Like many of the others today, I'm going to look at my career and just tell
you stories, things that I've learned, things that I've experienced. And if
it's got any value to you, great. I'll try to think of what I perceive as
valuable comments to make as we go through it.
But this is kind of my personal career with the price of oil plotted over
it. So I came out of OU grad school in the fall of 1984. So I consider myself a
I'm a geologist. I started with Marathon in Midland, Texas. And moments after
I arrived, the crash of '86 occurs. There's layoffs. I'm thinking, all right,
I'm going to go back to North Carolina and be a carpenter-- that's where I grew
up-- a carpenter. Obviously, the oil business isn't going to work.
Little did I realize when the layoffs fell that, oh, I was the last guy in
and probably the cheapest guy on the payroll and also, as a young, year and a
half, inexperienced idiot, I at least still had promise. I hadn't proven myself
to be a waste of investment. So that's probably why I survived.
There were three more layoffs after that during my time at Marathon, so a
10-year run. In the fourth one, it was voluntary. We haven't experienced that
yet, I don't think. We may, as an industry, again.
But that was the voluntary severance package. Everybody who says that you'll
get-- everybody got a piece of paper. This is what your severance would be
worth if you quit. We know it's destroyed morale. So if you quit, this is what
you'll get, and you can go do something else.
And so that's when I quit and went, huh. Had a buddy at Samson up in Tulsa.
And he said, why don't you come up to Samson? We'll do some things.
So I took the package, entered into the smaller world of the independent oil
and gas producer, moved to Tulsa in '94, and I haven't left since. I actually
like the town, I like the people. And that began this quest to stay alive and
figure out a way to make it work in Tulsa. So that's '94.
On this slide, the first 2/3 of my career, I'm a technical guy. Didn't
really understand the business. I'm a geologist. I wanted to be a good
geologist. I was still learning what a log meant. I'm trying to map things
The business side was just-- that's for the engineers and the finance guys.
I just want to make sure I'm finding where oil and gas are, and I want to be
really good at that. And I'm mixing my career opportunities, working 3D
workstations, chasing different plays.
Part of that experience, though, after Samson was a vintage petroleum. And I
see Marty's still here, so holy crap, that was a fun ride. It was a 7 and 1/2
year run in an A&D group. And with Marty and the team there, I was the
first geo, I guess, permanently hired in that group.
And we searched for opportunities around the world. And it's kind of a
three-week lifespan. You get introduced to a new asset. You try to figure it
out and quickly come up to a value and make a bid, win or lose. Regardless of
the outcome, you'll probably take a day off, refresh yourself, and then go off
to the next deal.
One day, it's Bogota, Colombia. Next day, it's Cook Inlet. After that,
you're working the Anadarko Basin.
As I look back and think about that team and that experience, it's not that
dissimilar from our private equity-based world. It was very much about existing
value of an asset and the way to create more value with that asset, whatever it
is. So that experience, I think-- again, I think, looking back, it translates
into being able to get into the private equity world.
The other thing I put on this that I think is very relevant is those bottom
bars-- the unconventional gas play cycle, CBM, unconventional oil play cycle. I
think those plays, those play concepts, the ability to kind of turn ourselves
into manufacturers, is another reason for the private equity explosion that we've
experienced recently. And the maturation of those plays is a contributor to why
we're in the difficult times that we're in now, as well.
All right. Let's-- whoops-- try this button. Wrong button. Got it. Quick
slide here. The explosion of private equity firms.
I've only shown logos for 28 of them. There's over 100. Storm was talking
about that a little bit earlier. Some of the classics that formed in those mid
to late '80s, some of the new ones that have emerged many of you may be
Curious. How many are in a private equity-backed shop now, if you don't mind
raising your hand? So half the room. How many are in a public company right
now? About a third of the room. So the rest are somewhere else in between. OK.
Good enough. Thank you.
Keep hitting the wrong button. Anyway, that's the explosion. The impact.
This is a real quick-- here's the slide.
So 2019, the impact of private equity. How many horizontal wells were spud
by private companies in 2018 only? Those are shown in the purple dots, and you
can see the scatter of basins. How many were spud by public companies? About
twice that amount.
So a third of all the horizontal spuds were private equity-backed
enterprises. Goes to tell you, if that goes away, there goes a third of the new
drilling, I think, potentially. I mean, it is what it is. So what it means, we
can all talk about.
Let's look at just even the active rigs. Kind of a similar situation. As of
January of this year, there were 325 private company drilling rigs operating,
544 public. Same basins.
