Gary Evans, a wildcatter who left his job as chief executive of Magnum Hunter Resources just as it emerged from bankruptcy on May 9, is wasting no time getting back into the oil business despite the worst price rout in years.
He has already formed a new venture called Energy Hunter Resources Inc. and is close to buying two tracts of land in the oil-rich Permian Basin and Eagle Ford fields of Texas, Evans told Reuters on May 10.
Evans, who started his most successful oil company for $1,000 in 1985 near the bottom of a price crash and later sold it for $2.2 billion, is an eternal optimist, much like many risk-taking wildcatters.
“All the veterans in the business know that this is a phenomenal time to get something new going, when everybody else is running for the hills,” he said.
Evans declined to discuss the size of the parcels he is purchasing but said the privately held tracts had enough space to drill about 40 wells that would cost about $6 million each.
“I’m a big believer that oil prices this time next year will be $10 to $20 higher per barrel. So I’d like to drill some now and capture some of that upside,” he said.
The land is not currently producing but is surrounded by active oil fields, he said.
Evans said he was targeting the Eagle Ford and the Permian Basin, two of the country's top tight oil fields, because he has worked there before and their sweet spots, with the oiliest rock, still offer profits with oil near $44 a barrel.
“These two plays in this current commodity cycle offer the best opportunity for finding unique deals,” he said. “You have to be in a sweet spot ... that’s what is very hard to find.”
Evans is restricted for one year from buying working interests in the Marcellus and Utica natural gas fields in the eastern U.S. where Magnum Hunter operates.
Magnum Hunter, which exited bankruptcy this week with zero debt, has said it is looking for a new CEO as it tries to regain its footing after oil and natural gas prices fell by half since mid-2014.
Evans, 59, said the first round of financing for Energy Hunter Resources will be a private placement with friends and family.
Later he said he may tap public capital markets, where he has raised some $6 billion over his career.
He said the current bankruptcy wave, which has ensnared about 60 oil and gas companies, is hitting as derivatives expire that companies had used to protect against the price crash.
Liquidity helped fuel the U.S. fracking revolution and more money was available in the latest boom, which came at a time of record-low Federal Reserve interest rates, than in previous cycles.
“I don't think there’s any doubt that access to capital—whether it is the Fed, hedge funds or private equity—is 100 times greater now than it was in the 1980s,” Evans said.
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.