James A. Gibbs started visiting rigs with his father when he was five or six years old. He's been involved in the oil and gas business ever since, generating prospects, drilling wells and more recently, providing capital to small companies and independent producers.

Today, Gibbs is manager of Five States Energy Capital LLC, a private-capital investment group, and chairman of Five States Energy Co. LLC, both in Dallas. In the 50-plus years he's been in the industry, he has participated in drilling more than 600 wells, primarily in Texas, Louisiana and Oklahoma. He has bought and sold oil and gas leases, operated, and consulted. And he was one of the early managers of production partnerships.

In March the private-equity arm of Five States announced plans to invest $17.5 million with Advantage Pipeline LLC in the development of the latter's Pecos River Pipeline, which originates in the Delaware Basin near Pecos, Texas. Indeed, West Texas has been a bread-and-butter area for Five States ever since Gibbs founded the company in 1984.

Gibbs received his B.S. in geology from the University of Oklahoma in 1957, served as a communications officer in the U.S. Navy from 1957 to 1959, then returned to OU to earn an M.S. in geology in 1962. Right out of school, he worked as a geologist at The California Co. in New Orleans and Lafayette, Louisiana.

In 1964, he opened an office in Dallas as a consulting geologist and independent producer. From 1975 to 1978, he consulted exclusively for Ross Perot's Petrus Operating Co. Over the next couple of years he consulted for Cornell Oil Co., and from 1981 to 1983, for Bobby Lyle's Lyco Energy Corp., a first-mover in the Bakken shale.

What goes around comes around: Last August, Five States Energy Capital committed $85 million to an independent producer in the Bakken.

Gibbs is a past president and honorary life member of the American Association of Petroleum Geologists and a past president and honorary life member of the Dallas Geological Society.

Investor Seems like the oil industry has always been a part of your life.

Gibbs My dad was a geologist and petroleum engineer working out of Wichita Falls, Texas. I can't remember when I wasn't going out to the field with him. I just loved everything about it: logging was like Christmas, when you finally see what you've got at the bottom of the well. In high school, I worked in Dad's office as a geotech. During college I worked for two summers on a seismic crew and two summers on a mapping crew.

Investor Why did you go independent so early?

Gibbs It was a slow time in the industry. I was 29 when I left Chevron and came to Dallas. In retrospect, there weren't many people my age who were striking out on their own.Things fell into place for me. I bought some stripper wells to give me some financial support and time while I put prospects together, did leasing, found investors—I did it all, even the revenue distributions. Oil was $3 a barrel and gas, if you could sell it at all, was 3 cents. Some of those stripper wells still produce today!

Investor You've managed through the tough times, too.

Gibbs In the early 1980s, I bought all the properties I could possibly afford. Oil…got up to $40 and then fell off a cliff. By 1985 I was running out of money, so I started taking on partners. I started Five States in 1984 and formed my first partnership in 1985 to buy production. A group of fee-only financial advisors with high-net-worth clients found us, and we found them. I invested our money alongside them and managed the properties.

By then the majors were moving overseas and selling domestic properties. Buying their nonoperated properties was the least efficient part of the market—no one really knew what to do with those, so I bought them on a cash-flow basis. I think I got up to 500 property interests, some with multiple wells.

Investor When did you start providing private equity?

Gibbs That's a whole different deal. Around 2007…we saw that pension funds and other institutions had started buying oil and gas properties and we knew the market was changing. At the same time, we saw what Ken Hersh was doing at Natural Gas Partners and basically followed his model in mezzanine financing. We started financing smaller deals, funding development drilling, pipeline construction, lease enhancements and so on.

Investor What is your sweet spot for deal size?

Gibbs We would love to do $20- to $50-million deals all day long. We have committed as much as $95 million to a project. We look for entrepreneurs who are far enough along that we can see the light at the end of the tunnel, and who have their own money in the deal. We evaluate assets for collateral and for acquisitions.

In our deal structure, clients are under no obligation to liquidate in four, five, seven years as other mezzanine companies may require. We're looking for long-term assets.

Investor Is now the time to buy natural gas?

Gibbs We hear that everyone is a buyer of gas now, but there are no sellers. We suspect as time goes on, with these low prices, more properties will be stressed and we'll look for those. Last year we bought our first gas deal in a decade, from a company that operates in Ohio and West Virginia.