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RIZZY
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In reply to ThreeFive • 12:24p, 8/16/23
AG
ThreeFive said:
RIZZY said:
Identity crisis - is acquiring and running an 50MM+ operated or non-operated asset too big of a pipe dream before turning 30? let's just say I'm four years out. PE + RBL
Can it be done? Yes. But why not continue to learn while earning a (relatively) stable income. It's a small industry and you can't fail too many times without damaging your reputation.

The quality of learning from 0-5 to 5-15 yrs experience is significant. Especially when it comes to the nuances of managing an E&P business.
Invaluable insight 3-5 and this is exactly what I'm struggling with. I've been incredibly fortunate to have my entire career, albeit still very short, in a position where I'm able to directly see my fair share of nuances on a daily basis while being relied on to create significant value. Currently at a small shop where ownership is the direct report and thankfully very transparent in every aspect of the business.

I think being able to see and work on what I have makes my few-ish years of experience feel a lot longer than it has been hence the impatience to go out in a couple years, take the lessons learned, hopefully improve on them - rinse and repeat.

Is it detrimental to be more eager to fail younger with less experience than the flipside?
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ThreeFive
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In reply to RIZZY • 12:32p, 8/16/23
AG
Is it detrimental? Yes. But failing younger obviously gives you more time to figure it out the second time + you can leverage the significant learnings from the process. Failing two times is what will get you.

I've been in your shoes. It's a difficult proposition. Feel free to message me or leave contact info and I can share some of those experiences.
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topher06
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12:36p, 8/16/23
Surprised you have a sponsor at 4 years out.
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Cyp0111
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In reply to topher06 • 12:57p, 8/16/23
I've seen it from some of the shops but admittingly, most of those are low on deployable capital and have struggled with new funds.

I still continue to see an environment short on equity checks and short on available debt at numbers/terms that makes sense.
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RIZZY
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In reply to Cyp0111 • 1:05p, 8/16/23
AG
Cyp0111 said:
Rizzy, happy to help if you want any advice. I've dealt with most the PE groups and lenders out there. I do not think 30 is too young as long as the experience is there.

Seems like getting a PE check that size right now is the difficult part.
Thanks Cyp, that's exciting to read and it'd be awesome to get any advice you're willing to give. Are you seeing any specific experience (conventional, unconv, esg/ccs) being more or less important to the PE shops?

In regards to checks - my thought is stable decline PDP assets with an esg/ccs outlet are going to be king when it comes to capturing funding.
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topher06
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In reply to Cyp0111 • 1:38p, 8/16/23
Cyp0111 said:
I've seen it from some of the shops but admittingly, most of those are low on deployable capital and have struggled with new funds.

I still continue to see an environment short on equity checks and short on available debt at numbers/terms that makes sense.
But as CEO? Usually the land/legal guy is young and maybe a second PE if there is a second PE. CEO usually requires quite a bit more seasoning, from what I see from the portco side of the world.
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birdman
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In reply to RIZZY • 1:56p, 8/16/23
RIZZY said:
Identity crisis - is acquiring and running an 50MM+ operated or non-operated asset too big of a pipe dream before turning 30? let's just say I'm four years out. PE + RBL
Whose money are you using to you learn on the job?

If it's somebody else's money, I would go for it. From my perspective, the oil business doesn't seem to hold failure against people.
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Furlock Bones
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2:09p, 8/16/23
AG
Hugoton Operating filed for Ch 11 bankruptcy
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PeekingDuck
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In reply to Furlock Bones • 2:32p, 8/16/23
AG
The bankruptcy posts and this conversation next to each other is great.
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Cyp0111
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2:47p, 8/16/23
A lot more distress out there in the more thinly capitalized space. Current ratios being held up by bank revolver availability (for now)
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Cyp0111
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In reply to topher06 • 2:49p, 8/16/23
I see it. He would maybe need to partner with someone in the 7-10 year range at the CFO or COO level. I think it depends on asset type and basin.


Regarding the question on location/asset type. It's all over the map. I think the reason for that is people are unsure how to make money right now.
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DripAG08
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2:55p, 8/16/23
AG
If I were raising money today, I would go with Carnelian or Pearl as the sponsor.
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GarlandAg2012
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3:08p, 8/16/23
AG
I work for a successful portco. I was recruited to work here, so wasn't around when it was founded but have heard the stories. The biggest difference I see between myself and those who started the company is networking. He knows every power player at every company seemingly, grew up with many of them, or at least is within 1 degree of separation. I didn't grow up with any industry connections (no family in the industry, didn't ever know much about it) and wasn't a PETE major, so I started networking at 22 and didn't do a very good job of it.

