Ken Hersh
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.
Growing up in Dallas, Ken Hersh knew little about the energy business. After high school, he attended Princeton to study political science, took a job at Morgan Stanley after graduation, then left that position to pursue an MBA at Stanford.
As a grad student, he landed a summer internship with McKinsey & Co. in its Dallas office and made time while in the Metroplex to visit with the legendary Fort Worth-based investor Richard Rainwater. Rainwater had worked for the Bass family and by 1986 had formed his own firm.
In early 1989, while still a student, Hersh joined Rainwater’s office as part of the newly formed oil and gas private equity firm Natural Gas Partners (NGP) with David Albin, John Foster and Gamble Baldwin. Early on, NGP created an investment methodology that has become the standard for how capital is allocated to the sector.
“I was 25 years old,” Hersh said. Today, NGP is older than Hersh was. “We built something from scratch into a firm that’s invested tens of billions of dollars.”
In a planned succession, Hersh handed leadership to another generation of NGP team members in 2016 and began a new chapter: CEO of the George W. Bush Presidential Center in Dallas.
His 2023 memoir, “The Fastest Tortoise: Winning in Industries I Knew Nothing About,” tells thrilling tales of investments that turned out well—and a couple that didn’t—as NGP grew into one of the largest and most successful energy private equity firms.
Among deals that went well was the restructuring of the late T. Boone Pickens’ Mesa Inc., resulting a year later in Mesa’s merger with longtime Permian Basin wildcatter Parker & Parsley Petroleum.
The new leadership: Scott Sheffield. The new company: today’s $55-billion-market-cap Pioneer Natural Resources, now in the process of being bought by Exxon Mobil for $59.5 billion.
NGP was also there for the early days of what is now the $42-billion-market-cap Energy Transfer. Founders Ray Davis and Kelcy Warren were looking to buy a South Texas midstream gas asset. NGP invested $37 million in 2002. In 2008, upon distributing the last of the equity to NGP’s investors, the return totaled $1.3 billion.
It was extra helpful to compensate for an investment that went bust in the midst of the late 1990s financial crisis. While doing the deal, a green light had turned yellow, but NGP moved forward, stepping outside its typical investment parameters.
The lesson: Yellow lights don’t turn green.
“I’m not a geologist. I’m not a geophysicist. I’m not a petroleum engineer,” he told Hart Energy. “What I really loved about the energy industry is that I was able to make an impact in a business I knew nothing about by just diving in, meeting people and listening.
“You don’t have to be a geologist or geophysicist to have a good conversation about energy. For a generalist, I did OK.”
At the Bush Center today, Hersh said, “I feel 20 years younger when I go to the office at the Bush Center. There’s a cadre of young, motivated, mission-driven people who want to change the world.”
—Nissa Darbonne, Executive Editor-at-Large