DALLAS—What kind of strategy succeeds these days in the A&D marketplace and why does one savvy buyer, EnerVest Ltd., focus on natural gas assets?

“When everybody else is zigging we try to zag,” said chairman and CEO John B. Walker in his opening address at the 13th annual A&D Strategies & Opportunities conference in Dallas last week.

EnerVest did $3 billion in transactions last year.

The Houston company has averaged at least $1 billion of acquisitions annually over the past five years, and is focusing on gas assets. Walker explained his bullish outlook for long-term gas prices and growth in demand.

“I think we tend as an industry to focus too much on the now and not enough on where we are going. If you look out to 2018, I think by then U.S. gas demand could outstrip supply.

“There will be 17 new pipelines into Mexico. Mexico alone could have as big an impact by 2022 as LNG exports. There could be up to 9 Bcf/d [billion cubic feet per day] going into Mexico by that time.”

He cited other key indicators of improving natural gas demand that contribute to his positive stance: the 31 applications before the Federal Energy Regulatory Commission (FERC) for LNG exports, with some 11 Bcf/d already approved; and the fact that many power plants that use coal will be retired, leading to another 5.6 Bcf/d of new demand by 2020.

Walker said he is not too worried about basin differentials, nor would he predict differentials, although he did say it could take two years before Appalachian Basin gas will sell for a price close to that at Henry Hub.

“By Nov. 1, when six new pipelines are finished, the Marcellus and Utica will be producing over 20 Bcf/d.”

EnerVest is now the largest acreage holder in Ohio with more than 1.2 million acres under lease. “We were originally targeting the Knox but our guardian angel rewarded us with the Utica,” Walker said.

By the end of 2014 EnerVest will have drilled 580 Utica wells in its joint venture with Chesapeake Energy Corp. and Total; they will be producing 800 million cubic feet per day (MMcf/d). The company also is participating in a Utica study group with eight other operators.

In Texas’ Austin Chalk play, where the company has acquired assets through several deals since 2007, it now has accumulated more than 800,000 acres and is trying new fracks. “It’s like an ATM machine,” Walker joked. “You can take the revenues from that and keep drilling, with the added blessing of the Eagle Ford.”

In the Barnett Shale the company has acquired $2 billion of assets and is now the fifth-largest producer there. “Again, concentration is a key part of our strategy as it allows you to maximize efficiencies,” he said.

EnerVest is also opportunistic. For example, it just sold its Permian position to QEP Resources (NYSE: QEP) for about $950 million. “We do try to come up with strategies, although they do or do not work. When we saw a lot of interest by the big public companies leasing in that basin, we thought we should try selling our best asset. I think it’ll be worth $3 billion someday.”

And yet also in West Texas, EnerVest recently acquired HighMount Exploration & Production LLC from Loews Corp. (NYSE: L), with 1.1 Tcfe of proved reserves. It mainly produces prolific dry-gas wells in the Sonora Field. Walker said some of the Canyon Sand wells there do as much as 20 MMcf/d, and he thinks EnerVest can improve on cost efficiency.

Meanwhile, EnerVest and FourPoint Energy (George Solich’s new Denver E&P) recently inked a joint development agreement (JDA) and area of mutual interest (AMI) to develop oil and gas in the multi-pay western Anadarko Basin.

Each company will hold 50% in the AMI, and EnerVest is the designated operator. The companies hold more than 90,000 net acres in this, one of the most prolific regions of the country. They will share future lease and producing property acquisitions within the JDA, now encompassing 14 counties in Texas and Oklahoma.

Walker said, “I think it is hard to get up there and admit your deficiencies, but you’re never the best in everything, so we partnered with George. To my mind his team is the best there is there. We feel like we complement each other and this JV allows us to bid on bigger packages.”

The JV has spent $1.2 billion in the Anadarko Basin so far and Walker said his objective is to build an even bigger position.