Again, you kind of look, though. The dark purple being the privates, they're
the ones who are slipping out and trying some new things. I do think that model
of-- even though we know equity product hates the word "exploration"
now, it's the small companies that are getting out there and testing new
concepts. Because that's really how we create the biggest value. Just food for
Laredo. So I'm going to go
through three of my private equity-backed company experiences.
I came as just a technical guy and then quickly turned into the A&D
manager at Laredo. Randy Foutch, I will forever be grateful for-- he said, OK,
Don, here's your job. I want you to be aware of any deal in kind of the
parameters that we're looking for. And so make sure that we know about a deal,
particularly the ones that aren't being publicly marketed. Second, get the name
Laredo out. And other than that, go invent your job.
Cool. So, I mean, I started out in Tulsa in that time period. We did a
billion dollar acquisition-- Don Edwards over there, who was at Broad Oak.
I guess Broad Oak went through an attempted sale. It didn't work. They're a
Warburg Pincus company. Laredo is a Warburg Pincus company. Both privates.
And then I think the discussion ensued such that, huh, Laredo could pay this
billion dollars to buy Broad Oak and then IPO and actually cover the cost, is
something I think Storm and some others were showing, the uptick that used to
happen with an IPO, and create value and be able to do that deal.
And so that was done. The blending of the companies occurred. I was
fortunate enough to come down into the Broad Oak office for a period of time
and learned very eye opening ways. Like, holy crap. These guys made a bucket
load of money being the acquired. Maybe it's better to be the acquired than the
But I had an opportunity with somebody who said, hey, you want to come into
a private equity shop and be in a startup? Well, OK, so what's the pay check?
And then I get these C shares. And what's that worth? Well, nothing. But if
you do something, it might be worth something.
And then a public company says, yeah, but I can give you a sign-on bonus,
stock that you can look at The Wall Street Journal every day and see what it's
worth. And we're a secure company.
I went, yeah, OK, that makes more sense. I mean, my dad was a college
professor. He got hired out of school with one university and stayed there till
he retired. So this jumping around businesses was pretty foreign to my DNA.
So it scared me until I started opening my eyes a little bit more and then
thought, hm, so Laredo does this big acquisition. We do an IPO. We sell off
some assets and decided to be a focused, efficient producer.
And I looked at myself and thought, well, I'm sort of an explorer. I'm
getting better at the A&D thing. I'm a geo. I'm not an efficient, focused,
do-this-well kind of guy. I'm always looking for something new. Maybe I don't
belong at Laredo. Maybe it's time to start a startup to explore this a little
So here's where the story gets fun, I hope. How much time? I'm probably
chewing up all my time.
OK. So for those of you who aren't yet, give me some signs. Those of you who
aren't in a private equity, you might be thinking about this. That's part of
why you're here. You want to hear from the speakers today.
So how do you do it? And thinking back a little bit, I think I've got a
slide. Oh, yeah. How's it work? These funding commitments, I think we've heard
some of that. But even more importantly, who do you partner with? And how does
that all come to be?
So it's funny. When you start thinking about yourself as an employee or a
co-worker, there's one mindset. When you start thinking about yourself as, I'm
going to partner with some other guys, your metrics for evaluating who you
partner with change a little bit. Not just a guy I like going out to grab a
beer with or whatever, it's more, hey, how competent are they in their
particular discipline? Do they have a business mindset?
I love to talk about, for each of us-- I may be a geologist, but I want to
think of myself as a business man who happens to know geology. If we have an
engineer and she thinks of herself as a business woman who knows engineering,
that mindset. You have a discipline you bring, but it's all about the business.
So we had a group of guys. There were six of us who thought, hey, let's spin
out and explore this a little bit. So we did. We talked to the different
private equity guys. And this is 2013, to set the timing stage.
Started asking, what's an A, B, and a C share? Didn't really know if people
use some different terms. But if you call the A shares, that's the investor
class from the private equity. The B shares is the investor pool from the
management team. And the C shares are those profit shares that you get if you
hit those multiples we've talked about earlier.
The pitch book. I think we heard Dick Stoneburner talk about, yeah, it's
good to have a business plan, your pitch book. But what they're really looking
for is this integrated team that can work together.
So if I'm throwing advice out there, depending on where you are,
particularly if you're younger in your professional career, be that individual
who does work hard, who does try to solve problems, who shows respect, learns
from his or her peers. Be that person that other people say, yeah, I want them
on my team. Because one day, that investment of your character probably puts
you on a list for somebody that says, yeah, I'd like to partner with you to
start a new business.
So that's what we went through. We had six of us. We had that Sunday
afternoon meeting, where two geos-- no, three geos, a land man, a finance guy,
and a super engineer had enough conversation with private equity, they thought,
I think we're going to get funded. OK, guys. Let's get together. Are we all
ready to do this?
