company #2, which had interest in a number of coal mines and
some oil and gas properties. Because its banks were squeezing it severely,
Company #2 had to liquidate its assets to pay down its debt load.
We knew of Company #2 and we knew of the energy conglomerate. As soon
as our CFO got back, we got the principles around the table and started
kicking around ideas and postulating a few strategies. During these initial
Page 49
session, our EVP of Exploration fought the idea because it wasnt his, and
then later on, for other reasons.
It didnt matter to me because I knew we needed an acquisition badly. And I
Knew, instinctively, this was it!
These were late night sessions a lot of them because we were busy during
the normal working hours running the business interest we already had! These
sessions normally didnt start until 6:00 in the evening and lasted at least until
midnight. We would arrive home in time to get a few hours of sleep only to
get up the next morning at 5:00 am and start all over again. We didnt have
much time: the Company #2 deal had to be finished by the end of December
and it was late October 1986.
If Company #2 was going to sell off its assets, then we wanted its oil and gas
interest. This was hardly going to be a fire sale, but there were going to be
some good values out there. We set up a meeting with the energy
conglomerate and told them that we wanted to go in on the original deal; we
would acquire the oil and gas interests.
To our disappointment, they told us point blank that if we were interested in
Company #2s oil and gas, then they would consider such an interest, but only
after they had acquired everything. It was a smart plan on their part, and one
which I myself would have wanted. Why let a smaller company reap the
benefits accruing from the a larger acquisition? Why not sell a part off your
own investment in short order and make a quick profit. Good business sense.
THE DILEMMA
My disappointment at not being invited to participate in the acquisition of
Company #2 was short lived. I saw the rejection as an opportunity, but it
placed me on the horns of a dilemma.
I believed that Great Western should go after all of Company # 2: oil and gas,
coal operations, everything. It was time to diversify, but something kept
nagging at me.
Pea-ism. Stick to your knitting. To maximize the return on invested

capital, deploy your assets, resources and capabilities in those areas
where in lie your expertise and experience.
I had learned this lesson the hard way.

Page 50
As I noted earlier, before starting Great Western, I ran a vertically integrated

company in the energy business. We were in exploration, drilling, refining,
marketing, and gathering distribution of oil and gas. For whatever reason, we
got into some business interests far afield from what we knew and it was
disastrous.
I thought a lot about that experience as I now considered this acquisition
which, while not a marked departure from our core business areas, represented
a significant diversification.
THE TARGET
Company #2 was a major subsidiary of a multi-billion dollar natural resources
company operating in Canada, the United States, and elsewhere.
There were four elements to the deal: 1) the coal mines; 2) the oil and gas
interest of Company #2; 3) other interests in oil and gas properties in various
states; and 4) the coal miners and coal operations.
The biggest part (about 74% of the deal was the coal mining operations.
Company #2 and the operations company both had capable and experienced
management teams. Additionally, 95% of everything that came out of the
ground was sold to major public utilities in the southeastern United States
under long term contracts, the earliest expiring in 1995.
Notwithstanding the obvious strength of the coal operations, our EVP of
Exploration now decided he liked the oil and gas assets. He now had
convinced himself that he found the deal.
He did everything humanly possible to dissuade me from considering the coal
assets because they would easily dwarf the entire combined oil and gas
operations. But again, I knew this was what Great Western needed. My
instincts told me so.
The acquisition of Company #2 would enable us to meet two major business
objectives: 1) provide the quantum leap vehicle to implement out strategy of
corporate growth via external acquisitions vis--vis internal exploration; and
2) spread our business base over something besides oil and gas, thereby
mitigating some of the financial performance risk of Great Western currently
being occasioned by the energy recession.
The oil and gas interests were an added bonus because they had already met
our strict acquisition criteria for oil and gas; after all, at one time we were
content to take these as part of the original acquisition of Company #2 by the
Page 51
energy conglomerate.
So how did I finally resolve the dilemma? I decided to proceed with the
acquisition on the strengths of another standard of mine:
Pea-ism. Dream big; think big; Be Big!
THE NEGOTIATIONS
Even though Company #2 was under enormous pressure to liquidate, they had
grave reservations about continuing a dialogue with us on any level.
Since we had absolutely zero experience in the coal industry, they were
hesitant to turn the operation over to somebody who might jeopardize the jobs
and security of 900 employees. Additionally, the public utilities in the
southeast might get nervous about the reliability of future coal deliveries.
And, finally, they were very skeptical that we could put together the financing
for the deal and, therefore, didnt want to waste time with somebody who, in
their assessment, couldnt come through by the end of December.
As this juncture of the Great Western Resources story, it is very important to
understand that this $150 million deal wasnt just our largest deal it was
much more than that!
If we failed, in my judgement, GWR may have never done a big, big deal.
And as it turned out, it was our first and last big , big deal while I was there.
You look and work at a lot of deals before you consummate one. Everyone
knows that. But from time to time a deal has to get done not for the
economics. The deal has to get done for the moral and life-blood of a growing
company.
When a growing company has been in the hunt and has highly-trained and
capable gladiators, everyone on the team wants to do deals. Everyone wants to
be tested. Everyone wants to prove how good they really are.
This deal became a must for intangible reasons. I was concerned that our
fighting machine would react poorly to being handed a defeat on a deal where
we had worked so hard. It was like some prize fighters never come back for
their first defeat. This was such a deal to GWR. I knew intuitively that this
was a life or death situation for the company. I didnt know why, I just knew!
And I didnt know that Charlie Soladay would die less than a month later.
Oh, God, I just knew that this deal was critically important! I knew that GWR
was at the plate, it was the bottom of the ninth, and the count was 3-and-2. I
Page 52
still get chills and a lump in my throat

thinking about it. In those glorious days I was breathing through every orifice
in my body. It was easy for me to keep everybody pumped up!
I had sent Charlie to New York City to secure the bridge financing. I told him
not to return without it. I told him this was life or death. He went to New
York, stayed ten days, and worked all day and all night at the banks and the
old line brokerage firm that were our finalists in the race to finance our deal.
In the final hours of the time allotted, Charlie got us the financing.
He paid $250,00 to the bank and $500,000 to the brokerage firm just to look at
the deal. The money was not refundable but was part of the overall fee if they
went ahead and financed it.
Now this might sound the exact opposite of what I profess about contingency
fees. But the bottom line is you do what you have to do! And I knew I would
close the deal or die trying!
Just imagine how the two financial institutions felt about our level of
confidence! They said, This must be a good deal or these guys wouldnt be
so sure of themselves. $750,000 is a lot of money to this company (which was
one of the great understatement of the 80s). We better take a good look at this
coal deal. We might be missing a great fee! And think of the potential of even
greater fees later on!
All Charlie did was act as if he had no limits to his abilities. He told them they
had ten days, or we were going to the UK bank that owned our UK brokerage
firm.
There was no back-up. The UK bank had already turned us down!
From that time forward, even after Charlies death, we would refer to him as
Charlie Big or C.B. He came, he saw, he conquered!
The rest of acquisition #2 didnt go that well. The head of our Exploration and
Production department was continuing to sabotage the deal. The big energy
company that originally brought the deal to our attention was threatening a
lawsuit and the acquisition candidates Canadian parent was telling us to get
lost!
Meanwhile, our largest middle-eastern shareholder was refusing to go along
with the deal because they didnt want their name disclosed in the documents.
And our own U.K. stockbrokers were
Page 53
undergoing major changes in their senior personnel, particularly those people