The next biggest difference is a little harder to pin down. Perhaps it is the difference between a Landman-turned-CEO and an engineer who has always had a bit of imposter syndrome, but he exhibits the ability to be definitive and convicted in his decision making. I tend to always look at both sides of a situation, assess the data, and then agonize over a decision. He relies on data and advice from trusted sources, but then makes a decision in a way that doesn't come naturally to me. He has a clear worldview/thesis on our industry and market segment and that informs his decisions. Maybe you could call it killer instinct. I think it is possible to grow this, but I think it probably is easiest to learn/grow it from a mentor who has it.

If you have a strategy and financial model you believe in, it's definitely possible. Also, it can sort of go either way, but I think having a definitive idea of the asset you want to buy is helpful, even to the point of having a bid on something for which you then have to go find financing. However, this can be tricky and ruin your reputation if you swing and miss too many times. If nothing else, it lights a fire under your ass.

I have enough contacts now that I could probably attempt to fundraise if I wanted to (I don't, I have a sweet gig), but I have always thought I needed to address the items above to really be successful. For me, having a strategy and the knowledge of how to make good financial decisions is not the hard part to me - it's the network and the intangibles.
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TxAg20
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In reply to RIZZY • 3:47p, 8/16/23
AG
RIZZY said:
Thanks for the response TxAg - did you have issues with the money people biasing your age into what you could actually accomplish when starting out?


I don't think so. We were drilling $400k infill San Andres wells in the beginning which are about as simple as it gets in the Permian. I had good operations experience in the Permian and Powder River, especially for my age. Our "money people" were long time, oil and gas working interest, family offices and were investing as non-op JOA partners. Most of them knew each other and there was nothing exotic in that structure. If they had qualms about our age or ability, I suppose they knew they could replace us as operator under the provisions of the JOA, if necessary.

I realize this is easy to say from my perspective, but finding capital was never an issue. Even in late 2020, we were looking for a partner to take $40 million of a hz development project. It took 3 meetings and one was a waste of time at one of the often mentioned PE groups in this thread. There's always capital for a good project at fair terms.
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ThreeFive
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In reply to DripAG08 • 3:59p, 8/16/23
AG
AustinAg008 said:
If I were raising money today, I would go with Carnelian or Pearl as the sponsor.
Ha, you and everyone else. Carnelian can be very selective, and they are. Great track record.
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Cyp0111
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In reply to DripAG08 • 4:40p, 8/16/23
Agree- the only two I would co-invest with at that size. NGP seems to be looking bigger and encap isnt my favorite. Some other smaller capital providers out there but not sure on fund status/availability.
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Cyp0111
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In reply to ThreeFive • 8:20a, 8/17/23
I would say this, when picking a PE fund, some are extremely hands on, others more in the background. I'm not saying it's positive or negative but something to consider based upon preference.


Remember one thing, it's their capital, they're going to have control and smascho's still have a lot of scar tissue across the industry.
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RIZZY
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In reply to Cyp0111 • 8:59a, 8/17/23
AG
Really appreciate all yours and everyone else's insight about all this.
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AggiePeeps06
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10:54p, 8/18/23
AG
Family has some land on the gulf coast and has been approached about a CCS lease. Anybody have experience here they are willing to discuss? What's typical lease bonus and royalty?
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Ag CPA
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11:47a, 8/20/23
AG
Every now and then I'll go read the first few pages of this thread and note how much fail there was by some back in '14 expecting the boom to last forever.
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Cyp0111
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2:15p, 8/20/23
Usually service people talking booms in my experience or others on tertiary.

Some ****co ceos there just as a dumping mechanism on retail.

I get a lot of these vibes from the natty ceos being "LNG ready"
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MAROON
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In reply to Cyp0111 • 2:21p, 8/20/23
AG
Anyone who has spent any significant time in the industry or lived in Houston knows it's always cyclical. Hell I was in high school when I figured that out.
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Gordo14
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In reply to MAROON • 4:02p, 8/20/23
MAROON said:
Anyone who has spent any significant time in the industry or lived in Houston knows it's always cyclical. Hell I was in high school when I figured that out.