Because every all this courtship phase we've been going through, it's
probably going to be harder than we thought. So we'd better be ready for those
down days in case they come.
So with three geos, one of the geos said, guys, I'm a EVP where I'm at right
now. My stock bonuses are awesome. My paycheck is awesome. I have two young
kids. My wife is really nervous about us leaving that to come into something
that we don't know. Love you guys, I'm out.
OK. All right. We can handle that. The super engineer, he goes, I'm still
in, but I was really hoping this geo was a part of that team. Don't worry,
though. I'm not backing out. Yeah, I'm still in.
And then I got really nervous. And when-- I about cussed. I don't think
we're ready. I think we're too scared. And we all, all of us, we're well-paid
and had good positions and all that. We're not ready to do it together as a
We like each other. Let's hit the pause button and come back again later. By
the way, though, if somebody is ready to go now, no hard feelings if somebody
wants to try something.
So the third geo, he said, well, I am fed up where I'm at, and I am going
out. So hope you guys join me, but I'm going. OK. So off he went.
That's when the door opened to Panther Energy for me. And so I had some
friends there. I met Barry, sat down with Barry and Roy-- I mean, Roy Grossman.
You'll never meet him, because he does not do these things unless you're a
drilling engineer. But he's just not Mr. Glad hander Fred, rush boy, or
But he is so fun. So I sat down across the table from him and did exactly
what you don't do in an interview. We're talking a little bit, and he says,
Don, if we bring you on board, your job is to build the geo team. And if you do
and get us into the right place, you'll be well rewarded. Here's what we could
offer you. If you don't, your head will be the first to roll.
That's pretty honest, and I accept those terms. Well, here's my deal, Roy.
I've kind of done a bunch of things and kind of have my hands in the community
in a lot of deals, different things here and there. I still want to do that. I
still want to not just be a geo, and I want to do a lot of BD.
By the way, and this is really what you never do, but this is what I did.
His name's Roy Grossman from New York. Roy, I'm involved in the political
arena. I'm just going to tell you. I'm pretty conservative in my politics. And
if that's an issue for you, let's get it out right now. I mean, I don't care
where you are if you don't care where I'm at, but if that's a problem, let's
just flush that thing out and figure it outright.
Because I was kind of expecting him to be on the other side of the aisle.
Well, turns out, he said, no, I'm pretty conservative, although I don't get
involved that much. They're all a bunch of crooks.
So you do whatever you want. Let's just make sure if you do it on your own,
it's under your name, not Panther's name. But I don't really care what you do
there. I went, OK, good.
So that got established early. So from the standpoint of for any of us, we
all have our outside things. If it's maybe going to conflict with work, I took
the chance of flushing it out early.
So anyway, so off we went. So as Barry told you, we went from zero. I went
on the tour with Kayne Anderson, NGP, some others. We partnered with Kayne.
We had no assets. We built our US onshore game board every play. Mac
Blackford, who's in the room, was a part of that first geo team. And we had
We're going through spreadsheets. We're downloading data. And OK, here's our
top 50 ideas and 20 and 10 and 3 and 5. The Delaware Basin was in that top
The funny thing was, truth be told, cost of entry seemed high, then, that
2,000 or 3,000 an acre. Man, that was expensive. So we looked at a couple of
other areas. Said, oh, let's go there first.
And then we came back after we deployed a little capital. And we wanted to
have two or three plays running. And said, you know, it may be a higher cost of
entry, but the exit is a big multiple on top of that. Where could we go?
So we worked the petrophysics, figured out that there were some sweet spots
still remaining and some sweet spots unrecognized-- at least, we believed,
based on the petrophysics-- and dove right in. So boom.
My Panther story with oil price on the green curve there, we figured out--
we partner with Kayne, we pick up a lease, all in this $100 oil environment.
That's the green, horizontal line there.
We get so much acreage so fast and deploy so much capital, Kayne got a
little nervous about that and said, hey, do you want to maybe get a non-op
partner to drill your first well? Oh, no, we don't want to sell down.
Then we drill the first well. We go ahead and get the partner. We drill the
first well. Have some cost overruns. Whew, glad we had a non-op partner.
And then price collapses. So here you go. A company that starts in $100 oil,
we exit in $50 oil. And yet we turned, as Barry said-- we turned, I think, all
in, counting the partnership money, 250 into 863 because of the just
world-class attractive nature and reserves of the Delaware Basin.
So not easy. Went through hard times. I remember putting on my desk-- I
think it was $24-- was it $24? It was. It was $24.60 a barrel. I wrote that on
my desk one day and went, damn, we're screwed. I mean, no, this is not going to
And then it turned around, and our wells performed. We still have some great
wells out there. WPX, I think, is very happy.
