Milagro managing for value and size
Milagro Exploration CEO Bob Cavnar says he manages the private Houston E&P firm for return and value, not just scale. “Yes, drilling is fun, it’s great to do all these things…but the most difficult decision to make is when not to complete a well,” he told the Houston Producers Forum recently.
But Milagro is still planning to increase its scale, nevertheless.
The company, with 14 employees, and holding assets worth about $40 million, made a transforming $825-million acquisition of Gulf Coast assets last November, from Petrohawk Energy Corp. Now it is focusing on increasing production in high-margin areas. ”Our goal is building for some kind of liquidity event, whether an IPO or a sale, but we’re thinking today about growing the company as fast as we can,” Cavnar said.
Milagro was able to complete the complex financing for the deal in just six weeks last fall, right when the credit crisis was starting to spread wider through the financial system. The financing involved 11 banks, several private equity firms and a seller’s note from Petrohawk. Milagro even had to borrow the $10-million downpayment.
For this achievement, Milagro won the Oil and Gas Investor Excellence Award for Best Financing of 2007. For more on Milagro’s Miracle, see Oil and Gas Investor magazine’s April issue.
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–Leslie Haines, Editor-in-chief, Oil and Gas Investor, lhaines@hartenergy.com
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