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You may remember this archived thread from earlier this year. My business partner and I had put together what we felt was an outstanding deal for a group of wells in Wyoming only to have the bank we were talking to balk at the last minute. We were last seen getting shitfaced because it looked like the dream was dead. Until a couple of weeks ago. Since you last heard from us, I had gotten a job working as a drilling engineer for a large independent in Dallas and my partner had taken a job as a consultant working for a number of small independents around Denver. She had been doing a lot of really good work for a specific company that also happened to have bought a couple of wells off of our acquisition target. A couple of weeks ago, the principals of a $150,000,000 fund went to the owner of that company looking for a place to put some money. He told them he didn't have any but the young consultant he had on the payroll was on to something good. She ran them through the entire project, the engineering, the geology, and of course the money. They were very interested and wanted us to update the forecast. So I spent the 3 days before Thanksgiving pulling in another year of production data, updating the price deck, running the cash flow forecast, and updating the business plan. When they saw everything updated, they were even more excited. They want to approach the acquisition target either this week or next. And through the guy my business partner has been working for, we have a line to the CEO of the target to get an introduction. It seems like 6 months ago the dream was dead, but just by leaving it dormant for a little while and letting life happen we might actually be in position to make this happen.
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Dec 1, 2013 16:42
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That is awesome! Congratulations, man. If someone in charge of $150,000,000 came to me, I'd be all like, I hear bitcoin is gonna be huge this year.
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Dec 2, 2013 00:06
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gently caress yeah. I read your first thread with interest, I hope you are able to share some of your progress going forward.
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Dec 2, 2013 05:02
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That old thread was exciting as hell for me. I'm glad to see you guys are back on track to making the dream come true. [shamelessplug] I'm graduating in two weeks with a B.S. in geophysics and a prior background in mechanical engineering so if you're looking for some talent shoot me a PM [/shamelessplug] Good luck with everything and good on your for taking a shot at something like this!
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Dec 2, 2013 18:37
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Dec 2, 2013 19:24
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I'm pulling for you! I followed the last thread and was hoping for a story of starting out in Oil&Gas. Would you happen to know how to get started in well servicing work? I have a process that I'm pretty sure would work for sour gas well (H2S scavenging?) a lot better than the standard trizane&soapy water, and I'm probably going to be testing it out over the Christmas break when the university I'm working at shuts down for the holidays. Assuming that it works, do I just start cold calling people or something?
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Dec 2, 2013 22:50
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I swear nothing is ever easy with this deal. (names have been changed in the following story) So my partner has been doing consulting work for a guy named Joe. The funding guys, Bill and Mike, went to Joe about another deal he was working on that is pretty much a stinker. My partner sensed that the Bill and Mike weren't that interested in that deal, so she started talking about the Wyo deal. Joe was ok with that provided we gave his son Adam a piece of the company and a job as a finders fee. We were fine with that since we really want to get the deal done. Well sometime in the last couple days Joe changed his mind. He's upset that we "sabotaged" his deal. So he's been getting in Mike's ear telling him that it costs $200,000 to abandon a well and if you spread that out across 300 wells it would cost $60,000,000 when the field is at the end of his life. There is no actual basis for those numbers. A one off P&A costs about $15,000 (before you factor in the salvage value of surface equipment) and if you turnkey out a package of wells you can get them done for <$10,000. He also told Mike that we would need to get a $20,000 surety bond for every well, never mind that Wyoming allows a blanket bond of $75,000 for any number of wells. Now Mike is spooked. And now Adam has started a whole bunch of technical question about decline curves which is interesting because he has no technical background in oil and gas. Our suspicion is that he shared the business plan with Joe and that is a problem because Joe has not signed the NDA that we had Bill, Mike, and Adam sign. The good news is that Bill is very much still in and knows that these are not real issues. And Bill is the one that controls the access to the money.
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Dec 5, 2013 04:21
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This is so rad. I remember reading the first thread. Business development is so cool. Best of Luck!
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Dec 5, 2013 07:38
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ch3cooh posted:I swear nothing is ever easy with this deal. gently caress those oil rig shows with macho riggers, they need to make a TV show of your adventures in getting these wells.