responsible for our deal.
As all these machinations were taking place, Mark Harrison was negotiating
with the Canadian parent in Los Angeles determined to close the deal before
December 31, 1986.
While I was in London getting our stock brokerage firm to guarantee the deal,
I was also trying to get our largest shareholder to not only consent to
disclosing their name but to also sub-guarantee the deal. You see, the
Canadians wanted, in addition to bank bridge financing, the entire transaction
guaranteed by both our largest shareholder (a sovereign government) and our
stock brokerage firm, which was owned by one of the largest banks in
England.
Well, I got the guarantees in the U.K.; Charlie got the financing in New York
City; and the negotiating was left to Mark Harrison in Los Angeles. Why Los
Angeles? Because Harrisons wife was expecting a child and wouldnt permit
mark to leave home even though the logical place was New York City! And
it ultimately was!
In the U.K. during a GWR board meeting finalizing and approving the deal we
thought would be signed later that day in Los Angles, we received a panic call
from Mark. Dan, theyve left! They just got up and left! Theyre going to the
airport! Theyre gone! Dont you understand, they arent coming back! The
deal is dead!
Panic broke out at the board meeting. Everyone looked like they saw a ghost.
The outside professionals saw their previous fees going down the toilet. The
individual board members started to distance themselves from the deal. More
than one said. I knew he (Dan) could never get it done! And I knew he
shouldnt have let Mark handle such a sensitive issue. Why L.A.? etc. etc.,
etc.
I screamed for everyone to shut the -#*#%* up! Suck up your panty hose! It
aint over till this fat lady sings! This meeting is temporarily adjourned! Im
going back to the states to resurrect this
-#*#%* !!!
I went to the nearest phone and called the guarantors, who I had just
convinced to back the deal, to tell them the deal had temporarily died. But I
was flying to the U.S. to breath life back
into it. I jumped on a Concord and was at my lawyers office that afternoon.
Page 54
We started one of the greatest offensive attacks of the 80s: injunctions,

motions, and filings in New York, California and Canada. I threatened suits
against every single board member of the Canadian parent. I probably spent
$100,000 in 48 hours. I was like a psycho splashing, biting and cutting.
I made more important and powerful decisions in those 48 hours than I had in
the 2-1/2 years since we went public.
Hour after hour I just kept locking and loading, locking and loading. I felt like
it was the TeT Offensive all over again. The deal was disintegrating right
before my very eyes. Some of my staff were buckling under pressure for the
very first time.
The reasons for not doing the deal became almost insurmountable. Our largest
shareholders felt they had lost face; then it was a foreign tax issue; then the
Canadians cut a special deal with their lead bank; then the Canadian
government had to approve the deal; Mark wasnt talking to me; the head of
Exploration & Production said he knew it would never happen; the energy
conglomerate that we beat out for the deal was again back in our face; our
auditors changed their minds on their computation of our real taxable income
before and after the acquisition, thus changing the RoR. (Rate of Return).
And finally there was a nervous calm that befell the deal. That eerie stillness
that you feel in a cemetery after dark. And when the smoke cleared, I had
threatened, beat, kicked, and propelled the Canadian giant back to the
negotiating table!
I would have one more shot at the deal the deal of GWRs lifetime. One shot
at glory, I thought. One chance at immortality.
If I could just close this deal I could die a happy man knowing I had tasted the
blood of a giant at least once!
Six days had passed since everyone thought the deal had died. The Canadians,
advisors, and the GWR team would meet altogether in one room as I had
demanded.
Ive been called the most controversial American to set foot in The City
during the 80s partially because of what I said at the beginning of this
three-day marathon live-or-die meeting. I said, We are here to either breathe
life back into this amorphous or
crush it out of existence. We will not leave this room until one or the other has
occurred.
And so we did. I stood at the end of a 40 conference table surrounded by
Charlie and a host of our advisors. I alone spoke for GWR and the others
sides U.S. subsidiary board of directors spoke for them.
Again, in those three days I made more million, and ten million, dollar
Page 55
decisions than I had ever done before.

Was I ready? No! Did I have the experience? No! Was I comfortable knowing
GWRs life hung in the balance? Yes! Was I comfortable that I would be
judged in the future by the many decisions I was making during that meeting?
Yes, because I knew I would do the very best I could and I couldnt expect
any better!
Could I have made better decisions? I dont know! I never looked back! Being
an entrepreneur is only looking forward.
Seventy-two hours and two fist fights later, we concluded the negotiations and
consummated the deal.
This was, without a doubt, the bloodiest and toughest proceeding in which I
have ever participated. It was a hellish nightmare. No one is ever ready for
that kind of gut-wrenching experience. No amount of deals or transactions
afford you the true grit to carry on like that.
What made it even better was it was my GWR. I wasnt a dispassionate
investment banker. I was an entrepreneur, just like you, that had his back
against the wall and knew it was do or die!
It ultimately involved negotiations in London, Los Angeles and New York. It
involved negotiations at all levels of all organizations participating. It was
conducted on both a personal and professional plane. It ended with both
personal and professional failure and triumph. But it was over and done by the
end of December, 1986, and Great Western Resources Inc. was in the big
leagues!
As they say on The Wide World of Sports. It is the thrill of victory and
agony of defeat.
Oh God, how others should envy you that have the true passion of being a real
suck-up-your-pantyhose entrepreneur. There is
something very special about being responsible for yourself and beholding to
no one.
THE FINANCING
In November, 1986 our balance sheet still had not one dollar of long term
debt on it. But I knew the Company #2 deal was going to be in the $150
million range, and there was no way in hell we could raise all of that through
an equity issue. If I wanted Company #2, I would have to finance about half of
the acquisition through debt.
Page 56
After much consultation with our advisors, we put together a three-point

financing plan to fund the acquisition.
Dont forget, Company #2 had serious reservations; we put together a threepoint financing plan to fund the acquisition.
Dont forget, Company #2 had serious reservations about our credibility as a
legitimate buyer. That pressure, plus trying to hold together all three parts of
the financing, was a lot to handle. The three parts were as follows:
1, A short term bridge loan from a major U.S. bank.
2. Bonds secured on the coal assets of Company #2. One of the oldest firms on
Wall Street agreed to underwrite and/or place the bonds, contingent, of course,
on our ability to put together the rest of the deal. The investment banking firm
felt confident that they could sign up to as much as $85 million, and that the
bonds could be issued in early 1987.
3. Nothing succeeds like success, and we went back to our trusted financial
advisors in the U.K. for help with the equity end of the financing. It was
agreed that we would use another participating preference share vehicle,
identical to the one we had used for the Company #1 acquisition (non-voting,
with provision for redemption and conversion to common shares).
We needed about another $85 million, and the merchant bankers agreed to
underwrite and/or place 55,000,000 new preference shares at 110p (about
$1.58).
Our largest shareholder tentatively agreed to be the underwriter. The new
shares, Series B, would be entitled to a participating
preferential dividend of 50% of net profits available for distribution. And, of

