Founded by the son of Russian-Jewish immigrant Charles Schusterman in 1971, Samson Resources grew over 40 years to be the largest privately held oil and gas company in America. At its peak, the Tulsa, Oklahoma-based company employed 1,200 people, held interests in 10,000 wells across the U.S., and operated 4,000. Samson, named after Schusterman’s father Sam and with the intention of conjuring an image of the Biblical figure of the same name, was known for its deep bench of industry talent.

An investor group led by private-equity powerhouse KKR, eyeing the unconventional resource potential of Samson’s vast acreage holdings, swooped in to acquire the company in December 2011 for $7.2 billion, with the goal of ultimately taking Samson public. Since then, by choice or by attrition, some of that Samson talent has caught wind and scattered, taking root elsewhere.

Model redux

Rich Frommer, former senior vice president of Samson’s Rocky Mountain division, where he worked for 11 years in Denver, built a $200-million acquisition in the region into a $4-billion asset. Compare that with the $7.2-billion total buyout. A major restructuring post-acquisition, however, resulted in senior management stepping aside to give opportunity to middle management.

Frommer and his close team—including Jay Smith and Steve Stacy—were free agents. The three had started the Samson Rocky Mountain division.

Having worked closely with the Schusterman family for better than a decade, Frommer liked the dynamics of working with a privately held, family owned business. That affinity led him to The Broe Group, a closely held enterprise owned by entrepreneur Pat Broe. The Broe Group is known for its commercial real estate holdings and 17 railroads, but entered the energy business in recent years through mineral interests affiliated with its real estate.

“I found what I thought could be similarities with what we had with the Schusterman family at Samson,” Frommer says. The three execs left Samson at the end of 2012 and joined Broe Group’s Great Western Oil & Gas Co. February 1. “We chose to stay together because of our incredibly successful track record.”

Frommer, a geologist by training, is president and chief executive. Smith is senior vice president of engineering and Stacy is senior vice president of land. “We have all three disciplines covered,” Frommer says.

Today, Denver-based Great Western, with 34 employees, holds 42,000 net acres in the greater Wattenberg Field in the Denver-Julesburg Basin. All the assets are in Weld and Adams counties east of I-25, producing 2,100 barrels of oil equivalent per day from 321 vertical wells with a one-rig program. Frommer plans to change that.

“We’re at a crossroads,” he says. “We’re shifting from vertical to horizontal wells.”

The Great Western strategy is simple: “We’re going to execute drilling low- to medium-risk development, horizontal Niobrara and Codell wells in the greater Wattenberg Field. We’ve identified more than 350 horizontal locations on our acreage.”

He points to Credit Suisse’s No. 2 ranking of the Wattenberg Niobrara among Lower 48 plays overall. “We felt that was a good place to be starting out. We’re in the core.” Frommer inherited interests in five horizontal wells with operators Noble Energy Inc., Anadarko Petroleum Corp. and Encana Corp. “We’re getting to go up the learning curve watching them while they refine the recipe.”

The company plans to bring in a horizontal rig later this year, two more in 2014 and a third the following year. It will spend $50 million in capex this year to drill 50 wells, and anticipates spending $100 million and $200 million in subsequent years to drill 100 and 170 wells, respectively. Vertical wells deliver a compelling high-20s percent rate of return, he says, while horizontals return in the high 50s.

“The amazing thing we’ve learned from our nonoperated participation is the operators continue to increase the amount of oil in place, and increase the number of wells that can be drilled per 640-acre unit.”

Noble, for instance, is touting 30 wells per 640 acres, targeting three separate benches and the Codell formation. “We have a design in place to access all 640 acres and 30 wells with two pads per section,” says Frommer. He plans to seek joint-venture partners to help derisk the developmental drilling of the horizontal play.

