?Sanford E. McCormick is back, this time as chairman of Rimrock Energy LLC in Denver. After more than 40 years in the oil and gas business, including heading up public and private E&P companies in the 1970s and ’80s, he had more or less retired a few years ago. But shales, other unconventional plays and new technologies have lured him back.
McCormick, along with wife Barbara, Rimrock’s corporate secretary, joined chief executive officer Terry Dobkins and chief financial officer Wallace G. Wilson, contributing their own equity, and raising $250 million from Bear Stearns Merchant Banking (BSMB) and Natural Gas Partners (NGP), to form Rimrock in August 2007. The company also has an office in Fort Worth.
Through networking at NAPE, McCormick hooked up with Dobkins, formerly with Antero Resources Corp., a highly successful Barnett shale player. They are assembling a world-class team that includes George E. King as senior vice president, engineering. King is an SPE Distinguished Lecturer.
McCormick came out of retirement because he loves the cutting edge. He founded McCormick Oil & Gas Co. in 1964 and listed it on the American Stock Exchange. From 1970-82, it conducted one of the industry’s most successful public drilling programs. In 1976, it discovered Oak Hill Field in Rusk and Panola counties, East Texas. It has reserves of more than 1 trillion cubic feet of gas and still produces today. At Oak Hill, McCormick conducted the first hydraulic frac stimulation that used more than 1 million pounds of sand.
From 1982-85, McCormick rolled up the drilling partnerships to form the second upstream public MLP ever, after Apache Corp.’s. He sold it in 1985 and formed privately held McCormick Resources Inc., which led a six-company consortium to try horizontal drilling in five basins where it had never been tested. Throughout the 1990s, McCormick focused on international coalbed-methane opportunities. In the latter part of the decade, he and Wilson secured financing for Output Exploration Inc., a pioneer in the application of 3-D seismic.
A Phi Beta Kappa history graduate of Yale, and a grad student at the Sorbonne in Paris, McCormick entered the oil business in 1956. His first job? Entry-level landman in Midland, Texas, for Zapata Corp., the oil firm headed by future U.S. president George H.W. Bush.
He is a member of the All-American Wildcatters Association and numerous industry boards. He also was a director for Continental Airlines, Rensselaer Polytechnic Institute and the Joffrey Ballet, among many other business, arts and charitable organizations.
He last appeared in Oil and Gas Investor in 1990, when McCormick Resources was on its way to drilling 500 CBM wells in the Black Warrior Basin in under 24 months. (See “Alabama Coal Beds,” Oil and Gas Investor, April 1990.)
Investor What led to Rimrock?
McCormick I had retired because I couldn’t find anything that interesting to me at the time. There was no new technology and the industry was picking over old bones. But now is such a fun time. I decided I wanted to get back into unconventional gas—you know, I was there before it was chic.
Investor In the Black Warrior Basin, right?
McCormick Yes. In the 1980s when we were there, horizontal technology was just Stone Age. But we drilled 500 CBM wells with Transco providing financial assistance and they also built a pipeline to us. That got me interested—how do we get gas out of these deeper coals and other shales? When the shales came along, it’s like God has said to the industry, “I gave you 140 years of drilling in traditional, easy reservoirs, and now let’s give you something new.”
Every one of these shale plays started out as a dog, and now some of them are going to be very big.
Investor How did you get money from BSMB, and has that been affected now?
McCormick We didn’t have a big money-raising effort. Because of my personal contacts in the financial community, we had the good fortune of dealing with only BSMB (which is a stand-alone entity separate from Bear Stearns) and NGP.
We had the idea for Rimrock and had identified several large prospects; we just needed a CEO with the proper experience. Terry Dobkins wanted to run his own company, and the people at BSMB and NGP liked him. He had the perfect dossier in tight gas and shales.
Investor You’ve always tried new technology.
McCormick I have as little technical ability as anyone. My friends joke about it—they say I can’t even run my own computer. But I’ve had an ability to spot new trends in technology. My companies were among the first to be in tight sands, CBM and horizontal drilling. I always said, “Why not try it?”
It’s absolutely fascinating what they can do today with these frac jobs. If there is an economic carrot out there, this industry will figure out a way to do it.
Investor What lessons from the old McCormick days apply to Rimrock?
McCormick First, you absolutely have to have a fully rounded, extraordinary, technical staff. Each of the shales and tight sands presents a unique challenge.
Second, you have to demonstrate expertise to attract sufficient capital. You’ve got to have a lot of money or you’ll be a spectator, because these unconventional plays require far more money than conventional plays do.