The Dallas Morning News
FW energy firm’s key execs resign
Approach Resources management shakeup includes its founder
A Fort Worth energy company says it expects to shave 19% off its corporate payroll this year with a management shakeup that led to three top executives exiting.
Executives departing Approach Resources Inc. include CEO and chairman J. Ross Craft, the company’s founder and leader since 2002. He’s being replaced by chief financial officer Sergei Krylov, 41, who’ll fill both the CEO and CFO roles.
Craft will be paid $1.8 million as a consultant for six months to ease the transition to Krylov, according to a regulatory filing Thursday.
Other key leaders exiting with Craft are Qingming Yang, the company’s president and chief operating officer, and J. Curtis Henderson, chief administrative officer and corporate secretary. Yang and Henderson also will be paid as consultants for six months, with Yang receiving $963,458 and Henderson $815,000.
Approach operates more than 800 oil and gas wells in the Permian Basin and posted revenue last year of $114 million. But the company also racked up its fourth straight year of losses. Its revenue in 2014 was $258 million.
One analyst expects Approach to continue burning cash this year because of its reliance on natural gas production. It produces about 53% more natural gas from the Permian than it does oil, according to investing website Seeking Alpha. Permian natural gas prices are extremely low, with futures markets showing negative values.
The company’s largest shareholder — an investment arm of West Texas billionaires and fracking pioneers Dan and Farris Wilks — also started pushing Approach Resources last year to expand production through acquisitions or consider other alternatives, such as a debttoequity exchange with Wilks Brothers LLC.
Management began talks with a potential seller early last year but wasn’t able to close a deal, according to its annual report.
When the company reported its yearend results last month, Craft said that a sharp decline in commodity prices forced it to focus on “conserving capital and reducing our cash operating expenses” in the last three months of 2018. He also said Approach didn’t expect to drill or complete any additional wells in early 2019.
Craft, whose oil and gas career spans three decades, told the Permian Basin Petroleum Association magazine last year that the company succumbed to Wall Street demands to boost production at any cost at a time when natural gas prices were still rising.
“We tried to do what Wall Street wanted us to,” he said at the time. “In 2014, we had a $400 million budget. That was the wrong thing to do. That’s what I spent the next three years since ’14 trying to do — to reduce that . ... Don’t try to let somebody dictate how fast you need to go, because that’s not the way to do it.”