And so that happens. We sell. Press release comes out January of '17. And
that day, in kind of talking with the team and talking with Roy and Barry,
frankly, about, hey, do I do a Panther 3? Or do we spin out and do something
I got seven minutes? Wow. Cool. So in talking with the geo team, the
engineering team, and then there were a few others-- Andy Drury, who's here in
the room, a geologist and petrophysicist, that I tried to recruit out of grad
school at OSU.
And she said, I'm not working for you, you loser. And she went to--
actually, she joined the company, just not in my group. So there you go. She's
Then went to ConocoPhillips, mastered some additional petrophysical skills.
We somehow lured her back. I think it's because we have a guy named Bill
Crabtree, who's a 35-year genius petrophysicist. And she said, hey, I can learn
from him in spite of you. So she joined the team.
We are kind of committed to that. But as we were assembling this group of
people with the blessing of Roy and Barry, this is January of '17. I thought, I
don't know if we can raise money. It was getting a little tighter then, not
like it is today. But give me till June, see if we can make something work.
So that journey began-- I guess I can put this on there now. Oil is in the
40s. And here's something some others have said. I think because of the fact
that the geoengineering team had had success at Panther, we got the benefit of
that track record. We added some new folks to our team.
And we were able to partner with EnCap for a pretty attractive-- we had the
$300 million starter kit with EnCap and said, yeah, we're going to go back to
the basin we know. But we're also going to look at some other areas. And so we
So June of '17, we're in shorts and t-shirts painting our individual offices
in this new space we picked up for cheap. August, we took our first swing at
trying to acquire some acreage in the Delaware. We failed.
September, we tried again. We succeeded. We got a 2,000-acre position at a
university lands lease sale. We negotiated our way to double that position. We
spud a well in November of 2017.
So September, our acreage acquisition, well drilling in November. So we knew
time was not our friend. And we thought, let's-- we weren't so smart. We were
just trying to do it the old-fashioned way of lease, drill, and flip. And
that's what we were going after aggressively.
Three wells in, we've now got-- they are all producers. I got five whole
minutes. And we're pleased with the results.
And so we went out to market here just recently. And I'm actually on the
market live as we speak. And what I guess we're doing for you guys is being a
test case of, does lease and drill and flip still work? Or will I get slapped
in the face, and we'll all say, OK, how to live lower for longer?
I don't know yet. I can't give you that answer. But it's happening live.
You'll know it here in a month. I promise you that.
But here's the bottom line, and here's maybe the most important and fun
thing about all of this and why I have zero regrets about going down this
adventure. You get to choose who you partner with. We have 15 total people at
this point at Olifant.
In a real way, there's no boss-employee relationship. It's a partnership.
Different people have different roles. We get that.
But we all need each other, or this doesn't succeed. And not only that, we
got to choose each other and say, these are people we want to work with to try
to create value.
That, in and of itself, I think, is a absolutely wonderful experience. So I
encourage that. No matter how hard this market is, there's always going to be
opportunities for people who are entrepreneurial, who are creative, who are
You get to create your culture. And everybody's culture is a little different.
These poor folks at Olifant have to deal with my nuttiness. And, I mean, I
started an Irish festival. And if you haven't been a funder for that, I'll talk
to you later. I'd love to have your contribution.
A story just came out on the local channel 2 station. Rose is the security
guard in our building, and she paints. And so we commissioned her to do a piece
of art for Olifant.
Her husband was struggling through terminal cancer. He has since passed. But
this was a skill Rose had that she'd sort of shelved in her life and was
struggling with more important things.
But we asked her to do this painting for us. And she has told us it kind of
helped get her through some hard times. And now, Whiptail Midstream, they've
got a painting that was commissioned and Rose has done. And the local TV
station, we were telling them about her.
So they just did a human interest story on Rose and showed it last night.
Why do I say something silly like that? It's because when we're in these little
organizations, if we just own our opportunities and act on them, we can do some
pretty fun things.
I don't know if it'll always make money, but you can't take it with you
anyway. I think we'll always enjoy the ride. I encourage others to investigate
that, and you'll be that good worker.
You guys already know this. You're here. But your friends and the people you
care about who maybe weren't, encourage them to come out, network, get to know
other folks. Be creative. Take some risks. Embrace the rich highs and lows of
life. Laugh and cry.
And I think we do it better when we're in these little small shops. And so
maybe that's my closing thoughts. I'm upbeat. Even if we just get trashed by
the market, I'm still upbeat. We're going to find a way. So thank you.