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Dec 5, 2013 10:19
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Rudager posted:gently caress those oil rig shows with macho riggers, they need to make a TV show of your adventures in getting these wells. I love this business and most of the people are really amazing but there are some petty petty loving people. This guy was gonna get a small piece of a huge deal instead of 100% of a tiny mediocre deal! We have placed a call to the CEO if the target but he is out of the office today. Left a message with his secretary who said he would "call back tomorrow"
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Dec 5, 2013 18:18
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Nice! I was excited for you in the last thread and am ready for round two!
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Dec 7, 2013 19:03
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God drat I love these threads. I kinda got worried that the deal fell through completely, but I'm glad to see there is still some hope. You'll be in high society in no time 
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Dec 8, 2013 11:25
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Looking forward to updates, the original thread was a great story to follow! Are you more optimistic about the chances this time around?
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Dec 9, 2013 17:09
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So with the investors how does that effect your overall business structure? You don't have to get super detailed on the economics of it if you don't want, just curious about how things work. Before when you tried this I assume it was more of a traditional loan, you and your team would be entitled to whatever profits above operating costs and re-investment into the business, etc? But using someone else's money I assume that cuts up your slice of the pie significantly, yet shielding you from most risk? Is this the general jist?
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Dec 10, 2013 17:50
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dreesemonkey posted:So with the investors how does that effect your overall business structure? You don't have to get super detailed on the economics of it if you don't want, just curious about how things work. It's a split of net cash flow, paying back investors with most of the money until a certain ROI has been reached and then tapering to where we would keep most of the money. We would use our cut of what's left to reinvest and pay ourselves. Basically a distribution waterfall. Right now we are letting things cool off for a little bit to deal with the situation I talked about a couple posts up. We have met with the first of 10 funding groups that are interested. This group is typically the hardest to get money from and we'll work our way up to the group that we think would be easiest. Even for how tough these can be they are very very interested in funding us.
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Dec 11, 2013 01:48
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Great to see you're still at it, I was pretty bummed when it seemed like your prospect petered out. I moved into an A & D position in my company early this year so this is doubly interesting to me now. You're doing exactly what I hope to be 10 years from now, please be my hero TIA. Edit: if this thing gets serious and you'd like a reserves / production / misc geo tech in Houston holler at me. metasynthetic fucked around with this message at 19:09 on Dec 13, 2013 |
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Dec 13, 2013 19:05
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What was it like presenting your business plan and forecast to the investors?
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Dec 13, 2013 19:26
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Goon Oil! Excited to see this thread back!
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Dec 14, 2013 02:57
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Eagerly watched the last thread and the updates in #sports... still watching and good luck!
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Dec 15, 2013 05:44
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Neo Duckberg posted:What was it like presenting your business plan and forecast to the investors? For us it's not really that stressful. We learned so much from the failed attempts earlier this year that we know this deal forward, backward, upside down, and inside out. We have the long form business plan with detailed economics (it's about 20 pages) and then we have a powerpoint that we can get through in about 20 minutes that gives a summary of the history, technical details, and economics of the deal. I'd say my biggest tip is that you should know everything there is to know before about your proposal before you ever walk into the presentation. Like think Art of War style, you should have worked through the presentation so many times (show the information to people you know and TRUST COMPLETELY and ask them to pick it apart mercilessly) that the outcome is decided before it starts. Know the weak points of your proposal, I believe that if you are up front about the risks involved in the deal (and what you propose to do to reduce them!) it takes a lot of the ammo out of doubters guns. It makes you look honest, thoughtful, and most of all realistic. You're not some wide eyed optimist that sees no downside, you're a realist who has really thought it through. metasynthetic posted:Great to see you're still at it, I was pretty bummed when it seemed like your prospect petered out. Houston blech. Move to Denver and we can talk!
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Dec 15, 2013 18:10
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The last thread read like the finest business thriller, and this one is shaping up in that direction as well. Thank you for making it. You know a considerable amount of the accounting side of things, which seems uncommon for an engineer. How did you educate yourself in that regard? Where did you envision your career advancing before Goon Oil was revived? Keep us posted!
