An American Oil Legend Returns

An American Oil Legend Returns

February 13, 2017
in Category: News

An American Oil Legend Returns

Mark Papa has returned. During the time of the Great American Oil Boom he was a legend. Between 1999 and 2013 he was the CEO of EOG Resources. Due to his influence it became the biggest producer of oil in all of the lower 48. Papa finally retired in 2013 after he had earned a couple million personally and billions for the shareholders.

Papa believed the low prices of oil would cause investments in the oil fields to turn into a shortfall of supply. Then he realizes how much he missed the oil business because it is in his blood.

He worked for Riverstone for a year and the price of oil continued to drop. He received encouragement from Pierre Lapeyre and David Leuschen, Riverstone founders, to begin a new company and decided to give it a try. In 2015 his friends at Riverstone put together $500 million for this purpose. He called the new company Silver Run Acquisition and believed the best opportunity was the Permian Basin.

The Permian Basin has since become one of the greatest oil fields anywhere in the world. Unfortunately, Papa arrived a little too late. Companies were already doing anything possible to secure acreage. Over time he did find what he was searching for. It started with his acquiring Centennial Corp. They already have 43,000 acres in a sub-basin of the Permian Basin. In 2016 he sold Silver Run for $810 million. After acquiring additional acres Centennial now had 35,000 acres located mainly in Reeves County.

Most of the companies drilling was in the Wolfcamp zone. There was enough oil to keep ten rigs drilling for fifteen years. Centennial now has a $2.9 billion cap on the market and they have absolutely no debt. Riverstone owns almost half of the company.

Some investors are afraid there is too much oil in the Permian Basin for a world who already has enough of a supply. Papa feels the world will eventually need all the American oil it can possibly receive. He says the demand for oil is growing so quickly we need a lot more just to keep the market balanced.

Papa believes 2.7 million gallons of oil are going to be needed to fill the gap in its entirety. This figure is in addition to the five million already in production. Papa thinks about half of this is going to have to be acquired at the Permian Basin.