An American Oil Legend Returns
Mark Papa, the Lee Iacocca of oil, is back in business. The legendary CEO of Enron Oil & Gas (EOG), first went back to work for Riverstone, a private equity firm. After making EOG one of the top players, he retired in 2013. But since his departure from the company, the oil business has been interesting, to say the least. It was the wild West all over again, and Mr. Papa could no longer stand on the sidelines and watch.
The biggest game changers in the oil and gas field were the Eagle Ford and Permian basins in Texas and the Bakken shale in North Dakota. These explorations resulted in historically low oil prices. Watching all this chaos was Mr. Papa himself and he decided to make the plunge once again! He joined Riverstone, a private equity behemoth, as a bargain hunter. Not surprisingly, he soon got bored with it and planned to leave. But Riverstone gave him an offer he just couldn’t refuse. The deal? To start another company from scratch and replicate EOG’s success! Mr. Papa was skeptical but decided to make the plunge after all.
The new company was named Silver Run Acquisition and Mr. Papa went to work. While still working at EOG, Mr. Papa was convinced there was going to be no new business opportunities, at least not on the scale of Eagle Ford or Bakken. After working with Riverstone under the guidance of David M. Leuschen and Pierre Lapeyre, he realized that he was wrong. This is because of the promising finds in the Permian Basin, of west Texas. The Permian Basin has grown to be one of the best oil fields in the world. Based on this Papa went shopping for Silver Run Acquisition and bought Centennial, who had cobbled together 43,000 acres of Delaware sub-basin of Permian. After that, another 35,000 acres was acquired bringing the grand total to 78,000 acres!
All this acreage has produced wells that will keep the drills busy for at least 15 years, leaving some worried that it will just produce another glut in the market. But not according to Papa. His grand optimism comes from two places. One, the global demand for oil is only rising, two, shale oil, unlike offshore drilling, is more flexible when it comes to production. The big story in all of this is that the Permian Basin is the gift that keeps on giving. The three major areas of oil production are in Midland, Delaware and Marfa basin. Midland is the largest and the Delaware basin comes in second.