TULSA — Two years after selling the bulk of his company’s assets for $650 million, self-described serial entrepreneur Steve Antry is at it again.
The CEO of Tulsa-based Eagle Energy Exploration has returned to long-time backer Houston-based Riverstone Holdings LLC for a pledge of at least $300 million to hunt for oil and natural gas acreage to buy, develop and eventually sell.
Antry is one of the growing number of oil and natural gas entrepreneurs backed by more than 250 private equity firms nationwide. He spoke at the DUG (Developing Unconventional Gas) Mid-Continent conference in Tulsa on Monday
While private equity backers are looking at companies throughout the state, Antry said it is a very different kind of investor than the state saw three decades ago.
“It’s a very sophisticated investor today,” Antry said. “We have to justify every dollar we spend. It’s not like the ’80s when there was stupid money out there. This is very sophisticated money. They have ways to financially model everything. I’m a better oilman now because I’ve known Riverstone.”
The arrangement is good for the private companies funded by the investors, but it also is beneficial to Oklahoma.
While several local and regional companies have taken the lead in development of Oklahoma oil and natural gas assets, much of Wall Street’s attention has been on higher profile plays such as North Dakota’s Bakken and Texas’ Eagle Ford and Permian basins.
“If you’re a big public company, you can get a better valuation for your property from those sexier plays,” Antry said. “The Oklahoma plays are not the big plays. The economics are strong, but they’re not the big, sexy names. That leaves the Mid-Continent for local companies, which is just fine for us.”
The industry’s private equity needs have changed dramatically over the past two decades. In the past, a geologist or engineer could find a prospect, raise money through friends and family, put a deal together and sell it for a strong return.
“Now with these resource plays where a single well is going to cost you $10 million, let alone picking up a large position, you’ve got to have a lot more capital,” said Donald Burdick, vice president of geology at Tulsa-based Panther Energy Co. II. Panther has followed a similar pattern as Eagle by several times selling its assets and starting over.
“The private equity market has found this niche,” Burdick said. “They’re leveraging investors that may be endowments or funds.”
The trend has been driven by larger market forces, Burdick said.
“It’s the rate of return,” he said. “At the end of the day, where can you invest your dollars and make something? The oil and gas business always has that potential. When interest rates are as low as they are and so many other investment opportunities don’t look like they’re making those returns, oil and gas looks like a good place to get going.”