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Dec 16, 2013 08:36
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usha posted:The last thread read like the finest business thriller, and this one is shaping up in that direction as well. Thank you for making it. So it kind of comes from two places. First, petroleum engineering is a unique subset of engineering because it has a heavy emphasis on economics. I remember my freshman year at Mines in the Intro to Petroleum Engineering class on the very first day we were told that while making oil was nice the goal of everything we were going to learn was to make money. And making money and making oil are not always the same thing. So everything I've done has involved, sometimes heated, debates over costs, PV10, IRR, and discounted payouts. Second, I'm kind of the black sheep as far as my dad's side of the family is concerned. I come from a long line of accountants, finance-types, and businessmen that makes me the weirdo that went into engineering. So a lot of this stuff just kind of makes sense to me. It's weird. These last few months I had settled into a pretty good spot. I'm the drilling engineer on a really challenging project for a really incredible company. I figured I would be in this position for a few years until the older guys started retiring and then I could move up to the senior staff level or into management.
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Dec 16, 2013 17:50
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What's the ballpark on how much capital you think you need to raise to pull off the wyoming acquisition?
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Dec 20, 2013 19:53
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gmilo posted:What's the ballpark on how much capital you think you need to raise to pull off the wyoming acquisition? $55,000,000 Which sounds like a lot but for oil and gas is actually not that much. When we were trying <$10,000,000 deals we had people tell us it sounded like a nice deal but wasn't big enough to get them interested.
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Dec 21, 2013 19:04
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ch3cooh posted:$55,000,000 That's it? drat, that really is nothing. I work in offshore oil and I've snuck a few peaks at the numbers in our business. To put it bluntly, they make 55 million look like couch change. At least 2 were in the billions and we're considered a smaller outfit in the grand scheme of things.
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Dec 26, 2013 06:04
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mr_cardholder posted:That's it? Also, to add a slight amount of anecdotal perspective for on-shore transactions: I've worked projects of 5-figures and low 6-figures (for small-time, individual investors) to $300MM, and a couple near or above $1BN. In my experience, most transactions among small to mid-size companies range in the $5MM to $50MM area.
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Dec 26, 2013 06:33
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mr_cardholder posted:That's it? Offshore is going to be way more expensive than anything land based, just because of the infrastructure involved. Boats are expensive as gently caress, offshore oil and gas boats are the most expensive of boats.
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Dec 26, 2013 14:02
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Glad to see you're still in the game, ch3cooh. I don't think I posted in the old thread, but following your story has been really fascinating. Business can be just so drat exciting, and there I am sitting on my rear end clicking stuff on the computer all day. So... good luck, looking forward to more updates.
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Dec 26, 2013 15:32
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Yeah, I followed the last thread and am really excited to see where this one goes!
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Dec 26, 2013 17:47
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FrozenVent posted:Offshore is going to be way more expensive than anything land based, just because of the infrastructure involved. Boats are expensive as gently caress, offshore oil and gas boats are the most expensive of boats. Oh, I know. I was just emphasizing the point that the OP made that $55 million in the oil industry is not a lot of money, relatively speaking. I wasn't trying to insult you, ch3cooh. Sorry if it came off that way. Good luck on your acquisition!
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Dec 27, 2013 04:25
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mr_cardholder posted:Oh, I know. I was just emphasizing the point that the OP made that $55 million in the oil industry is not a lot of money, relatively speaking. I wasn't trying to insult you, ch3cooh. Sorry if it came off that way. Oh man don't even worry about it. I take a lot of pride in living on the low end of the oilfield. There are lots of places like emerging resource plays and deepwater where cost isn't the focus as much as appraising and securing leasehold. But go into an area like I work right now, and its a world apart. I'm drilling 5600' vertical wells in an established area where the geology is really hard and economics of the project require I keep well costs down. Under $850k to be exact while running 250k of casing, getting good cement bond from TD to 1500', keeping deviation under 2deg, and often spending >$75k to build a location. If I sneeze I blow the economics of an injection pattern. We've had engineers take assignments in Kurdistan to avoid working on this project.