The affiliation with The Broe Group garners unique infrastructure advantages, Frommer believes. The group’s industrial park in Windsor, Colorado, houses a crude oil loading facility, which will be important as volumes ramp in the Niobrara play, and the largest frac sand terminal in the country, built by Halliburton.

“It puts us advantaged over other E&Ps in that we have access to the Omnitrax railroad, which moves 35% of the nation’s frac sand,” he says. “And because of our other extensive real estate holdings, we have access to water rights for industrial use. We’re building a water facility that will be available to ourselves and other operators for frac water.”

Ultimately, Great Western will move into other basins and plays, he says, and “do what we did at Samson. Our goal is to be one of the more significant oil and gas companies in Colorado. My goal is to look like Samson’s Rocky Mountain division in five years.”

Reunion season

Having worked his way up from engineer to executive vice president over 24 years at Sam-son, Dudley Viles retired in 2009 at 51, two years ahead of the KKR buyout. Spending time with his high school daughter was a motivator, yet he figured he would turn his attention back to a new set of challenges once she entered college. That opportunity turned out to be Bright Horizon Resources LLC, formed November 2012 with a $300-million commitment from Denham Capital Management.

“I love the industry and wanted to get back in,” says Viles, “and I like the idea of a smaller company.” Another C-level management position in a large, established company mired in day-long meetings didn’t appeal to him. “This is closer to the action,” he says.

All the Bright Horizon partners are ex-Sam-son and have worked for Viles previously. Doug Black, vice president of land and business development, has 37 years of industry experience, including as manager of business development for Samson. “Since we’re doing a start-up, deal flow is extremely important to us,” says Viles. “Doug has tons of industry contacts and will keep us plugged into the deal flow.”

Dave Clupper is vice president of geology and geophysics. His 34 years in oil and gas geology include a seven-year stint as senior geologist at Samson, where he evaluated multiple opportunities in East Texas, West Texas and the Rockies.

Rounding out the Bright Horizon team is Carl Burgman, vice president of engineering and operations and a 30-year veteran. Burgman worked for Samson Resources in East Texas as an operations manager, asset manager and reservoir engineer, with responsibility for both drilling programs and leasing projects.

Prior to joining with Viles, Black was vice president of land at Wagner Oil Co. in Fort Worth, Clupper was vice president of geosciences at Bravo Natural Resources in Tulsa, and Burgman was production manager for the central Uinta Basin for Newfield Exploration Co.’s Rocky Mountain division.

“We’ve seen a lot,” says Viles, “and have worked a lot of the common areas that tie into our overall strategy of pursuing Midcontinent and Ark-La-Tex opportunities. Those were core areas of Samson.”

Yet Viles says Bright Horizon does not have much interest in hot shale plays. “We’re going to focus on conventional reservoirs where we can apply modern technology with horizontal drilling and multistage fracturing. We’re target- ing areas where that hasn’t been done, that are underdeveloped, or where companies haven’t had the capital to get to those opportunities.”

Oil and gas liquids are the objective—“obviously”—he says. But the new company will consider dry gas “if there is a significant amount of upside you could realize with a moderate price increase.”

Bright Horizon’s strategy is opportunistic and deal driven, but “we’re also going to be generating opportunities internally. At the end of the day, I imagine we’ll have a portfolio that is a combination of acquisitions and targeted leasing where we’ve generated play concepts.”

Targeted deals range from $50- to $100 million, “but we could certainly do $500 million or more with our backing,” he says. “If the deal was right, we’d look to do a larger deal.”

Why choose Denham? “We see eye to eye on time frame,” says Viles. “It’s going to be a five-to seven-year build cycle for Bright Horizon, and they’re comfortable with that. I’m more interested in building a significant organization than in doing a flip in 18 months. Our strategy requires more patience and building for the longer term.”

That strategy reflects an evolutionary shift in the marketplace. “In today’s environment, you’re going to have to mature your opportunities more than just drilling two to three wells on thousands of acres and then trying to flip it,” Viles says.

