2019 Conference Highlights

Rice Chats About Management, Investments;
Panel Focuses On Credit, Debt

 

ECC 2019

 

DALLAS—Daniel Rice sat down for a fireside chat with Hart Energy’s Richard Mason to close out the morning at the Energy Capital Conference hosted by Oil and Gas Investor on March 5 at the Fairmont Dallas. One of three Rice brothers to run Rice Investment Group following Rice Energy’s merger with EQT, he said, “You have to pick and choose where slowdowns will happen.” There is more pressure on public companies these days, he added.

Rice told the audience of oil and gas professionals that Wall Street doesn’t trust them following the last slowdown. However, he said the future is bright for companies designed for growth.

Asked by Mason whether oil and gas companies need to have a different set of skills at this point in the cycle, and Rice said you do. “You can’t make a camel into a racehorse by cutting off its tongue. You only have a dead camel. The two have different skill sets,” he said.

Rice also said data are great, but management needs to execute for success. A company needs engineers to match finance people, he said.

 

Daniel Rice

Rice Investment Group's Daniel Rice

 

Before Rice took the stage, a panel took a look at private credit and alternative debt. Jeff Bartlett with HPS Investment Partners told the audience it's better to focus on the best management teams, data analytics, and low costs.

Bartlett added that the biggest change in energy finance has been default losses rising sharply in 2014-2015. He said the massive losses were a “game changer.” Banks have a totally different risk appetite now.

Damon Putnam, Angelo Gordon’s managing director of energy, added that commercial banks have no interest in second liens.

Shalin Patel of BlackGold Capital Management told the audience the industry is replacing cheaper capital with higher cost capital.

Earlier, S. Wil VanLoh, founder and CEO of Quantum Energy Partners, opened the conference with a simple message, “The U.S. won the shale race.” Speaking to a group of investors and producers, he was talking about capital, of course. VanLoh pointed out that the U.S. has gone from worst to first in terms of capital usage when it comes to shale exploration and production.

He steadfastly claimed that the rig count on U.S. shale plays doesn’t matter at this time. Why? Because the nation’s producers have made “amazing gains in efficiency,” he said. “Shale 3.0” is all about efficiency and that “should scare” some small operators, he added.

He said private operators have a tough time exiting plays now. One reason: big publics “land long” and don’t need to add inventory via purchases.