With more than 40 years of experience under his belt, Frank A. Lodzinski is a serial entrepreneur who builds and sells E&P companies; sometimes he “rescues” troubled assets, forms a company around them, then sells. He's at it again, and the deals just get bigger.

In April 2012, he sold his last company, GeoResources Inc., to Floyd Wilson's startup Halcón Resources, for $1 billion in cash and stock, representing a 28% premium to GeoResources' closing price at the time.

Recently, he re-assembled 90% of the GeoResources team to form Oak Valley Resources LLC, backed by EnCap Investments LLC and also by the Vlasic family office (of pickle fame).

Initial capitalization was producing properties and acreage, plus more than $150 million in cash commitments from Vlasic, EnCap, Wells Fargo, management and employees. A second round includes $63 million in cash commitments from “friends and family.”

Lodzinski obtained his BSBA degree in accounting and finance from Wayne State University in Detroit. In 1984, he formed Energy Resource Associates Inc., which acquired controlling interests in oil and gas limited partnerships and producing properties, which were exchanged for common shares of Hampton Resources Corp. in 1992, which he joined as a director and president. He sold Hampton in 1995 to Bellwether Exploration Co. This reverse merger approach to public markets became a common theme for Lodzinski.

In 1996, he formed Cliffwood Oil & Gas Corp. and in 1997, it acquired controlling interests in Texoil Inc. In 2001, he sold the restructured Texoil to Ocean Energy Inc. (now part of Devon Energy).

That same year, Lodzinski was appointed chief executive and president of AROC Inc. to direct its restructuring and ultimate liquidation. In 2003, AROC completed a monetization of most of its oil and gas assets. It began a plan of liquidation, in 2004, for the benefit of shareholders. In 2005, Lodzinski formed Southern Bay Energy LLC, which acquired the residual assets of AROC.

In April 2007, he reverse-merged Southern Bay and cash into GeoResources Inc. and became its president and chief executive officer. The company was ultimately sold to Halcón.

Investor How did you enter the oil and gas business?

Lodzinski I joined a public accounting firm, and they threw me into the regulated industries division, where I audited some utilities, many of which had E&P operations. The way they found the gas, contracted to sell it, shipped it—I found all that intriguing for a blue-collar kid who knew nothing about the industry.

After five or six years, I moved to Houston with the oil and gas division of American Natural Resources and worked with Earl Swift there, before he formed Swift Energy Co. He mentored me.

Then in the 1980s, I took over management of some distressed partnerships, and that's how I met the Vlasics. This year marks 25 consecutive years they've invested with me, and they've taught me a lot: Don't let your integrity slide, work hard, invest alongside the investors, and earn most of the rewards on the back end.

Investor What hard lessons did you learn from the AROC restructuring that you bring to your endeavors today?

Lodzinski Our methods had already been proven ever since we started acquiring distressed partnerships. We always earned a piece of the spread from building reserves and increasing production and earnings.

In our view, the financial side of a restructuring isn't the most important thing; the operating side is. You've got to show the investors and debtors some good administrative practices, and more important, you've got to dispatch your technical people out to the field to increase production and cash flow. You've got to establish a new game plan. You've got to show them what you can do, and earn investors' cooperation.

Investor How do you know when it's time to sell? Did you ever sell too early, or too late?

Lodzinski We're actually better off when the capital markets and acreage markets are on the downside, because we know we can raise money from our investors and private equity. We place a strong emphasis on generating our own projects and leasing, like we did with GeoResources in the Bakken, Chalk and Eagle Ford. That gives you a lower cost basis and greater opportunity for profit.

Have I ever sold too early? Yes. But we've never fallen off the cliff and sold too late, because that's when you've missed the market. If we ever miss the window, we just keep on building the company and wait for the next time it's right.

If you can get most of the peak, that's good…Mr. Vlasic told me, “A little bit of a good thing is better than a lot of a bad thing.” Greed is not necessarily good.

Investor What advice would you give others who want to start an E&P company?

Lodzinski Look around the industry and emulate the companies that are successful, and study the ones that are not, and try to figure out why. Make sure you're surrounded by good, loyal engineers and geologists. And give your investors a fair shake.

Investor How has the model of fixing or building a company and selling changed in the past few years?

Lodzinski It's easier because of our track record, but it's harder because of these resource plays. Everybody has so much acreage today.

—Leslie Haines

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