Skye Callantine
Editor's note: This profile is part of Hart Energy's 50th anniversary Hall of Fame series honoring industry pioneers of the past 50 years and the Agents of Change (ACEs) who are leading the energy sector into the future.
“We’re focused on commercialization,” Skye Callantine told Hart Energy in 2015. “We go into identified resource plays and work on both sides of the margin—cost and production rates. Then, once we’ve made the play commercial, we sell it to someone who wants to fully develop the project.”
Sounds simple enough. Here’s how it has worked out:
- 2015: Callentine’s company, Felix Energy, sells assets to Devon Energy for $2.5 billion-$3 billion;
- 2019: Callentine sells Felix to WPX for $2.5 billion; and
- 2022: Callentine sells Validus Energy to Devon for $1.8 billion.
In early 2021, Devon closed on its merger with WPX, so, whatever Callentine’s been doing, Devon likes it.
Felix Energy was focused on the STACK and Cana Woodford plays in Oklahoma in the early 2010s, demonstrating an aptitude for cutting costs while increasing production. Callentine drew a parallel between the multizone, stacked pay stratigraphy of the Permian Basin to what he was encountering in the STACK.
At the time, the region had its share of skeptics, but Felix proved the economic viability of the play. And Callentine proved the economic viability of Felix, securing strong capital backing from EnCap Investments and a J.P. Morgan-led credit facility.
Felix Energy II worked 60,000 net acres in the sweet spot of the Delaware Basin. A year before he sold to Devon, Callentine said Felix was operating six rigs with average production of 30,000 boe/d. Most of the company’s locations in the Delaware supported 2-mile drilling laterals and the acreage was host to extensive infrastructure.
With Validus, Callentine built a pure play in the Eagle Ford. Validus purchased Ovintiv’s Eagle Ford assets for $880 million in 2021. Production was 35,000 boe/d on 42,000 net acres in Karnes County, Texas, adjacent to Devon’s leasehold—ingredients for a bolt-on acquisition in any M&A recipe book.
Analysts were pleasantly surprised by the deal. Devon’s Eagle Ford acreage went from 40,000 to 82,000, and its production shot up from 38,000 boe/d to 73,000 boe/d.
Validus’s 350 drilling locations were “highly economic inventory that is complementary to our existing footprint in the Eagle Ford,” Devon CEO Rick Muncrief said at the time.
Senior E&P analyst Phillips Johnston at Capital One Securities deemed it a “sensible” deal for Devon.
David Ramsden-Wood was far more enthusiastic.
“One must recognize the brilliance of Skye who, alongside John Sellers and Cody Campbell of Double Eagle, have redefined what it is to be a company builder in the last decade. It’s bloody impressive,” Ramsden-Wood wrote following the Validus sale in August 2022. “Too bad they aren’t running the country. Competence is sorely missed elsewhere.”
—Joseph Markman, Senior Managing Editor