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Dec 28, 2013 18:09
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ch3cooh, thanks for this thread! At the moment I am getting my bachelors in mechanical engineering, but next year ill probally get my MsC in Petroleum Engineering. Starting my own company in 15 or something years would be fantastic, so ill be watching this thread closely. I didn't read your previous one, so sorry if you already awnsered my question.. How hard is it to find a decent drilling spot? I figure that the competition must be hard. How do you compete with large companies? Aren't they interested in all the profitable wells? Or do they have so many, that they just don't care about smaller sites?
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Dec 28, 2013 18:27
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So after letting the holidays pass and the previously described situation cool off a bit we were back at it today. We have 3 investment groups looking to fund us if we get the deal in place. We also had first contact with the target. My partner spoke with their VP of Strategic planning and development. When he heard the assets we were interested he said they hadn't talked about doing anything with them in years and they would definitely be interested in talking about divesting them.
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Jan 11, 2014 00:53
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Not sure what potential sponsors you've been in contact with, but this sounds like the kind of asset package a family investment fund would go after. Small size, earlier stage and longer investment horizon. PE funds will be more concerned about LP distributions and how much leverage they slap on--obviously banks only lend on PDP / PUDs so the answer is "not much." Very interested in following this. Edit: Holy poo poo, just realized this is Wyoming, which I actually know pretty well. Jonah? Wamsutter? If this is lovely 90% dry gas acreage it's no wonder investors aren't biting. Also need to keep in mind your basis risk, Rockies gas sells at a healthy break to NYM and is difficult / expensive to hedge given the volatility... Swaps liquidity is approximately dick past 2016. If you have a CIM or deck you've been showing and don't mind sharing, I'd be happy to do some NAV work on this. Might be useful for you to see how potential investors are valuing, risking etc. Also sanity check your curves, engineering and single well economics. Also: I wish I'd gone to school for engineering. Hell of a lot harder to learn than the business side. Although I'm convinced I could fake it pretty decently if only my boss would pay for ARIES / PHDWin licenses. Edit #2: Reread the archived OP, this is non-CBM PRB correct? tolerabletariff fucked around with this message at 06:46 on Jan 17, 2014 |
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Jan 17, 2014 05:33
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I understand maybe two words in the last post. Good luck with the project though! I followed the last thread an i'll be watching this one too.
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Jan 17, 2014 20:06
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tolerabletariff posted:Not sure what potential sponsors you've been in contact with, but this sounds like the kind of asset package a family investment fund would go after. Small size, earlier stage and longer investment horizon. PE funds will be more concerned about LP distributions and how much leverage they slap on--obviously banks only lend on PDP / PUDs so the answer is "not much." That's correct non-CBM PRB. There are some other operators drilling horizontals that are coming on huge where we would potentially pick up some offset undeveloped acreage but that kind of development would be further down the road depending on lease expirations. I would actually love to pick up some HBP gas acreage off the scrap heap and just sit on it until gas prices come back (if that ever happens (it's probably not)). But we're 100% focused on oil. We heard from the seller on Thursday and they said to make them an offer so I'm meeting with our attorneys this week to put together the offer letter.
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Jan 18, 2014 19:26
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ch3cooh posted:That's correct non-CBM PRB. There are some other operators drilling horizontals that are coming on huge where we would potentially pick up some offset undeveloped acreage but that kind of development would be further down the road depending on lease expirations. Without knowing particulars, I wouldn't expect much of your leasehold to expire if you're buying old, still producing wells. At this point, probably almost all of it that would have expired will already have done so, as long as your production curves stay steady as you're expecting them to. There can be weird stuff that happens with federal leases, but even so.
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Jan 18, 2014 20:00
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We sent our letter of intent for the purchase to the seller last week. They called us back to say that their upper management was in Houston for NAPE but they would get back to us probably Tuesday (today). They also said that our offer was on the low end of their price range (of course it is) but they were very interested in talking.
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Feb 11, 2014 20:12
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I assume the lawyers you're working with on preparing the offers are also helping you navigate any issues with your investors concerning securities?
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Feb 22, 2014 08:38
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I have to go find the old thread now ( Moral_Hazard fucked around with this message at 21:42 on Feb 25, 2014 |
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Feb 25, 2014 21:35
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