Private-capital providers can bring much more to an E&P start-up than big bucks. Wisdom is one example. "You may not always think it's strategic. You may not always think it's advice. But you're going to get it," Randy Foutch told fellow E&P-company executives at an IPAA business-development program in Houston recently. Foutch has started his third Midcontinent-focused company, Latigo Petroleum Inc., Tulsa, after having started and sold Colt Resources and Lariat Petroleum Inc. He was joined on the IPAA program panel by founders of two other nascent firms and who have also started and sold E&P companies before: Graham Whaling of Laredo Energy LP, and Bill White of Amado Energy LLC. Private capital helps pay the bills until the start-up has revenues. Houston-based Laredo Energy was formed last year by former Michael Petroleum executives with $20 million of private equity from EnCap Investments LC, $1 million put up by two individuals, and $2 million from management. "They actually wrote checks for a year's worth of G&A," Whaling, chairman and CEO, said of investors. Midland-based Amado Energy was formed in January to acquire and exploit in the Permian Basin. White, president and CEO, was a co-founder of Titan Exploration Inc. in 1995 with $20 million of equity. Titan became Pure Resources, which had an enterprise value of $1.8 billion upon its buyout last year by Unocal. White suggests having a Plan B when starting an oil and gas company "because it's not going to happen the way you think." He makes other suggestions too. • If you're going to acquire and exploit, be on top of your undeveloped reserves. • Hedge when it's right for you, not when the buyer is panicking. • Long-life reserves will help you weather the cycles. Operational control will too. • Stay focused. • Have a co-employer relationship, such as with Administaff. "You don't want to be in the HR business. These organizations give you the benefits of being in a large organization. You'll be able to hire good people you won't be able to hire without offering good benefits," White said. And know when to exit. "If we have more people than would fit on one floor of an office building, we would be looking for the eject button. I don't want to be in the people-management business." -Nissa Darbonne