Fueling the future: transforming a "sleeping giant" into a lean, competitive oil and gas producer.

Author:Royal, Weld
Position:William Henry Harmon, Columbia Natural Resources Inc.
 
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The American Institute of CPAs wants all cutting-edge CPAs to step forward. As one part of the CPA Vision Project--a grass-roots effort to help CPAs come up with a picture of where they want the profession to be in the next century and then devise a plan to actually get there--the AICPA and state CPA societies are looking for "pathfinders." Whether they work in business and industry, public practice, government or education, these men and women stand out among their peers. This month, the Journal takes a look at one such pathfinder, William Henry Harmon, president and chief executive officer of Columbia Natural Resources.

Forecasters called for snow as William Henry Harmon, then controller for Charleston, West Virginia-based Columbia Natural Resources Inc., known locally as CNR, rushed to the city's airport in midwinter two years ago. He was there to meet Rick Richard, chairman, president and chief executive officer of Reston, Virginia-based Columbia Gas System Inc., CNR's $6 billion 'in assets parent company, who was in town to announce layoffs.

Harmon remembers the day well. Columbia Gas System had recently emerged from bankruptcy, and CNR was in the throes of reorganization. Richard had told CNR employees the company would be forced to eliminate 40% of its staff. CNR CEO John Henning had decided to retire, and everyone expected Henning's successor to be named from outside the company. Harmon arrived at the airport, hoping he wouldn't be the next casualty. Little did he know that Richard and other corporate executives viewed the native West Virginian as a "home-grown" leader.

At the airport, Richard surprised Harmon with a question. "He said to me, `We think you're the one to take the reins; are you up to it?'" Harmon, a CPA, certified management accountant and economist, accepted the challenge and began his new job in February 1996.

Harmon devised a five-year turnaround plan to grow CNR and boost its profitability by drilling new wells, purchasing assets and expanding joint ventures. In 1997, the company embarked on a $65 million drilling and exploration program. By late that year, CNR had spent close to $32 million to complete 140 new wells--almost three times the amount it had spent drilling 45 in 1996. (This year, it plans to drill 180 new wells.) In addition, Harmon invested $27.5 million in pipelines from another Columbia Gas subsidiary. Last May, CNR grew by 25% when Harmon acquired Alamco, a local gas and oil producer, for $101 million. Today, he is also seeking to buy production companies abroad--new ground for CNR, traditionally a leading producer of natural gas and oil in the Appalachian Basin. He currently is on the way to doubling CNR's size in terms of net income contribution to its parent company.

When he took on the CEO position, however, Harmon knew his toughest task would be completing the last round of layoffs the company had planned for April 1996--the second time in his career he'd had to oversee a downsizing. "Those first few months were very troubling. I thought about the layoffs a long time before actually implementing them. As painful as it...

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