HOUSTON Gary Evans, a wildcatter who left his job as chief executive of Magnum Hunter Resources MHRCQ.PK just as it emerged from bankruptcy on Monday, is wasting no time getting back into the oil business despite the worst price rout in years.
He has already formed a new venture called Energy Hunter Resources Inc and is close to buying two tracts of land in the oil-rich Permian Basin and Eagle Ford fields of Texas, Evans told Reuters on Tuesday.
Evans, who started his most successful oil company for $1,000 in 1985 near the bottom of a price crash and later sold it for $2.2 billion, is an eternal optimist, much like many risk-taking wildcatters.
"All the veterans in the business know that this is a phenomenal time to get something new going, when everybody else is running for the hills," he said.
Evans declined to discuss the size of the parcels he is purchasing but said the privately held tracts had enough space to drill about 40 wells that would cost about $6 million each.
"I'm a big believer that oil prices this time next year will be $10 to $20 higher per barrel. So I'd like to drill some now and capture some of that upside," he said.
The land is not currently producing but is surrounded by active oil fields, he said.
Evans said he was targeting the Eagle Ford and the Permian Basin, two of the country's top tight oil fields, because he has worked there before and their sweet spots, with the oiliest rock, still offer profits with oil near $44 a barrel.
"These two plays in this current commodity cycle offer the best opportunity for finding unique deals," he said. "You have to be in a sweet spot ... that's what is very hard to find."
Evans is restricted for one year from buying working interests in the Marcellus and Utica natural gas fields in the eastern United States where Magnum Hunter operates.
Magnum Hunter, which exited bankruptcy this week with zero debt, has said it is looking for a new CEO as it tries to regain its footing after oil and natural gas prices fell by half since mid-2014.
Evans, 59, said the first round of financing for Energy Hunter Resources will be a private placement with friends and family.
Later he said he may tap public capital markets, where he has raised some $6 billion over his career.
He said the current bankruptcy wave, which has ensnared about 60 oil and gas companies, is hitting as derivatives expire that companies had used to protect against the price crash.
Liquidity helped fuel the U.S. fracking revolution and more money was available in the latest boom, which came at a time of record-low Federal Reserve interest rates, than in previous cycles.
"I don't think there's any doubt that access to capital - whether it is the Fed, hedge funds or private equity - is 100 times greater now than it was in the 1980s," Evans said
(Reporting By Terry Wade; Editing by Tom Brown)