Two to retire from Houston investment banking firm they helped create
Maynard Holt and Bobby Tudor will retire in January from Tudor, Pickering & Holt, the Houston investment bank they founded in 2007 with Dan Pickering. Under the direction of its three principals, Pickering and former Goldman Sachs bankers Holt and Tudor, the firm carved out a niche for itself as a boutique investment bank, acting as a financial adviser to companies in the energy industry.
Despite its small size, the company helped finance the shale revolution the remade the U.S. and global energy industry. Tudor, Pickering & Holt participated in some of the largest and most significant energy transactions of recent years, including the entry of state-owned Chinese oil and gas company CNOOC into the U.S. shale oil market, with a $1.1 billion asset purchase from Chesapeake Energy. TPH also served as financial adviser to Cimarex Energy, a Permian Basin oil producer, in its merger with Cabot Oil & Gas, an Appalachian Basin natural gas producer. That deal, valued at $17 billion, closed in October.
The New York financial services firm Perella Weinberg Partners acquired TPH in 2016. Pickering left the company in 2019, but remains a shareholder and a senior adviser to TPH. Holt and Tudor will remain partners in the firm until they retire. Holt also hosts TPH’s “Close of Business Tuesday,” a weekly video presentation on the latest energy news and trends.
They recently spoke with the Houston Chronicle about the state of the energy industry, their careers and their futures. Edited excerpts follow.
Q: What were your original goals when you founded TPH?
Holt: Having been at Goldman for a long time, and having been around the industry for a long time, we thought there was probably a different way to do things. We were excited about working with private and public companies and being a global firm. We were also excited about working with technical and industry people.
Tudor: We felt the world of energy finance and investment banking was changing and bringing industry technical expertise to the table as a financial adviser was going to be increasingly important. Research was a big part of that and how we organized our advisory business was also a big part of it.
Q: What part did each of you play in the early years of the firm?
Holt: I’d been an upstream person at Goldman. I was always the head of the exploration department of the company, thinking we could try this, we could do that.
Tudor: We very much ran the business as a trio. As a practical matter most everything we did, all three of us were involved. I had spent a chunk of my career being in London and understanding international markets. That was important to our vision.
Q: How does TPH differ from other investment banking firms?
Holt. One thing that made us different was the “Morning Note” (newsletter) in which the research department every day was commenting on what was happening with the world. That note was very influential.
Tudor. Our view was that we did need to be differentiated. If our work just sort of looked like and sounded like any other investment bank, we were likely to lose. The core of that for us is we just knew more about our clients’ business than our competitor.
Q: What is the largest deal that you’ve been an adviser on? The most complex?
Holt: TPH represented CNOOC in 2010. That’s the day that it was like: “Are you kidding?” We were a small firm with a handful of research guys, and we showed up working for one of the major Chinese stateowned companies. That was the biggest, “What just happened?” moment.
Tudor: I’d agree with that.
Q: Did any of the merger deals that your firm was involved with fall through?
Holt: A lot of them fell through. For every one that happened, a lot of them didn’t. But I don’t think we had one that
had been announced that did not happen. There was nobody that had set a wedding date that didn’t go through with it.
Tudor: We established a lot of credibility with private companies, and very often they were controlled by private equity firms like EnCap Investments, Riverstone Holdings or NGP Energy Capital in Dallas. Those firms were early adopters of TPH and given the amount of activity around those firms, that had a lot to do with our early momentum as well.
Q: How have developments such as the shale oil revolution changed the energy investment industry?
Holt: In the early days of shale, we were doing a lot of transactions based on companies growing, expanding, getting access to more inventory and getting more infrastructure. From 2015 on, and certainly in the last few years, we’ve been doing much more consolidation work. The industry has been trying to cut costs, improve profitability and get more scale.
Tudor: The most significant development has been the change in mindset of the energy investing community about what they want from the management teams. It’s pushed us toward a phase of consolidation, as opposed to new company formation. It’s also pushing in the direction of energy transition.
Q: How did the merger with Perella Weinberg Partners change things for TPH?
Holt: What we feel really proud of, it didn’t change things and that almost never happens. Usually, when two companies merge, particularly companies in the financial services industry, the smaller firm changes significantly: culturally, operationally and strategically. Not only did things not change, arguably we’re more TPH than when we entered that marriage.
Tudor: We were very fortunate during the period 2017-19, when the industry was going through such turmoil to have a partner in PWP that had such an outstanding restructuring franchise. When we paired our energy depth and expertise with their restructuring expertise, it was a powerful tool and we very quickly took huge market share in that space.
Q: In regard to the Cabot merger with Cimarex Energy, what was it like to work on a deal that large?
Holt: We were excited because it was different strategically. You weren’t just merging two things of the same flavor. It was different in that sense of trying to create a new platform, which is more resilient, more versatile, more able to withstand all the volatility of oil and gas, and more able to achieve the scale people are looking for.
Tudor: We were involved because we’d built a really good relationship with both of those companies. The depth of our knowledge of their asset bases and of the capital markets were really needed by the clients.
Q: What does the future hold for M&A activity in the oil and gas industry?
Holt: I think there’s going to be quite a lot of it. But you need to be really careful and make sure you have the right partner, the right company culture. Everything’s really got to come together in a way that makes sense.
Tudor: The whole energy transition space is similarly ripe for M&A activity, but for a slightly different reason. Much like in the early days of the shale revolution, new fresh capital is very hungry to get exposed to this space. It’s looking for places to get deployed.
Q: What are your future post-retirement plans?
Holt: I find the energy transition to be fascinating. Spending more time in that debate and trying to make it better and more civil could be very fun. I plan to remain involved with the “Close of Business” podcast that comes out on Tuesdays. Just thinking about how the energy world plays out, I think is going to be interesting and fun.
Tudor: I’ll stay in the middle of the energy business as well. I’m currently leading the Houston Energy Transition Initiative, under the umbrella of the Greater Houston Partnership. HETI is working to develop and execute a specific regional strategy related to the energy transition with the end goal of making sure that a decade from now, or three decades from now, Houston continues to be the energy capital of the world.