course, the merchant bankers and the large shareholders agreements were
contingent on everybody else becoming a player.
So here I was, standing on top of this consortium-in-principal, trying to get the
members locked in place while each of them eyed the others and me- making
sure that when we took a step in any direction, we took that step in perfect unison.
It was like trying to maintain your balance with each foot on a rotating log while
shooting river rapids. Each piece of the financing deal had to fit with the others,
and if one piece changed, the others changed with it.
But none of the pieces changed and everything held together. Just another day in
the life of the entrepreneur and the senior executive.
THE FINAL ANALYSIS
Page 57
We paid $116 million for Company #2s coal operations and $25 million for their
oil and gas interests. The other oil and gas interest cost us $7 million.
We raised a total of $168 million in cash: the bank provided $85 million in short
term loans; the Wall Street firm agreed to underwrite the bonds with which we
would later retire the short term debt.
Another $63 million came from the Series B preference shares and our big
shareholder took the whole deal.
GWR kept $20 million for future projects.
At the interim report to the shareholders in March, 1987, GWR would proudly
display total assets of $272 million, up $191 million (hyper growth!) from the
previous fiscal close of $81 million.
My dream, for the most part, had come true. But with success came new
opportunities and problems.
SECTION 10
THE DARK SIDE OF EQUITY FINANCING
THE TRANSITION
After the Company #2 acquisition in December 1986, we were all tired. The
adrenalin pumps had been working at maximum since 1984 and they needed some
down time for preventive maintenance. We wanted to regroup, step back, take
inventory of what we had, and decide how we were going to manage our assets.
We decided to table from further consideration any and all future major
acquisition candidates. Little did we know that Company #2 would be the last
major acquisition for Great Western, ever.
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For the next couple of years the capital structure of the company and our one
major shareholder would occupy most of our time, energy, and resources.
We watched the financial side of our corporation very closely during 1987. As
prudent managers, we always cast an eye toward the direction of our balance
sheet and stock price, but during this time period we were paying an extra
measure of attention.
We were concerned about two things: Number one, our major shareholder owned
such a significant portion of our participating preference (PP) share capital that it
made the stock unattractive to investors. The vast majority, but not all, of our
common shares were owned by institutions and I spent an inordinate amount of
time with them directly and indirectly through our financial advisors assuring
them of our plan to deal with the issue in the near term.
The second problem, separate from but related to the PP shares ownership issue,
was the market value of the GWR common shares. We were convinced that they
were trading well below the value of the underlying assets, and as such, made us a
prime target for a takeover. One of the steps we took throughout the year was to
buy back and cancel (retire) shares of our stock.
Actually, it didnt take a genius to make money in GWR stock during this time
period. There were hints that the energy recession might be over when the West
Texas Intermediate spot price went from $12.25 in August, 1986, to $20.00 a year
later. It would dip back to the $15.00 range in 1988 and then level off to around
$18.50 in 1989 and stay there until it would hit $38.25 in October, 1990, two
months after Saddam Hussein invaded Kuwait.
Additionally, during 1987 and 1988 the pound sterling would grow increasingly
stronger against the dollar, maintaining an exchange rate of approximately $1.80
to the pound sterling during the period before heading back down to the $1.60
range in 1989.
And finally, two research reports came out with strong buy recommendations
on GWR common shares. Both recommendations came from prestigious
brokerage firms.
But here I was, back in the saddle again with a myriad of problems and decisions
facing me. There were real tough times ahead, and there was the funding problem
on the Company #2 acquisition that needed immediate attention.
THE FUNDING PROBLEM
We had to clear up a financing problem on the Company #2 acquisition. As you
will recall, the $85 million bridge loan from the bank was going to be replaced
with the issuance of bonds secured on the coal assets then being acquired. The
Wall Street firm was going to underwrite or place the bonds in early 1987.
When discussions commenced on the detailed terms and conditions of the bonds,
Page 59
an insurance consortium, the potential placee, took a number of hard positions on

some of the covenants they wanted attached to the bonds. Acceptance of these
provisions would have placed severe financial and operational restrictions on
Great Western with respect to our newly acquired coal assets.
Negotiations will normally produce a position acceptable to both parties and you
can eventually shake hands and go on with business. In this case, the consortium
would not relent; they continued to make us an offer we could not accept. We had
to find another way, even though the deadline for taking out the bridge loan had
come and gone.
We initially went to the premier old-line brokerage house who we paid the
$500,000 to back in December and who put together the insurance consortium.
They merely told us the market conditions had changed; that they would like to do
business with us again someday; and that GWR, not them, had a problem.
THE DARK SIDE OF EQUITY FINANCING

To grow Great Western, I had to swallow hard on some financial arrangements. In
the early days, I, and I alone, was the financial guarantor for Great Western.
I detested debt, but to get the brass ring I considered Company #2 to be, we were
more or less forced to use that vehicle. The only thing I disliked more than debt
was dilution of ownership, especially ownership having entitlement to vote. And
at this juncture, I had 44% of the only voting shares.
Up to this point, we had successfully postponed the voting problem through the
issuance of the preference shares. Preference shares didnt have a vote, at least not
now. But upon redemption and conversion to common shares, they would have a
vote.
In this respect, the then current capital structure of the company was a dream; the
preference shares holders gave us tons of money, but they couldnt tell us how to
spend it.
The dark side of this arrangement was the fact that nearly all of the preference
shares were held by one major shareholder and this fact severely limited the
marketability of not only those shares, but it also made our common shares
unattractive.
The problem was clear. I needed to do three things:
A NEW PLAN
1. I had to minimize the dilution of my own voting rights accruing from
Page 60
ownership of the common shares.

.
2. I had to decrease the ownership of our PP share capital by the major
shareholder as a means of making Great Western a more attractive investment to
both institutional and individual investors.
3. I had to get the marketability of the common shares increased as a means of
getting the common share price to a level of threat approximating the value of the
underlying assets.
All three of these issues were intertwined and very complicated. I developed a
two-phase plan.
PLAN PHASE I
Phase I would be implemented as part of the resolution of the Company #2
acquisition funding problem. The Phase I package had four components:
1. 6% Convertible Loan Notes expected to raise approximately $60 million, net of
expenses. The loan notes would be convertible to common shares from 1991 to
2002 at a conversion rate of 50 common shares for every 100 pound sterling of
loan notes held. So that existing shareholders could maintain their percentage
interests in the company, the convertible loan note issue would be by way of
rights to the existing shareholders.
There was a separate conversion rate for Common Shares, Series A Preference
Shares, and Series B Preference Shares reflecting the contribution of each equity
class to the total share capital. Interest on the loan notes was payable semiannually at a fixed rate of 6% per annum.
2. A new $40 million facility with the bank to pay off existing loans of the coal
subsidiary and provide an additional source of working capital for GWR.
3. Conversion of the existing preference shares to a new Class B common Share at
the proximate rate of 50 Class B shares for each 100 series A or Series B
preference shares. The new common shares would also be nonvoting, but would
receive a 15% dividend premium over the dividend declared on the existing
common shares.
The primary purpose of this conversion was to increase the marketability of the
shares. Additionally, this action would uncouple dividends from certain financial
transactions tied to the Convertible Loan Notes.
Page 61
Reclassification of the existing Common shares to Class A Common Shares and

