Tom Ward is back in the Oklahoma City oil and natural gas business.
The former CEO of SandRidge Energy Inc. and co-founder of Chesapeake Energy Corp. has started a new Oklahoma City energy company.
Tapstone Energy LLC has leased space in Oklahoma Tower. The company has “a handful of employees” and is looking for more employees and oil and gas properties, Ward said Thursday during the Bloomberg Oil & Gas Conference in Houston.
Ward said he is funding the new company himself for now, but that he might consider bringing on other investors.
“Usually my ideas tend to be larger than my pocketbook,” Ward said. “We might need help along the way if we come across an idea worthy of having a partner.”
But for now, Ward said he enjoys working for himself.
“If you were to go out and say I want XYZ private equity company to invest with me, they tend to be fairly graspy of what they want of my time. If I'm funding myself, I can wake up and decide if I'm going to work at the boy's home or at the office that day,” he said.
Ward received about $50 million when he left SandRidge.
He also recently secured financing from Tulsa banker and oilman George Kaiser. According to documents filed with the Oklahoma County Clerk on Sept. 3, Ward used proceeds from his interest in the Oklahoma City Thunder as collateral for the private loan. The amount of the loan was not disclosed.
Ward said he is still looking for properties to buy. He is focusing on producing properties rather than areas that will require extensive drilling, he said.
“I like areas that are out of favor, maybe natural gas properties. I am long-term bullish on natural gas prices in the U.S.,” he said.
Don't expect Ward to take his company public anytime soon.
“Today is the first time in decades that you have access to private capital,” he said. “When we started SandRidge and Chesapeake, the private equity market was different from what it is today. If we wanted to run a company of any size, it had to be in the public market because that's where the capital was. That's not the case today.”
Ward's recent experience with activist shareholders also may influence his decision to keep the company private. Ward was ousted from SandRidge in June after a proxy fight lasting several months.
Ward on Thursday had clear advice to any CEO engaged in a battle with activist shareholders.
“You always have to have your bags ready to be packed and have thick skin, don't take things personally,” Ward said. “More than that, you just have to perform. Once you're at a CEO level at a publicly traded company, your company has to perform, or you'll be replaced. Investors are expecting to have performance in the company. If that doesn't happen, you can expect to have to move on to something else.”
Ward said he learned important life lessons during his recent struggle with SandRidge shareholders.
“It was a reminder that as a CEO, you work for the investors and they have the right to ask questions and to move forward the company how they see fit,” he said. “You're an at-will employee. I was no different from anyone else. It reminded me that in life, it's best to take an open-hand policy. If you grasp hold of things, it can be harder to let go. Knowing that when you come to work that you are an at-will employee and can leave at any time gives you an easier exit whenever that time comes.”
If he had to do it over again, Ward said he would focus more on communication.
“The way I think I could do something differently is to not be separated into camps where there's not much communication during a proxy fight,” he said. “I think the more open communication there is with all investors, the better.”
Ward said the issue at SandRidge focused on a low stock price, which has remained below $10 a share for much of the past three years.
“I was in somewhat of a unique position in that I made a lot of money at what I did. I was isolated out from others because of that. And our share price hadn't done very well in the last year before the activist investors were involved,” he said. “If we had a share price that would have gone up instead of down, I don't think there would have been the same issue we had. In my position, I was being fairly compensated in what I was doing. In the case of the company, we weren't progressing at a rate investors wanted us to. I look at it as their right to be able to let me go whenever they chose to.”
Through the process, Ward said he also learned to not take things personally.
“I think it's natural to have a feeling that things are becoming personal when they're really not,” he said. “There are usually reasons why an investor would question a company as to what they're doing and how they're doing it. Usually that would have to do with a share price that hasn't moved up.”
You always have to have your bags ready to be packed and have thick skin, don't take things personally. More than that, you just have to perform.”
Tapstone Energy LLC