Michael Hackett, an associate with Houston-based GasRock Capital LLC, grew up in El Paso, Texas, and majored in economics at Southwestern University, Georgetown, Texas. When he graduated, he was interested in a career in investment banking, but had missed the recruiting cycle. His first job was with Hewitt & Associates, a business-process-outsourcing firm.

He joined the boutique advisory firm Weisser, Johnson & Co. of Houston as an analyst in 2005. The partners put him to work on ongoing assignments involving capital raises for small E&Ps.

Hackett arrived just as the partners closed funding for their new start-up, GasRock Capital. Launched at the end of June 2005, the mezzanine-debt fund absorbed about half of Hackett’s time over the next 18 months; he spent equal time on Weisser, Johnson’s private-equity efforts.

“At the outset, my job at GasRock was to help build models to evaluate loans, write investment proposals, manage the research and due diligence process and assist with closings,” he says. Today his work reflects the changes that have occurred in the business environment.

Two institutional investors, one based in New York and the other in Minnesota, provide backing for the fund, which since its launch has invested a total of $250 million in $10- to $50-million increments.

Since graduating from college with “zero” knowledge of the energy industry, Hackett has developed an in-depth understanding of its workings and an appreciation for its place in the American economy.

He spoke with Oil and Gas Investor about his outlook for 2010, his work with GasRock and lessons learned from the downturn, at a transformative point in his personal life—just a week after the birth of his first child.

Investor: What drew you to investment banking?

Hackett: I like looking at companies from the top down, understanding how they work. One company might be really good at operational efficiencies but need more market share, while the opposite might be true for another. Combining them would result in a great entity. I enjoy that strategic thinking.

It’s also the kind of thinking people do a lot of in the oil and gas business. They have to be good tactical decision makers, i.e., know how to control costs and implement operations, but they also need to think strategically.

Investor: What did you learn during the downturn?

Hackett: There were a lot of challenges in 2009, but also opportunities. There were deals that did not work out, and I was involved in finding alternative avenues to success for some of those deals. That’s been a learning experience, to come up with solutions, be creative, and at the same time protect our investments.

It’s given all of us a huge appreciation for what works and what doesn’t. I think in 2010 and 2011 we are going to have a much greater appreciation for ways to structure investments to avoid going down that pathway. It’s going to make us better investors, and ultimately, that benefits our borrowers.

When business is going well, little mistakes can sometimes go unnoticed and not pose a problem. But when things fall apart, you learn why things are done a certain way, and the extreme importance of due diligence. The financial provider has to be the one who has discipline.

Investor: What’s your outlook for 2010?

Hackett: It’s going to be a much more positive year. The transaction marketplace has thawed. We saw a big pickup in deals in the fourth quarter of 2009, and deal momentum is building in this quarter. Capital markets have also thawed a bit; the money is coming back. GasRock is looking to invest in new deals, and we’re excited about the opportunities.

While 2009 was a year of a lot of housekeeping, so to speak, 2010 is the year to restock, do deals and grow.

Investor: Have you had a particular mentor?

Hackett: I look to the partners at GasRock for a lot of the industry-specific and business-specific mentoring I’ve needed in the past five years. I re-read Stephen Covey’s The 7 Habits of Highly Effective People at the beginning of 2009, and it provided a lot of insight and things to think about heading into the downturn—how to do the right thing when faced with challenges.

Investor: Any advice for young people starting out?

Hackett: Listen a lot, have an open mind and don’t be afraid to form an opinion for fear of being wrong. The industry is in transition, and there are lots of opportunities for new leaders.

It’s both an old industry and one that’s constantly turning over. I feel as if I joined at a watershed moment—a macro-level renewal of the oil and gas industry in that it has discovered a huge reserve of natural gas, all over the U.S., and it’s an obvious solution to the energy and environmental needs of this country.