It's been a whole lot of bleh for the past 7 years for it to be truly cyclical (the last 18 months mostly being the exception). More of just an efficient commodity market balancing the interests of supply and demand. You bring a whole lot of new supply to the market and it shouldn't surprise anyone that the "boom" ended. Likewise, the next sustained boom will be precipitated by peak US oil production in the shale era.
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Ragoo
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In reply to Gordo14 • 4:11p, 8/20/23
AG
Gordo14 said:
MAROON said:
Anyone who has spent any significant time in the industry or lived in Houston knows it's always cyclical. Hell I was in high school when I figured that out.


It's been a whole lot of bleh for the past 7 years for it to be truly cyclical (the last 18 months mostly being the exception). More of just an efficient commodity market balancing the interests of supply and demand. You bring a whole lot of new supply to the market and it shouldn't surprise anyone that the "boom" ended. Likewise, the next sustained boom will be precipitated by peak US oil production in the shale era.
a whole lot? Through what lens?
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Gordo14
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In reply to Ragoo • 5:15p, 8/20/23
Ragoo said:
Gordo14 said:
MAROON said:
Anyone who has spent any significant time in the industry or lived in Houston knows it's always cyclical. Hell I was in high school when I figured that out.


It's been a whole lot of bleh for the past 7 years for it to be truly cyclical (the last 18 months mostly being the exception). More of just an efficient commodity market balancing the interests of supply and demand. You bring a whole lot of new supply to the market and it shouldn't surprise anyone that the "boom" ended. Likewise, the next sustained boom will be precipitated by peak US oil production in the shale era.
a whole lot? Through what lens?


I don't know. Did you work in the industry in (end of) 2014, 15, 16, 19, 20, and 21. Those were all bad to awful years. A bit of light at the end of the tunnel vibes in 2017 and 2018 when shale seemed limitless and prices were recovering despite mid-cush differentials being -$20 at times, ethane rejection and natty negative on basis)... Then it was no the Dominator development and anything like it doesnt work straight into a global pandemic.
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Ragoo
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In reply to Gordo14 • 6:00p, 8/20/23
AG
Worked in the industry since 2009. All depends on what your perspective is.

You also specifically said last 7 years.
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one MEEN Ag
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7:41p, 8/20/23
AG
Shale put the kabosh on the commodity cycle where it was a couple of good years followed by a bad year. The good times returned when the 100 year trend of 1% yearly increase in demand caught up with supply more so than supply curtailed to demand.

Shale's cycle is different. It put a price cap on production. The floor is rising as PE dumb money evaporates, OFS cost more, and decline curves rear their ugly heads.

Shale turned oil/gas into a landlord-like relationship. Whoever got the assets the cheapest the longest time ago is the biggest winner. Difference is you can kick a renter out and rent the house again. Wells only have a finite production.
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Fredd
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6:31a, 8/21/23
AG
PR to buy ESTE
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jetch17
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7:18a, 8/21/23
AG
Man Earthstone has been gobbling up and building nicely for a good sell, not to mention PR doing the same leading up to the Colgate merger and now this
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aston158
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12:56p, 8/21/23
geez, didn't earthstone just close on the novo acquisition last week?
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Cyp0111
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In reply to aston158 • 2:20p, 8/21/23
Yes- they did.
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Comeby!
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5:42p, 8/21/23
AG
Massive consolidation happening all over. This is all a giant game of musical chairs where a ton of management teams and to a lesser extent, staff folks are getting left out. We are expected to do more with less. For example, well counts per production engineers are rising just like rigs per drilling engineer and frac spreads per completion engineers. Then when everyone starts getting settled in, capital becomes available for newco's looking to pick off noncore assets. And so it begins again.
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Cyp0111
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In reply to Comeby! • 8:38p, 8/21/23
I'm not seeing the capital or capitall raises be near the level required for widespread deals to buy "non-core".

I'll tell you, its tough, buy at 3x EBITDA to sell at 3x EBITDA. only so much value to efficiency gains these days...
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Comeby!
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In reply to Cyp0111 • 7:53a, 8/22/23
AG
Yes, we aren't at that phase in the cycle yet.
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Cyp0111
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8:30a, 8/22/23
In my 15+ years of doing my little niche of oil and gas, this is the slowest period I remember. I'm pretty correlated to new capital/debt going into growth.
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