So what motivates a man, an entrepreneur and a geologist, who in the past eight years has secured corporate funding to the tune of $300 million for three start-up oil and gas companies, but has also seen and lived through the other end of that spectrum when he was, literally, making minimum wage?
Better still, how does the man himself explain it?
“I’d say the short answer is, ‘the love of a new adventure.’”
That’s Donald G. Burdick, CEO of Olifant Energy, who said, perhaps surprisingly, the adventure did not come out of boredom or burnout. First at Marathon, through Samson, Vintage and QEP, and most recently at Cimarex, Laredo and Panther Energy II, he said there was always something else out there calling him.
“In the summer of 2013, I left a very good position at Laredo Petroleum to work with Berry Mullennix and Roy Grossman to help start Panther Energy II,” he said.
Panther is a private exploration and production company formed to pursue development drilling opportunities in oil-weighted basins across North America. At Panther, Burdick’s responsibilities were to head up the geology group, find the right plays for investment, and to build up the company’s asset base.
“I also had a very strong role in the busines-development side,” he said of the company, which he called, “a blank slate.”
It’s not hyperbole. There were no assets, few people, and the money shot, if you will, was ... there was no money. Which meant he not only had to hire and build out a geoscience team – he had to raise money, and lots of it.
Which he did.
After evaluating every onshore lower 48 U.S. basin, his geoscience team determined the best option was to acquire “non-core” Delaware Basin acreage that fit the company’s petrophysical models and then try to drill it sufficiently to turn it into “core.”
“It worked, and we ultimately sold that position to WPX, making both Panther Energy II and WPX very happy,” said Burdick.
How to Win Friends and Influence Investors
It was then that passion for adventure became like a drug – Burdick needed more.
“Frankly, to experience the highs and lows of the Panther Energy II adventure was so intoxicating, that I’ve now done the start-up thing two more times since,” he said.
Before the current pandemic, there was an explosion of oil and gas private equity investment. Since then, that dynamic changed and much of that investment has dwindled, which means that the way in which potential investors are pursued has also had to change.
“At Panther, we partnered with Kayne Anderson. After the sale of Panther, and with private equity firms still having a strong appetite for new companies, I was able to partner with EnCap and bring a large number of my Panther co-workers along with me to start Olifant Energy I,” said Burdick.
As CEO at Olifant, he said two main factors enabled the partnership with EnCap to materialize: The first was a long-nurtured relationship with some of the EnCap executives, and the second was the ability to demonstrate a successful track record.
Which didn’t make it any less of an adventure.
“Olifant Energy II, was in many ways, a completely different ‘private equity’ adventure in that we partnered with a single family office and a local bank,” he said.
Burdick said that each of these business partnerships, whether at Panther, Olifant I or Olifant II, had their own unique components of wealth creation.
“Looking back, I can honestly say that I feel grateful for the ability to build businesses with these financial partnerships and would recommend this option to others,” said Burdick.
As to how one nurtures these relationships, he said it is important to understand the new requirements and different set of alignments.
“I think the first thing to acknowledge is that this path is much more difficult today,” he said.
The dominant business model during the heyday of private equity investment was the exact model he used at Panther: find unproven acreage, drill it sufficiently to “prove it up” and then sell the existing production along with de-risked future drilling locations.
That model has changed.
“Wall Street no longer wants growth in oil and gas companies. It wants dividend distributions and debt reduction. So a geologist who has a great talent at developing new prospects is going to have a tougher time getting those ideas drilled, regardless of where they currently work,” explained Burdick.
If anything is constant in the business of funding geologic startups, it is that there is no constancy.
Like the weather in his home state of Oklahoma, Burdick knows that if you don’t like it, just wait an hour or so.
“If we have learned anything about being in this critical commodity business,” he said, “it’s that things can change, and sometimes very quickly!”
He advises those entrepreneurial geologists who want to someday be a part of a startup to keep building networks of potential technical and financial partners.
“It is important to make sure the work is diverse and to not limit yourself to internal company relationships. Broaden your base across the spectrum of energy professionals,” Burdick said.
One of the truly remarkable circumstances about Burdick’s success – and it bears repeating – is that the success of Olifant Energy II began during the time COVID-19. After the sale of Olifant Energy I in October of 2019, eight key players from the company were committed to trying to build a new business.
“Olifant I was a portfolio company of EnCap, a private equity firm. Olifant II came to life as a self-funded entity, on the hunt for both assets and financial partners. With our internal funding, we gave ourselves nine months to build a new business, or if unsuccessful, we planned to fold up shop and let everyone move on to other opportunities,” recounted Burdick.
They then put their money, such as it was, where their mouths were. Those original eight members, he said, decided to reduce their paychecks to a minimum wage job with benefits, simply to give themselves more time to succeed.
“We completely changed our business model from a company that would ‘lease, drill and flip’ to one that would acquire distressed assets at a discounted price, operate them efficiently, and reward our investors with dividend distributions,” he said.
By March, they found an asset they liked and one, more importantly, financial partners liked. Again, though, this was in the midst of the first COVID wave and the financial world was in such turmoil that one of the partners eventually dropped out.
“The journey to ultimately secure financing is a tale in itself, but by September of 2020, we completed the purchase of the asset in partnership with a private family office and a local Oklahoma bank,” he explained.
The plan was always to produce the wells for many years, and to add more wells to its inventory, but the rapid change in commodity prices created an opportunity to monetize their assets in only 15 months, creating an outsized return for its investors.
“So we sold,” said Burdick.
A Far-Reaching Skillset
The passion for adventure, though, is a light sleeper.
“And now, the team at Olifant Energy II is trying to reinvent itself once again,” he added.
Burdick said the link between a degreed geologist, which he is, and a geologic entrepreneur, which he’s become, shares much of the same dynamic.
“A petroleum geologist is generally forced to find solutions and answer questions with only a fraction of the data he really needs,” he said. “And as it turns out, that same skillset was very much needed when starting each of these three businesses.”
Burdick said the potential entrepreneur has to be both realistic and optimistic about what’s out there, otherwise the challenges might become too overwhelming.
“So it may not be the exact same circumstances and data types faced by a geologist moving into more of a business role, but the intellectual challenges have a great deal of overlap. A great geologist ‘builds’ new ideas, just like a great entrepreneur ‘builds’ new businesses,” he added.