As oil slipped, opportunity beckoned
In the fall of 2015, U.S. crude prices were crashing, on their way to a $26-a-barrel trough. But Houston oil and gas company EnerVest saw opportunities.
The private investment firm calls itself one of the 25 largest oil and gas companies in the U.S., with 40,000 wells across 15 states, 6.5 million acres under lease and $8 billion in assets under management. It operates by raising money, investing it in oil and gas properties, and then cashing out those investments after a few years, usually at a healthy return.
The 25-year-old downtown firm is the eighth-largest private company in this year’s Chronicle 100 with revenue of almost $1.3 billion, more than 1,200 employees, with more than 300 stationed in Houston.
Two years ago, as crude prices kept tumbling, EnerVest kept working.
In September, it paid $125 million to small Houston oil producer Alta Mesa Holdings for land in Karnes County, a prime location in South Texas’ Eagle Ford oil field. In November, it spent $880 million for 365,000 net acres in Virginia’s gas-rich Nora Field from subsidiaries of Range Resources Corp. and then $120 million for 1,800 net acres in the Eagle Ford from an undisclosed seller.
In April 2016 it closed on 8,600 acres from San Antonio’s GulfTex Energy. And in May, it announced yet another Eagle Ford addition — more than 7,000 acres in Karnes County from San Antonio’s BlackBrush Oil and Gas LP.
By the end of 2015, it closed its 14th fund with $2.4 billion in capital, to be put to work in an industry dealing with the worst oil bust in a generation.
And by the end of 2016, it had spent over $2 billion on oil and gas land that year alone, including $1.5 billion just in Karnes County.
“It was a big year,” said CEO John Walker.
The crash took its toll on the company, certainly. In 2015, EnerVest laid off employees for the first time in its history. “Everything was going sideways,” Walker said. “We started shutting down rigs and pulling in our horns a little bit.”
It felt the consequences in 2016. Revenues fell by more than $300 million or 20 percent from $1.6 billion in 2014. Assets under management dropped by one-third from $11 billion in 2015. Payroll fell by about 100 jobs or 8 percent from 1,300 in 2014.
But EnerVest is bouncing back, executives said. They bought and sold more assets in 2016 than in 2015. Employee ranks have swelled, a little. They’re budgeting the first increase in capital spending next year since 2014.
And they kept their discipline, Walker said, skipping bad buys in favor of high-quality land that consolidates the company’s holdings.
They recently lost a few bids. But that’s OK, Walker said. They’ll keep trying.
“Hopefully,” he said, “we’ll get a few.”