J?oe Foster is chairman of TPH Partners LLC, the new subsidiary of the energy investment bank Tudor, Pickering, Holt & Co. Securities Inc., in Houston. It focuses on private investment opportunities.
No stranger to the private-equity world, Foster founded Newfield Exploration Co. in 1989 as a private start-up with $9 million of equity capital from university endowments, Warburg Pincus and other sources. In 1993, he took the company public. Newfield’s recent market cap was more than $6 billion.


Foster was chief executive officer until he retired from active management in 2000, and remained chairman until May 2005. Prior to founding Newfield, he was chairman of Tenneco Oil Co. and executive vice president and director of its parent, Tenneco Inc.


Thanks to his distinguished 51-year career, this Aggie is a go-to guy. Prior to launching TPH in January 2008, he compiled an impressive resume, heading up companies in upstream and oilfield services, as well as being on the boards of Valero Energy and Dual Drilling.


In 2000, he was interim chairman, president and CEO of Baker Hughes Inc. In 2001-02, he was independent trustee for a large portion of Texaco’s refining and marketing assets, which were required to be divested in the course of the Chevron-Texaco merger.


Today, Foster sits on several boards, including Targa Resources Inc., Chroma Exploration & Production, Memorial Hermann Healthcare System and the YMCA of Greater Houston.
He is also chairman of Houston A+ Challenge, an organization aiming to improve public schools in the Houston area.


Foster graduated from Texas A&M University in 1957 with a B.S. in petroleum engineering and a bachelor’s of business administration. In 1997, he was named a Distinguished Alumnus of A&M—and the Joe B. Foster Chair in Business Leadership was established in the Mays College of Business in 2002. In 2006, Foster was inducted into the Texas Business Hall of Fame.


Investor Why come out of “retirement” to join TPH?


Foster I was impressed with the firm Bobby Tudor has put together. Second, I’ve been making private-equity investments of my own since I retired, so I know something about it. A few have returned three or four times cash on cash and a few didn’t do as well. One was a write-off. Plus, I have an understanding that I will have time to devote to my own business as well as to Tudor Pickering Holt.
I’ll help the folks decide which investment opportunities they might want to be in and participate on some boards. I’ll help them raise some money, but even more, I enjoy building companies.
Another reason was that I had forgotten how much I missed being in an office where I enjoy all the give and take. I’m having fun as long as I feel I’m contributing.


Investor What lessons do you bring from Tenneco and starting up Newfield?


Foster From Tenneco I learned “don’t get too far in debt.” Tenneco had so much leverage that when it hit a cash-flow problem, it had to sell assets. I learned that you need to plan for the downside. I learned a lot about risk management and risk tolerance. Second, I learned the importance of focus. I’ve learned that again and again. Entities with a high degree of focus are the winners. Even at Newfield, in all the areas it is in today, there is focus. The Rocky Mountain and Midcontinent teams are just as focused as the Gulf of Mexico team was when I founded it and that was all we had. It’s “focus by team.”
And, culture is very important. At Newfield, we started a culture from scratch that survives today. That includes trust, openness and teamwork. I know it sounds cliché but culture is what causes a company to function at a higher level.


Investor How should CEOs handle $125 oil?


Foster I never thought I’d see it. But everybody has to be prepared to exist at $75. I’d have a business plan that says that, if oil is $75, we’re okay.


Investor Who were your mentors?


Foster A big influence was my Spanish teacher in high school. I was a good student and a fair athlete, but I wasn’t a leader. She goaded me to make lists, talk to people—heck, I realized I could get things done through other people. The next year, I was student body president. It was my senior year. Little things like that have a more dramatic effect on your life than you expect. I guess I’ve been a leader ever since.


Investor Who in the industry has impressed you in the past few years?


Foster Chesapeake has impressed me. I remember when, in 1994 or 1995, they were darn near bankrupt…but they survived. I don’t know Aubrey (McClendon) well, but he has been ahead of the curve on gas prices.
I think Larry (Nichols at Devon Energy) has been ahead of his time, methodical and persistent…and done a great job melding several corporate cultures together. Closer to home, I think David Trice has been outstanding in transforming Newfield from mostly the Gulf of Mexico to a firm not just in the Gulf, but in the Midcontinent, the Rockies and several overseas areas.

Investor What about the Woodford shale?


Foster I studied it when I was at Tenneco years ago, and we looked at it as a source rock. No way was it a reservoir. It’s a good thing I was not CEO at Newfield when they started in on that because the guys never would have gotten that by me. (Laughs.)