Be wary of recruiting management from super-majors and know that "sometimes you have to take the trash out." E&P management, capital, asset-marketing and recruiting veterans have a bounty of sage advice for MBAs and engineers looking to build and monetize an E&P company of their own. They converged in early June for an afternoon of rich tutorial on best practices. --A good capital partner provides support. "You should be running the company. We try to provide oversight and not interfere with the ‘day to day,'" said Carl Tricoli, co-founder, managing partner and co-president of Denham Capital Management LP, the sponsor of Oil and Gas Investor's annual "Starting and Building an E&P Company: The Workshop." Denham's current private-equity fund consists of $3 billion for investing in start-ups in E&P and also in new oilfield services and midstream ventures with targeted initial commitments of $75- to $100 million. Tricoli notes that a start-up should be launched with a complete management team, including with a chief financial officer-no matter if the founding CEO thinks one isn't necessary yet. When a CFO is needed, "it may take six months to find one," he says. --David Preng, president and founder of the 32-year-old energy-executive recruiting firm Preng & Associates, provided questions to ask possible management-team members. For example, when interviewing someone who will run operations, ask about what vendors he would turn to for solutions. Also, ask if he is aware of local operating customs. "Can he anticipate problems and how would he avoid them?" Consider too what your company brings to the table. "Money (alone) is not what drives people to move from one company to another," Preng says. Instead, it's for the work, the challenge and the pursuit of something to be proud of. A start-up developer should ask, "Will people want to come here? Is it exciting?" And, be careful of recruiting from the super-majors, he warns. Employees there tend to eventually become task-specific-or "silo-ed"-and become overly reliant on systems and other employees. "Get them before they hit their 10-year mark (with the major)." After this, odds are diminished of bringing in a self-sufficient, motivated, multi-tasker, he says. When checking references, "nobody really wants to say anything bad," he adds. To get beyond this, ask the past employer about the individual's performance reviews. Was he counseled on areas that needed improvement, what were they and what were the results? "That will tell you so much." --And, the payday will come to the successful. Craig Lande, managing director for asset-marketing firm RBC Richardson Barr, provided a "report card" for E&P asset portfolios that win premiums: control of operations, production and cash flow, and a high working interest. "The higher the better," he says. About acreage, "more is more," contiguous leasehold is more valuable, long lease terms are good but "held by production" is best, and ownership of all rights at all depths results in a less complicated valuation. A reserve life of more than 10 years is optimal. And, wait, if possible, until the portfolio has achieved bulk. "Bigger deals get premiums over smaller deals." --Rich Gan, team lead and managing director for Wells Fargo's energy-lending group, oil and gas division, notes to establish a borrowing base with a bank-even if not having assets yet to support a loan. "Involve your bank early," Gan says. A zero-dollar borrowing base can be established to open the relationship. When that first company-building, platform-asset acquisition comes along, the initial paperwork is already done. --Tyler Crabtree, chief financial officer of Denham-backed start-up Ursa Resources Group II LLC, reminds those starting up an E&P that staffing is a luxury. Be flexible. "Sometimes you have to take the trash out." -Nissa Darbonne, Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at firstname.lastname@example.org.
2023-10-24 - Earthstone's dividend is payable Nov. 6 to shareholders of record as of Oct. 31.
2023-11-01 - The vote is one of the final tasks to be performed before the closing of Energy Transfer’s $7.1 billion merger with Crestwood Equity Partners.
2023-09-28 - Net proceeds from the offering are expected to be used to fund a portion of the aggregate purchase price for Western Midstream’s pending $885 million acquisition of Meritage Midstream Services II LLC.
2023-10-24 - Hess Midstream upped its quarterly distribution 2.7%, which will be payable on Nov. 14 to Class A shareholders on record by Nov. 2.
2023-09-27 - Proceeds from the notes offering will be used to pay down existing debt, Sitio Royalties said.