Rest assured that the smart, quiet money is on the hunt now during a time of duress and recovery. From the muddy scrum of restructurings and recapitalizations underway, some golden opportunities will surface, but it takes capital and contacts to score the right deal.
A few small-cap E&P companies, even though they may be microcap stocks these days, are fortunate to have no debt and to have cash on the balance sheet. More important, they may have some big-ticket investors backstopping them as well. Since undergoing a restructuring effort and getting a capital infusion a few years ago, Houston independent Pedevco Corp. is one.
Today it defines itself as an acquisition vehicle with the long-term goal of consolidating assets in its favored target, the San Andres play on the Northwest Shelf of the Permian Basin. There, just west of the Texas-New Mexico line, it holds 38,000 net acres in New Mexico. Relationships between and among its principals and some of its present target companies show how the oil industry continually reinvents itself by turning over assets from one management team to another.
“There are a lot of good companies out there that are just financed incorrectly,” said Pedevco president J. Douglas Schick, who has an undergraduate degree and MBA in finance.