The reason: Major players that were once net acquirers are now resource rich, spending 150%-plus of net cash flow to develop their portfolios. “Those parties are no longer in the mode to snap up 50,000 acres and give a lot of value for it. You’ve got to HBP (hold by production) more of it so the purchaser has more control of the timing.”

Other Samson alumni joining Bright Horizon include Anna Miller, Rusty Wood, Brook Boethin and Roy Harney. Combined, they had worked 38 years at Samson.

Bright Horizon currently has nine employees, and Viles hopes to be drilling by year-end, although the company holds no assets to date.

Catamount on the prowl

When rumors of a Samson sale began swirling, Craig Reid, then general manager for business development at Samson, received a text from a private-equity contact that read, “Are the KKR rumors true? If so, get a team together and we’ll back you.” Six months after the sale, in May 2012, Reid formed Catamount Energy Partners LLC with a $50-million commitment from Kayne Anderson Capital Advisors LP, and was joined by former Samson geologist Rusty Kelly.

“That (e-mail) piqued my interest,” says Reid, president of Denver-based Catamount. Over nine years, Reid led Samson’s development efforts in a number of areas, including the San Juan Basin and the Bakken play in the Rockies. “The time was right. The KKR transaction created a good opportunity to leave Sam-son and start a new company,” he says.

Reid is a petroleum engineer who began his career at Shell Oil Co. before joining the small start-up JMI Energy in Houston, which sold to XTO Energy for $100 million. He came to Samson in 2003, where he managed multi-disciplinary asset teams in Texas and then in the Rocky Mountain division. It was the latter where he cut his teeth on horizontal drilling and complex completion techniques.

Kelly, a geologist and Catamount senior vice president, was a proven oil and gas finder at Samson. During his 10-year tenure there, he also became regarded as an expert at planning and steering horizontal wells. With Kelly to lead the horizontal drilling efforts, Reid takes pride in Catamount’s technical expertise.

“If you learn how to steer horizontal wells in the Fruitland coal, you can steer horizontal wells anywhere,” he says. “It’s the hardest horizontal environment I’ve seen. We drilled horizontal wells in coal seams as thin as six feet, where the coal was rolling and changing. It was very challenging.”

Catamount’s focus is on drilling in the Rockies. “We’re trying to find opportunities that don’t have a big, up-front entry cost, but that allow us to use our horizontal drilling expertise and technical abilities,” Reid says. “We don’t want to load up with a lot of PDP (proved developed producing) assets. We’re looking for mature fields that have never had horizontal technology applied, and we want to enhance these older fields by applying that technology.”

Currently, Catamount is pursuing leasing and drill-to-earn partnerships, and has its eye on an asset coming to market this year. “We’re going to try to buy that,” he says.

Reid anticipates a three- to five-year time horizon to exit, but admits the environment may be shifting. “The old model was to drill some wells to derisk the asset, and prove it up to sell as quickly as possible. It seems just lately that model hasn’t been working quite as well.” Instead, he says, “companies may need to spend more capital to develop the assets and increase the PDP component.”

Catamount’s initial challenge is to get over the barrier-to-entry hurdle. “We’re working on a number of deals now, but you don’t want to do a bad deal on your first deal. Gaining access to quality properties is challenging. We’ve been pretty picky.”

Rounding out the Catamount senior team is Paul Joeckel as vice president of land, most recently with Delta Petroleum.

Reid credits the Samson culture with creating an entrepreneurial mindset among its employees. Compensation was based largely on value creation, and

proved undeveloped locations (PUDs) didn’t count. “There was a big incentive to turn PUDs into PDPs to increase the value of the company,” Reid says. “People at Samson learn how to be value creators.”

That mindset is now the Catamount model. “If we find the right properties and drill wells like we know we can, we’ll be successful. It’s challenging, but that’s what’s exciting.”

