Exco’s ‘turnaround titan’ tries to beat the oil rout that battered small drillers
C. JOHN Wilder pulled the Texas utility TXU Corp. from the brink of insolvency a decade ago, then made a fortune selling it to a group including KKR & Co. in one of the biggest leveraged buyouts in history.
Now Wilder, once called a “turnaround titan” in local media, is on to his next challenge: Reviving the hardpressed energy explorer Exco Resources for billionaire Wilbur Ross Jr. Ross, whose companies owned 18 per cent of Exco in June, hand-picked Wilder last year to save it even as the worst oil downturn in a generation has battered small drillers, forcing at least 90 into bankruptcy since the start of 2015.
Exco took a key step forward last Tuesday, meeting a midnight deadline to amend terms with some of the holders of its senior notes. It can now sell more types of secured debt, after previously being restricted to bank loans and credit lines, a company statement shows.
Wilder “has succeeded fairly well at every one of the initiatives he has undertaken,” according to Ross, whose fortune was built on his knack for leading restructuring efforts in industries from steel to textiles.
“He’s done a very good job downsizing it,” Ross said in a telephone interview. “He’s done a good job reducing its capex. He’s done a good job reducing headcount. There are no longer any fundamental issues idiosyncratic to Exco that are within its own control.”
Wilder declined to comment for this story through a representative at his Bluescape Resources Co LLC investment firm.
The biggest factor outside Wilder’s control remains the low price of oil. Exco has acreage in Texas’s oil-rich Eagle Ford shale, where 90 per cent of production may return should oil rise above US$55 a barrel, based on analysts’ projections. US crude, meanwhile, has remained stubbornly under US$50 a barrel.
When Wilder was named Exco chairman, the move seemed a challenge he was uniquely qualified to tackle.
At TXU a decade earlier, he established himself as a man who always had a plan, meticulously developing strategies to the very last detail, according to those who knew him during that time.
He looked everywhere for ways to shrink debt, from selling money-losing businesses to selling art at the company’s headquarters.
He was “mostly the kind of person that would evaluate every strategy possible, even the most unthinkable, and really question why not,” said Daniele Seitz, who was a utilities analyst at the time Wilder ruled TXU and is now vice president at Ascension Asset Management.
“There were very few people who did this.”
Gavin Wolfe, now a managing director at Bank of America Merrill Lynch, worked at Credit Suisse from 2000 to 2012 and represented TXU during its sale. He recalled Wilder as a thoughtful leader who sweated the details.
“I remember quite vividly that, from the moment John got hired, he had a plan,” Wolfe said by phone. “Analytically and tactically, I’d put John up against virtually anyone in the energy industry.”
Wilder took advantage of a rally in natural gas prices to focus TXU on generating electricity, successfully navigating the company through the state’s transition to wholesale markets. The end result: A US$1.7 billion profit line in 2005 and US$2.6 million the next year.
The company’s shares responded in kind, rising almost 400 per cent from when he took over in 2004 to when he left in 2007.
Wilder stepped down at TXU after orchestrating the KKR buyout in a deal so convincing it drew the support of Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc.
Buffett bought about US$2 billion in debt carried by the company renamed Energy Future Holdings Corp. His investment didn’t prove as rewarding as it was for Wilder. — WP-Bloomberg