an increase in the authorization from 32,500,000 shares to 55,000,000 shares, and
the creation of 60,000,000 Class B Common Shares.
OBJECTIVES OF THE PLAN
The obvious objective of Phase I was to raise funds to liquidate the short term,
now long term, bridge loan and to increase the marketability of the companys
shares.
The not-so-obvious objective was to begin the process of wrestling away from our
major shareholder their influence both current and projected on Great Western.
Going in, our major stockholder owned 3,519,369 common shares entitling them
under the rights issue to 1.9 million of Convertible Loan Notes. They also owned
95% of the Series A preference share and 99% of the Series B preferences shares,
entitling them to another 21.1 million of the Convertible Loan Notes for a total
of 23.0 million, 66% of the total (a year later they would own 34.9 million,
99%). Coming out, they would own 54.2 million Class B Common Shares, or
98% of the shares issued and outstanding.
It wasnt hard to convince our major stockholder to take up their rights to the
Convertible Loan Notes. It was simple math: Their 23 million (eventually 35
million) in Convertible Loan Notes equated to 17.5 million shares of potential
voting common stock which would raise their share from the current 15% to 51%
while lowering everybody elses. My ownership would go from 44% to 26%.
As for the Class B Common Shares, there was no real financing change involved
since the market capitalization value remained the same. We sold the whole idea
to the major shareholder on the increased marketability concept, and the fact that
an authorization level of 60,000,000 shares would give us some additional
flexibility. In return, they gave up their preference dividends and conversion
rights. It seemed like an even trade.
AN ASSESSMENT
The Convertible Loan Notes came out on December 1, 1987, the first big issue of
any kind for an American company following the October crash on the New York
and worldwide stock exchanges.
Of course, conventional wisdom said a major issue couldnt be done six weeks
after the crash! Dan, you cant do that!
Was this a good deal for all parties involved? Was there equity on all sides of the
transaction? Was this a win/win situation? I didnt know the answer to these
questions then, and I still dont know now.
Negotiations and their results cant be evaluated or analysed in absolute terms.
Everything is relative; everything is perception.
Page 62
Pea-ism. Each party to every negotiation has a comfort zone: the effective
negotiator is the one who can define the boundaries of the other partys zone
and place the deal at the boundary nearest to its own interests.
A NEW PROBLEM
None of the dealings with the various owners of Great Western would ever had
come about if collectively we didnt think that the company had the real
opportunity to be a giant in the natural resources industry. In December, 1987, we
had total assets of $227 million and a market capitalization of $216 million. But
there wasnt one person associated with Great Western who didnt believe that
values ten times were achievable.
We had taken care of the funding problem associated with the Company #2
acquisition and put in place Phase I of the plan to straighten out the GWR share
capital structure. These were major accomplishments, but there was no time to
count our accomplishments or savor our victories.
Pea-ism. Any problem solved will be replaced immediately by a larger,

more complicated one.
The new problem was simple. As we entered 1988, our major shareholder had
now put up 78% of the capital in return for 14% of the vote. In time, they could
increase the percentage of their voting shares. For a year we negotiated with our
major shareholder, trying to alleviate the share perceived share structure problem.
None of this helped our share price, and at that time, the performance of our
shares was down and I was seriously concerned about an unfriendly takeover.
But, as usual, I was the only one on both sides of the Atlantic that seemed to have
any concern about GWRs shares being grossly undervalued. The consensus was
since I owned 44% of the voting shares and our major shareholder had 14% of the
voting shares, we were safe from any unfriendly takeover.
I disagreed vehemently!
I said that since the largest shareholder had 98% of the non-voting shares, 78% of
the total fully-dilated capital, and had all the money in the world, they were a
potential problem.
If that wasnt bad enough, their non-voting shares were able to vote under certain
circumstances, one of which was during liquidation of GWRs assets after a
takeover!
Page 63
In January 1989 I called a meeting of all our U.S. and U.K. advisors. We met in
Houston, sequestered in a hotel for two days. Many of the attendees came under
duress because they thought it was a total waste of time.
My own vice-chairman scolded me for sending out invitations via the mail.
The meeting started by me standing at one end of a very long conference table and
putting my right hand over my left breast and said, The milk has been sweet
these past several years. I have helped many of you become partners in your
respective firms. I have helped make many of you rich! GWR and I have been
there when you needed to help individually! You have been part of the GWR
family.
Some of you have gotten fat and lazy making a lot of money for doing very little
compared to when GWR first got started. Yes, the milk has been sweet.
Notwithstanding what you think, I know someone, maybe our major shareholders,
who is going to make a hostile run at us.
At the present, we are not prepared. We do not have the necessary safeguards in
place. That is why I have asked you to be here. Before we leave here tomorrow,
we will have a definitive step-by-step game plan.
Actually Im looking out for your future fees and commissions. Because if
someone else got a hold of GWR and my team was thrown out, you know you
would all be history.
The rest of the meeting went especially well. By the end of the second day, GWR
and its advisors had their marching orders.
June 5, less than five months later, a Bahamas-based energy company, allegedly
backed by a sheik from our major shareholders government, bid for my shares at
a 60% premium to the current market price!
Without even a micro-second of hesitation, I said, Surrender? Hell, I havent

even begun to fight! We won the fight even though we were battling some deep,
deep pockets. We won because we had planned step-by-step for such an
occurrence.
Only as I write this seminar manual did I think of the minimum of $30 million I
left on the table that day. I made the right decision for GWR and myself. I
couldnt leave the company I created and the shareholders who had believed in
my dream until the share structure was in order.
I knew I had to get that restructuring accomplished now!
Page 64
As it turned out, this attempt to buy my shares increased the market value of
GWR by 60% It also made the job of initiating meaningful discussion with our
major shareholder somewhat less tense.
We both knew it was time to take care of the problem.
The statistics looked like this:
Number
Pct.
Our Major Shareholder