New Samson

The most notable Samson alumni is Stacy Schusterman, the daughter of founder Charles Schusterman and chief executive of Samson since 2000 after her father’s death the same year. When KKR acquired Samson, Schusterman held back conventional assets along the Texas and Louisiana Gulf Coast and in the deepwater Gulf of Mexico, subsequently forming Samson Energy Co. LLC. Today, she is rebuilding the family business. “KKR wanted to focus on just the shale, and I was happy to retain the other divisions because of the opportunity set,” she says. With the deal came the entire Gulf of Mexico deepwater and Gulf Coast technical teams, along with a split of senior management. Almost all of Schusterman’s executive roster had been with Samson longer than 10 years, including chief financial officer Phil Tholen (35 years), senior vice president of operations Phil Schmucker (15), senior vice president of the Gulf Coast Paul Beale (18), vice president of offshore Andy Sandberg (14), and vice president of accounting Drew Phillips (26). Only chief operating officer René Richard has fewer; he has six years with the team. “We have an excellent team with strong technical expertise,” she says.

The transfer of existing assets and the team to maximize their value gives Samson Energy a solid foundation for growth.

Samson Energy’s deepwater Gulf of Mexico portfolio features interests in more than 70 federal leases, and includes a 16% interest in Noble Energy-operated Gunflint, 12.5% interest in Buckskin and Moccasin (Chevron operated), and a 33.33% interest in Samurai (Anadarko Petroleum operated). All are in appraisal phase with no production expected before 2016.

“We’ve made three discoveries and are in the appraisal phase of those,” she says. “We also have some exploration blocks that haven’t been drilled yet.”

Samson Energy has also partnered with Chevron Corp. in its Oceanographer prospect, expected to drill this year, and joined Statoil in the most recent Central Gulf of Mexico federal lease sale to take a 33% interest in Monument in Walker Ridge 271, which at $81.8 million was the largest bid in the lease sale.

The Tulsa-based company’s deepwater strategy is to participate as a nonworking-interest owner. “We bring technical expertise when we partner, but we don’t compete for operations. We think that is a unique position to be in.”

Onshore, the company inherited 400,000 net acres in Texas and Louisiana, with 140 wells producing 80 million cubic feet of gas and 6,000 barrels of oil per day, all conventional production. It is finishing an aggressive 3-D seismic shoot on the Texas Gulf Coast that she deems among the largest shoots in the U.S.

“Like the shales are going into areas drilled before, we’re going into older areas with new 3-D techniques,” Schusterman says. While the targets will be conventional, “we hope to find unidentified opportunities that will create value on that 3-D seismic.”

Capex in 2013 will approach $500 million, divided between onshore and offshore. “We have the capital from the sale to fund that ourselves,” she notes.

But Schusterman is not content to keep the company conventional. Samson Energy is now poised to expand, with a new ventures team cut loose in January. Resource plays are the goal. “We’ve been adding to our team to implement a growth strategy in the resource plays,” she says. And with expertise in various basins on board, “we’re not restricting ourselves with what we look at.” That growth could come via acquisition. “We could do an acquisition up to $1 billion if we saw the right opportunity,” preferably one with a host of drilling opportunities. Or growth might come via partnerships. “We have long-term, patient capital and significant cash,” she says. “A company may want a partner like us—private, quiet and we don’t need to flip right away. We’re flexible capital.” Samson Energy currently employs 180, somewhat smaller than its predecessor. “We’re smaller, but not small,” says Schusterman. She claims no ambition to be 1,200 strong again. “We feel we can build a great company without that target in mind.”

And like its predecessor, the new Samson incorporates the same employee incentives to create value as did the former, primarily tying compensation bonuses to profitability. “We try to be profit-focused rather than just growing production. If you’re profitable, production growth will take care of itself.”

Echoing the sentiments of former Samson Resources employees under her leadership, people matter, she says. “That’s where your ideas come from. We have a culture that balances people and profit so we can excel at both.”