Common A Shares
Common B Shares
Convertible LN
3,519,369
52,992.423
34,934,753
14.67
98.01
99.80
Dan Pea
Common A Shares
Convertible LN
10,641,375
43,324
44.36
0.12
Board Members
Common A Shares
3,429,007
14.30
This arrangement could no longer stand. It was time for Phase II of my plan.
PLAN PHASE II
Just for the sake of change, let me start with the resolution and conclusion of
Phase I of the plan and work backwards through the reasoning of the process. I
think the point I want to make will come across much clearer using that technique.
WHAT HAPPENED
When all was said and done, our major shareholder went from putting 78% of the
share capital for 14% of the vote to 29% of the share capital for 29% of the vote.
As they always do, the mathematics of these things make everything sound so
easy. But its never just the mathematics, not just the technicals, nor just the
financial analyses, not just the negotiations, not just behind-the-scenes actions that
make these things happen. Its everything in some proportion, such proportion
being different on each and every deal.
The bottom line was that our major stockholder had given up assets their
investment in Great Western cheaply. At least that was the conventional wisdom
at the time.
Page 65
When the deal was done and the prospectus issued, I believe that the restructure
was, in fact, a draw, a true win/win situation, at least in theory.
At the conclusion of negotiations, when the deal is struck, and both parties shake
hands, there exists, by definition, a win/win situation. There has been value given
for value received. There is equity; neither side of the table has been
disadvantaged; each party is satisfied; each party has found a position that it can
accept.
In the share capital restructure all of the criteria had been met: there were two
parties, each free to bargain; both were informed; both were wiling.
VALUE THE COMPANY
After conversion of the Class B Common Shares to the New Common shares on a
7 for 6 basis (the original proposal before us), our major shareholder would have
owned 70% of the voting stock. But what good would it have done them?
Nothing! They would have had 70% of a company on the verge of going out of
business. There would be no market for the stock. There would be no pool of
equity funds available to them in the future.
They needed to reduce their ownership; they needed to get money out of the
capital structure of the company. They agreed to place 27,849,118 shares with an
investment banking firm, taking their voting ownership down to 29.99%, and they
agree to place those shares at 164p when the stock was trading at 193p.
The net asset value of the company at the time (net asset value being defined
simply as the projected cash flow from the existing coal contracts, plus the
commercial value of the oil and gas reserves less debt) was round 227p. Our
major shareholder agreed to a 30% discount on the net asset value. Why? Because
they were stupid? I dont think so.
I think they thought at the time that 164p was probably more than enough
consideration for their desire to achieve a greater balance in their equity
contribution and voting rights, and to increase the marketability of the shares.
As it turned out, they were correct on both counts: the stock price zoomed up to
220p as soon as trading resumed, and they now had a 29%/29% parity in share
capital contributed and voting shares.
THE FINAL SHAKEOUT
Regardless of the assessment of who won or who lost or was it a draw, it was
over. The share capital structure ws now cleaned up. This is how the Common
Shares distribution looked as we faced the decade of the 1990s:
Share
Pct.
Page 66
Our Major Shareholder

Dan Pea
Board Members
GWR Profit Sharing Plan
All Others
21,092,327
10,641,375
3,429,007
751,250
34,417,241
29.99
15.13
4.88
1.07
48.93
NEW CHALLENGES
I was ready to go. We had entered into a joint venture with another major oil
company and the project was doing well. We all thought that more joint ventures
of this type were needed. We were having great success in the Gulf of Mexico. Of
eleven offshore wells drilled or completed, nine had resulted in the discovery of
commercial quantities of oil and gas.
In August/September of 1990, the combination of the common shares, the market
price of the shares, and the dollar to pound sterling exchange would push Great
Westerns market capitalization over $400 million.
I liked it. And I would have liked it even if the cost basis in my 10 million-plus
shares of Great Western Resources Inc. wasnt still $0.000082 per share.
$820.00 used to go a long way in those days.
ONE FINAL DEAL
Hey, Dan Pea. Whats wrong with you anyway! You cant go back into the
market so soon. You just completed a restructure of the company. What
could you possibly have to offer now! You cant come back so soon. It wont
work. You cant do that!
I needed working capital to finance our current onshore and offshore drilling
programs. We needed the flexibility to also consider the acquisition of additional
oil and gas reserves. I needed to get to assets of $2-3 billion. We had a 2 for 7
rights issue at 190p (about $3.61) and raised about $70 million on the rights to the
new 20,220,324 common shares a short eight months after the restructuring.
In this particular You Cant Do That!. Incident, notwithstanding my previous
achievements against the conventional wisdom, virtually everyone associated
with GWR lined up against me again.
The company was moving in the direction I always knew it would move once we
got everything cleaned up. We had adopted a higher risk/higher payoff
exploration strategy. As the financials on the following September 30 year-end
schedule attest, my dreams were becoming realities:
Page 67
Total
Assets
($0000)
1987
1988
1989
1990
Net
Worth
227,209
236,103
229,573
302,562
Market
Share
Capital
Price
($0000)
($0000)
118,274
118,651
112,336
180,747
216,271
175,262
200,668
325,751
3.38
1.79
2.84
3.58
SECTION 11
QUALITATIVE VS. QUANTITATIVE ISSUES
PLANNING FOR THE UNPLANNABLE
In the previous sections, I described to you the decision process I used to build
Great Western into a $400 million company. That decision process had its
foundation in my YCDT philosophy and was implemented on a day-to-day basis
through operations extending from The Five Credos.
Ive also described how decisions, for the most part, are based on the factual data
that is the grist of grinding information and data in a decision model. Its a
continuous process of interpolation and extrapolation: projecting the unknown
from the known; planning for the plannable.
But what about planning for the unplannable? Is such a thing possible?
You carry insurance policies on key executives. You carry insurance on
inventories and fixed assets so you will have funds to replace or rebuild them in
the event of a catastrophic loss.
Page 68
But thats not what Im talking about. What I am talking about doesnt fall into a
statistical prediction model which can be used with any degree of confidence by
the businessman.
How would you plan for the raising of the Berlin Wall? Or the razing of the
Berlin Wall? Would you care? You would if you were in the business of
international trade.
How about Desert Storm? That probably put a damper on the companies doing
business there. Conversely, do you think there were any dollars in the forecasts of
those companies who cleaned up during the clean up in Kuwait after Desert
Storm? Hardly.
CLOSER TO HOME
How about natural disasters? As Im finishing this edition of this seminar manual,
we are trying to recover from Hurricane Andrew in Florida and Louisiana and
Hurricane Iniki in Hawaii. Great time to be in the tourism business on Kauai,
right? The resort owners are saying that even after everything is rebuilt, people
will still be so scared they may never come back.
Try and put that on your balance sheet. Send me the long term business forecast
model you developed to project business volume on Kauai. Id love to see it.
MY OWN BACKYARD
I didnt have to deal with the Berlin Wall or Hurricanes Andrew and Iniki. I did
have more than a passing interest in Desert Storm. Nonetheless, I, like every other
businessman ever born, had my own catastrophes and unforeseeable events to
deal with. Let me tell you about a few of them.
THE RAINS CAME
The production of the first seven wells of one of our first properties was less than
anticipated. No dry holes, just disappointing rates of production.
We kept hoping that the next well would be the one that would start us off on a
string of successes, but even getting to the next well was a frustration. For
whatever reason, it rained like crazy that year. There were bad floods all over,
especially in Laramie Country, Wyoming, where our property was located.
Things were not starting out well (no pun intended) at all. Mother Nature went on
a rampage and there wasnt one thing we could do about it. It rained and rained
and rained.
Page 69
We had just gone public and were anxious to prove ourselves and to build our
company. Mother Nature had other ideas; she would have her way and we would
do her bidding.
THE ODD COUPLE
There was one other aspect of the Company #2 acquisition that bears mentioning
here. Its another example of one of the things they dont teach you in graduate
school/ the financing for the acquisition came from two sources: Series B
Preference Shares and short term debt/bonds. Our major shareholder, a
Middleastern, took all of the preference shares; the Wall Street firm, which had a
Jewish cast, underwrote the bond issue.
What a combination, a real odd couple: Middleasterns and Jews in the same deal.
Of course, to make this arrangement work, intermediary relationships had to be
formed so that the members of these two groups didnt have to touch each
other. We got through it but it was just one more thing to deal with.
AN IRREPLACEABLE LOSS
As Ive already mentioned, in January, 1987, I lost my best friend. He also
happened to be my CFO, soon-to-be-appointed CEO. He died of a heart attack at
the age of 40.
I survived his death, as did Great Western. The timing of his death was all wrong.
We had just closed the Company #2 deal. We were just about to move into our
new corporate headquarters. We had done so much, so fast. We were ready to go
even further.
My CFO had been with me from the very beginning. He was as much a part of
Great Western as I was. It just seemed so wrong for him to be taken from us at
this time.
But there was another side to this story. A side that never gets discussed openly.
A side that can only come into play when organizations and chains of command
are involved.
Although no one ever said it to me directly, I knew that there were a number of
people, both business associates and personal friends, who believed in their hearts
that I killed my CFO. People who believed that I simply drove the man to his
death. People who believed that the IPO, the $10 million, and the Company #1
and #2 acquisitions, all in a span of a mere twenty-eight months, were too much
for any human being to survive. People who believed that no none could go from
$830 to $300,000,000 (at that time) and remain alive.
People who believed that the CEO of Great Western killed his CFO.
Page 70
Anyone who has ever been the CEO of a company goes to bed each night with the
same thought, the same fear, the same apprehension: Will by subordinates help
me make my dream come true? Will they support me in all matters? Will they
follow when I lead the charge? Will they gird their loins with the same resolve as
do I? Will they remain loyal in the face of temptation? Will they share my
obsession? Will they believe in me? Will they trust me? Will they believe in my
dream?
I was my CFOs superior, but I was also his friend. With the right person, you can
have this kind of relationship and make it work on both planes. I did.
We never thought any of us would die until we reached 100 years old. We never
planned for it. It just happened.
Page 71
SECTION 12
MANAGING EGOS
THE PERSONALITY PROBLEM
Before getting to my concluding remarks in the next, and last, section, I think its
important to at least touch on the subject of personalities. For the most part, I have
tried to keep the previous eleven sections free of any influences of the
personalities who may have been involved, concentrating instead on the technical
aspects of the subject under discussion.
But personalities do play a large part in the success or failure of the business
enterprise. You can have the best financials in the world, but if the people at the
top of the organization hate each other, you will more than likely end up
squandering them because of your inability to effectively interact on important
decisions. Heretofore only when I thought it was absolutely necessary did I
discuss personalities.
Conversely, you should never staff your organizations with people just because
you get along fabulously with them and they with each other. A group of morons,
no matter how well-suited for each other, will never succeed at anything.
But talking about personalities is very much akin to talking about the weather: its
really interesting, but there isnt much you can do about it.
For purposes of this section, Ill limit my discussion to telling you about my three
key guys and some of the techniques I used to handle them. But please be aware,
these were my guys and this is what worked for me.
Youll have to find your own guys and what works for you.
THE CHIEF OPERATING OFFICER
My COO was a lawyer who specialized in matters involving oil and gas and
corporate law. I had first met him when I was at another company, a company I
also co-founded, and he was handling our legal affairs for a nationally known law
firm.
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I was impressed by this man from the very start. In fact, it was he who I had
wanted to handle the legalities during my separation from this other company; but
because of obvious conflict of interest, I ended up having to get another lawyer
instead.
My COO started out with Great Western Development Corp. on almost a parttime basis. I gave him a verbal deal for one year. He was still officially at his law
firm, but because of his stature with that firm, they agreed to give him a leave of
absence so that he might test the waters and his mettle at WDC. He would leave
the firm for good in the Spring of 1984.
Because of his legal background, my future COO had the capability to visualize
and analyze each and every aspect of an issue. He left no stone unturned during
his evaluations, and I can never remember him ever saying, I didnt cover that
and Ill have to get back to you.
But this penchant of his for thoroughness was to eventually become the singular
greatest source of disagreements between us and the other members of GWR
senior staff. He could analyze and evaluate, but when it came down to making the
final decision, he had so many facts in front of his mind that he slowed to the
point of inactivity.
I was to be accused on a number of occasions of carrying my COO. If I did, it
didnt count one way or another. Every CEO needs some kind of a sounding
board some person or some thing to play things off of.
Perhaps in some bizarre fashion in allowing my COO the opportunity to exercise
the responsibilities of his position, he became my sounding board and depth
finder, my crystal ball, as it were. Maybe it was by some grand design that it came
to pass that he would try his best and, in this trying, I could see the clear way.
Nontheless, in 1988, I would relieve him of his operational authority. And in
August 1991, I would fire him. GWR honoured his existing contract and gave him
a seven-figure handshake good-bye!
THE CHIEF FINANCIAL OFFICER
My other partner and the third member of the early Great Western Development
management team would become my CFO. Like the COO, I had met him when I
was still with the other company.
He was part of an acquisition team when we went after a company in the late
1970s. At the time he was a partner with a nationally
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recognized accounting firm in Fort Worth, Texas.

My future CFO specialized in the management and auditing aspects of companies
in the oil and gas industry, and he was very good at what he did. I knew that the
accounting firm became concerned when they found out that I was making
overtures to him; the last thing in the world they wanted was to lose this guy.
They gave him some big inducements to stay, but in the end the promise of
GWDC was too overwhelming.
My CFO was as technically competent as they come, but that was not why I
wanted him. He was a dreamer like me, but that was not why I wanted him. He
was a dreamer who could and would use his technical skills as tools to make his
dreams realities, and THAT was why I wanted him. He knew the difference
between theory and execution!
My CFO was the most practical finance guy I ever saw and the best numbers man
around, period! His contributions to what Great Western would become were
immeasurable. He was, probably as much as I , Great Western Resources itself.
My CFO was the guy who I played everything off of. I valued his counsel; I
trusted his judgement. I trusted him.
We spent many sessions, lasting long into the night, analysing, evaluating,
planning, replanning, replanning every last detail.
If you think you can succeed in business by simply rolling the dice, you are sadly
mistaken. You grind everything down to the smallest details, to the lowest
common denominator. You think about it, over and over; you change it; you get
to the point where you would love nothing more than to tear it to shreads. But
when you make a decision, you stick with it!
I did these things many, many times and always my CFO was there with me,
stride for stride, sharing my passion, my dreams. He was great. If you are going to
succeed at your business enterprise exponentially, you need a guy from the same
mold as my CFO.
But he was also my friend. We shared dreams. We shared laughter. We cried
together. When he died a very large piece of me died with him.
ACQUIRING TALENT: THE EXECUTIVE VICE PRESIDENT

In section 8, I told you the reason we wanted to acquire Company #1. Amongst
other things, and probably most importantly, was the need to strengthen Great
Page 74
Westerns oil and gas operation and business development: I wanted a guy who
could sniff out deals.
What I briefly mentioned in Section 8 was the guys personality, and why it was
important to his responsibilities.
I had met my future EVP about three years before the acquisition. You couldnt
be around the oil and gas business in Texas very long and not come into contact
with him, either face-to-face or by word-of-mouth. He had undergraduate and
graduate degrees in petroleum engineering and had gotten his experience at a
major oil company before forming his own company.
My son-to-be EVP was a guy so larcenous that he would steal his grandmothers
pension check without batting an eye. He could charm your socks off while he
twisted a knife in your back; he was so disarming that you would smile
uncontrollably as he picked your pocket.
He was basically uncaring, a man completely devoid of any emotion; he could fire
you in the morning and then thoroughly enjoy his lunch and workout afterwards.
He was driven to extremes by thoughts of power and authority; he was consumed
by the concept of untold wealth, yet he could never accept my ideas because he
didnt understand exponential growth; he was the quintessence of greed from the
moment he got up to the instant he went to sleep. The perfect business
development manager.
GROWING PAINS
A business combination of two companies is a lot like a marriage. The new bride
and groom easily get used to having each other around all of the time; its the inlaws that take forever to accept each other.
My new EVP and I never had a problem working together on a professional level.
I respected his technical aptitudes and his ability to surface potential business
deals, even when they were with his family or his buddies. I believe he respected
my general business acumen.
It was a marriage made in heaven; together we became a real force to be reckoned

with in the oil and gas industry, and the industry sat up and took immediate
notice.
Our relationship on the personal level was not quite as comfy. A wall existed
between us from the very start. We continued for a long time on a forced
pleasantry basis, but I always knew if had the opportunity, he would attempt to
oust me.
Page 75
In the end, he grew to hate me because he could never be as close to me as the

other two who had been with me from the start. And he knew, short of a major
discovery or a miracle from God, that he could never accomplish hyper growth.
Our respective companies went through the usual cultural shock process, but we
eventually settled in and got down to the day-to-day business of business. Some
people from each company had to be let go, but such occurrences go hand-in-hand
with business combinations; most people expected it and had prepared themselves
accordingly.
And there was one other small problem. My new EVP and my COO hated each
other guts from the get-go, and I constantly had to listen to each of them relate to
me what a major problem the other was.
It was all office politics, of course; each guy viewed himself as my heir-apparent
and, in that capacity, courted my favour continually. As President and CEO I had
to listen; it was a much a part of the job as deciding where to explore for oil.
MANAGING THE EGOS
Dealing with personalities is never easy, but I developed an approach that worked
well for me. I always prepared myself, both mentally and physically, for all
meetings with subordinates whether internal or external to the company.
Because I started GWR, ate GWR, slept GWR, loved GWR, and lived its energy
every second of my life, it wasnt that difficult to be prepared. I often told GWR
onlookers that I was born ready!
Perhaps this perceived need for total preparation was a carryover from my days in
the Army. Whatever the reason, I trained hard in anticipation of each particular
proceeding. I tried to see it in my mind:
the issues, the arguments, the players involved, their strengths and weaknesses.
I started every one of these meetings the same way. I looked deep into the faces of
each man sitting around the table with me. I looked for a crease, an expression,
any visual sign a hint as to what he may be thinking on the inside, his
predisposition on an issue was he friend or foe. Could I convince him to come
around to my side merely through persuasive argument or would I have to break
his back and grind his bones into a fine powder.
In every mans face I always found something unsettling to me, something that
would make the meeting a little harder than I would like. But I was prepared. I
had to be.
Page 76
Like, you, the buck stopped with me!
SECTION 13
CONCLUDING REMARKS
A LIFES STORY
This has been the story of my professional life as told by my experience at Great
Western resources from the events leading up to its IPO through the last equity
offering in 1990.
I have enjoyed a lot of successes, a lot on quantum leaps, a lot of hyper growths.
Dreams became reality.
Page 77
There have also been many successes in my personal life, although I dont believe
that one necessarily begets the other. I have been married to the same woman for
over twenty years (remember what I said about working at relationships!) and
have three beautiful children by her. I have bought and sold luxurious homes in
many prestigious areas: Guthrie Castle in Scotland and the Farrish Estate (founder
of Exxon) in Houston, to name two.
I wasnt born into wealth or a history of what one might call raging successes. As
a matter of fact, I started my adult life as what any observant and rational person
would have to term a miserable failure. I am a child of the 60s and one who
pretty much embraced the philosophy of the times.
My first attempts at being a serious college student were an absolute disaster. I
had already developed laser-beam focus abilities, but applied them to the pool
table at the expense of my studies. If my test scores and grades had been
anywhere near as stellar as my 9-Ball game, my life might have been another
story. I was going nowhere fast. So, taking a cue from the 60s high priest,
Timothy Leary, I dropped out of college and volunteered for the draft in the
U.S. Army.
I took basic training as an enlisted man and was offered the opportunity to attend
Officers candidate School at Fort Benning, Georgia. One of the proudest
moments of my life came when they pinned on my 2nd Lieutenant bars on July 1,
1967. I had finally gotten my act together. (See Appendix C for a list of events I
consider my lifes proud moments.)
After a distinguished career as an intelligence officer in NATO, I left the Army
for a new challenge. Actually, it was an old challenge, but
one at which I had failed miserably the first time around.

I went back to college, but this time with a completely different mind set. I went
back with a vengeance. I was obsessed with getting out of school as fast as
humanly possible and with great grades. I got on the Deans List with a 3.6 GPA
while taking 23 units in one semester (I had to get a waiver; its one entry on the
list of the 86 times I was told it couldnt be done). I finished 2-1/2 years of college
in 1 1/2 years, averaging 20 units per semester.
NO PANACEA
I dont want to create the impression in your mind that the QL-YCDT philosophy
is a cure-all or one that will insulate you from failure and disappointment. It will
bulletproof you against the adversity that confronts us all and over which we
can exercise some degree of control. But bad things happen in our lives both
professional and personal that are caused by forces over which we are
powerless.
Page 78
My life had been no exception. I have had to suffer profoundly sad moments that
have shaken my belief in QL-YCDT to the core.
THIS IS YOUR WAKE UP CALL
It is this simple: You must take responsibility for your life. If you dont, no one
else will! But there is a unique formula for success in life, especially your life.
YOU CAN DO THAT! Y-C-D-T (Why-Cee-Dee-Tee): The letters themselves
bring you face to face with the process:
-Y Why did you attend this session and/or read this manual?
- C To see first-hand the YCDT process,
- D and to define yourself, your goals and your dreams.
- T What a team for success! What a simple formula for success in your life!
Your dreams + my process = your reality!
YOUR REALITY: YOU CAN HAVE IT ALL!
I had a dream and made it reality. How I did it has been the subject of
this seminar and manual.
My successes success being defined as the absolute realization of my
dreams are a matter of public record.
But what about your dreams?
What about your successes?
What about your realities?
Just remember, no matter what they are, no matter how big or how
small:
YOU CAN DO THAT!
YOU CAN QUANTUM LEAP YOUR SUCCESSES!
LASER BEAM FOCUS!
- YOU EACH PERSON:
Can develop a positive self-image. You need one to succeed.
Page 79
Can build your confidence by practicing the Five Credos for Success.
Will gain self-esteem. You are somebody!
Will enjoy boundless enthusiasm and energy to turn perception into reality.
- CAN IS ABLE:
To see your dreams ahead. You know where you are going and how you are
going to get there.
To visualize success; to reach out in space and time and almost touch it.
To harness the power of your own affirmations; you internal energy source.
To simulate positive occurrences. Dont waste time on the negative or those
things you cant do anything about.
To dream big. Yesterdays dreams are todays realities. Perception is reality.
Shoot for the moon!
DO TO REALIZE:
How to develop the image and texture of your dream before the quest begins.
How to channel your burning desires and gut feelings into explosive energies.
How to act as if there are no limits to your abilities.
How to Think Big!
-
THAT YOUR DREAMS:
What is your dream? Fill in the blank

_____________________________________________________________. Use
another sheet of paper. Or a ream of paper!
Be big!
.
GLORY IS FLEETING
I didnt want to write this final subscription. I wanted to end this story
on the upbeat theme in the previous subsection.
Page 80
Go get em! The skys the limit! Dream big; be big!

But a good friend of mine told me, Dan, you have to level with them.
You have to tell them the truth. You have to give them the full story.
As I mentioned earlier, there have been some profoundly sad moments
(See Appendix C) in my life. Real gut busters. Ive already related one
of them: the death of my CFO and dear friend.
Offering the eulogy (See Appendix D) at his funeral was very difficult
for me. God, we had come so far, and now he was gone.
As it was to turn out later, he never knew how lucky he might have
been to miss the mess at Great Western in 1991.
And a year later (1992), I had to participate in yet another funeral of
sorts, that of my loyal dog, Driller, who died in my arms in June.
But as though on Dan Pea as these times were, they were nothing
compared to the sadness I felt upon the realization that my vicechairman and the rest of the Great Western directors had turned their
backs on me when I left the company as CEO on January 8 and as a
Director on February 28, 1992.
The company fired me. Thats right, fired me. If that doesnt surprise
you, then you skipped over Sections 4 through 10.
I cant talk about any of the particulars because the whole mess is
currently in litigation here and in the U.K. There were and aredifferences of opinion on a number of important subjects, but you
expect no, you demand that in a big company.
There were personalities and egos, not the smallest of which was mine.
There were office politics, but there are always office politics. I could
deal with all of that and more.
But having my friends and associates turn their backs on me was the
hardest blow I had ever sustained. My last day at Great Western my
Great Western was one of the lowest of my life.
But not for long! In case you may have wondered when it was that I
started my next venture, the one of which you are now a part
wonder no more. It was exactly the day after my last day at Great
Western!
This enterprise started with a dream on January 9, 1992. It is now a
reality. Dont believe me? Are you real? If you are, then my dream is a
reality because as you read the words on this page you are
participating in my newest success. Dream Big!
Page 81
I want to leave you with this final thought. On a pedestal in my office

at Great Western was a bust of Augustus Caesar.
It was there for a very specific reason.
When Caesars legions would return from their conquests, all of Rome
would turn out for a celebration parade. The conqueror would lead the
procession, behind him his family and wagons of plunder, that he may
pay tribute to Caesar.
But in the chariot with the conqueror rode an ordinary house slave
given a special task. The slave would stay close at hand, even as the
magnificent horses drawing the victors chariot would prance and
Snarl, jostling the chariot.

The slave would repeat, over and over, in the conquerors ear:
Almighty conqueror, general of Rome, leader of
legions, visage of Caesar.
Hail unto thee!
Enjoy thou this day.
Bathe in the pride of thy family.
Anoint thyself with the adulation of Caesar.
Bow thy head to the gods of Rome.
But knowest now this, mighty warrior!
Commander of legions!
Conqueror!
Humble thyself before thy soul,
For this be thy day, but perchance not the morrow.
For glory, my lord, is fleeting.
***
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How To Make Quantum Leaps in Your Business Reveals 33 Secrets for Super Success

SEMINAR AND SEMINAR MANUAL ORGANIZATION

TURNING $820 INTO $400 MILLION MARKET-VALUED ENERGY

ON NEW YEARS EVE!

Pea-ism: the consequence of a misguided decision

is de-minimis in the concept of eternity.

Pea-ism. Always, always, always pay yourself first.

Pea-ism. Dont, under any circumstance, ever

THE FIVE CREDOS

The Five Credos

Yesterdays dreams are todays realities.

See your dreams ahead of time now.

Simulation: practice within when youre without.

Act as if there are no limits to your abilities.

Enthusiasm: comes from the Greek word, god within.

QUANTUM LEAP/HYPER GROWTH

At Great Western, we never underestimated how wrong we could be. We thought

products and services, utilizations of resources, and management styles.

which, compared to other activities, involves a relatively high degree of financial

The appraisal of oil and gas interests is not an exact science.

Is there any form of prognosticating, estimating, and forecasting that is an

Unforeseen circumstances may result in drilling delays or lower that

Movements in the market price of oil and gas or changes in taxation

THE PEOPLE PROBLEM

Pea-ism Always maintain your personal relationships on the same plane

Separations at the management level can be very expensive for a company,

DOING YOUR FIRST REAL DEAL

Pea-ism. The fulfilment of your dream is directly proportional to your

THE NUTURING PERIOD

resources company in the world.

And I became even more obsessed with it!

If I had tried to do that in the U.S., it probably would have taken me 20 to 25

Each investor finds their own opportunity in the prospectus.

eventually the largest natural company in the world.

INTERNAL VS. EXTERNAL

Pea-ism: All managerial performance sins shall always be forgiven during

intended). Mother Nature and some overly-optimistic geological data teamed up

consultant engineers, lawyers and accountants.

Pea-ism. In order to really succeed in business, you need outside advisors.

dream to your business associates and partners inside the company,

A TALE OF TWO ACQUISITIONS

assets, financials, diversification, people, capabilities and opportunities. They also

We were not going to spend any more time on limited partnerships,

I decreed that we were not going to participate in the energy recession. It

Pea-ism. To succeed at anything, one must be focused to the exclusion of

$18 million was to be retained by GWR for future operations.

to construct an equity offering which satisfied four criteria:

THE FINAL ANALYSIS

Great Western picked up the resources it needed to position itself for

Pea-ism. You always need to reason to overlook that which is obvious.

The obvious thing to do was to go after acquisitions because there was

Pea-ism. Stick to your knitting. To maximize the return on invested

I had learned this lesson the hard way.

As I noted earlier, before starting Great Western, I ran a vertically integrated

Pea-ism. Dream big; think big; Be Big!

still get chills and a lump in my throat

undergoing major changes in their senior personnel, particularly those people

We started one of the greatest offensive attacks of the 80s: injunctions,

decisions than I had ever done before.

After much consultation with our advisors, we put together a three-point

preferential dividend of 50% of net profits available for distribution. And, of

an insurance consortium, the potential placee, took a number of hard positions on

THE DARK SIDE OF EQUITY FINANCING