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Mississippi Resources LLC: The Right Experience to Take the Right Risks
Mississippi Resources LLC (MSR) has been in operation for barely two years, yet the company is poised to make its mark in the oil and gas industry within the Southern Gulf States region because the company’s resources are much deeper than its short existence reveals. “I started the company in late 2009, and brought in three other partners to form our management team,” explains Keith J. Gourgues, managing member. “Between us, we have over 125 years experience in the industry.”
Of the four managing members, known collectively as Mississippi Energy Partners LLC, three are former Cimarex Energy Co. employees and have extensive knowledge of drilling and completion techniques, operational efficiencies, exploration project generation, acquisition evaluation and risk management, as well as much local expertise within the sites MSR currently operates. To date, the group has acquired all of Cimarex Energy Co.’s oil and gas properties in the Mississippi Interior Salt Basin.
Gourgues, a former region manager for Cimarex, explains, “We have a really strong partnership and a lot of experience in this challenging industry, which is what has made us successful so far.”
Bringing Together the Best of the Best
“I was studying engineering at college in the early ’80s when I recognized the tremendous opportunities opening up for petroleum engineers,” says Gourgues, who now has over a quarter-century of experience in petroleum engineering, geology and geophysics within the oil and gas industry.
Before cofounding MSR, Gourgues was the region exploration manager for Cimarex’s New Orleans regional office, with a staff of 25 employees and an annual budget ranging from $50 million to $150 million toward projects in Louisiana, Mississippi, and offshore Gulf of Mexico. Gourgues is a graduate of the Petroleum Engineering Program at Louisiana State University and has been a licensed professional petroleum engineer since 1992.
Like Gourgues, Bruce A. Smith is an ex-Cimarex employee and holds a bachelors degree in Petroleum Engineering from Louisiana State University, as well as a master’s degree from the same institution. His experience extends two decades of reservoir and operations experience in multiple geologic basins throughout the south. Smith now manages all operations for MSR.
Partner James M. Hansen is also an ex-Cimarex employee and responsible for managing all geological and geophysical research for the company to enable the team to continue to develop and implement a successful drilling strategy. Hansen brings over 32 years of professional experience to the firm, most of which was spent as a consultant generating prospects in the Mississippi Salt Basin.
Melvin J. Baiamonte Jr. is also a partner in the company. He is a Registered Petroleum Landman with over 30 years experience creating and managing land departments for a long list of organizations throughout his career. Although Baiamonte is not an ex-Cimarex employee, he and Gourgues worked closely together earlier in their careers at Forcenergy Inc.
In total, this group of partners boasts experience at some of the nation’s top independent oil and gas exploration and production companies beyond Cimarex, including Murphy Oil Corporation and Dominion Resources. Together, the team has worked in almost every capacity within the industry, reinforcing MSR’s comprehensive management capabilities.
Currently, the firm operates from two office locations with headquarters in Metairie, La., just outside of New Orleans. “Our headquarters are in Louisiana, but our core operations are actually in Mississippi, where we specialize in the drilling and production of oil and gas within the Mississippi Salt Basin area,” says Gourgues. “Most of our projects tend to be low risk, but we have experience with high-risk projects in South Louisiana, offshore Gulf of Mexico shelf and deep water as well.”
Aided by funding from Lucas Energy Ventures III, LP, the firm has acquired 18 wells for operation and holds an interest in 32 others. They hold over 15,000 acres of mineral leasehold. The company continues to grow through strategic acquisition and exploration drilling. MSR has recently closed on a $50 million credit facility and is perched to move quickly on additional acquisition opportunities as they arise.
Minimizing Risks Wherever Possible
Despite the MSR management’s experience in the industry, there is a certain amount of volatility associated with the venture that simply cannot be avoided. “We concentrate on developing low risk opportunities, but sometimes risk is difficult to quantify,” explains Gourgues. “It takes a very experienced exploration team with local expertise, combined with very trustworthy and reliable subcontractors also with local experience to mitigate the risk in drilling and operations work.
“Our subcontractors are hugely important to the successful operations of our business,” continues Gourgues. “In fact, during our recent three well exploration drilling and completion program, we have been able to achieve a 15- to 20-percent cost savings over our original estimates. We have only been able to accomplish this savings through careful planning and supervision throughout the drilling and completion processes. And, these savings will allow us to exploit and develop many other opportunities which would normally be uneconomic at the higher costs.”
The company focuses on drilling “in-fill” and “step-out” wells on salt dome and inter-domal fields to minimize drilling risks and has plans to expand these operations. MSR has recently completed one inter-domal well, and in the process of completing one salt dome well.
“In the future, we’re going to be looking to significantly grow our operations. Not only will we be continuing to drill, but we will also be acquiring new properties, as well as expanding our base and possibly hiring additional staff,” explains Gourgues. “In order to do that and be successful, however, we have to monitor very closely our production rates and rate of return. It is essential for us to stay at or above our forecasted production rates in order to grow this company. Also, commodity hedging has become an integral part of our long-term strategy in this highly volatile product price environment in order to protect our down-side to our leveraged investments.”
With a solid core of managing partners holding extensive and varied experience in the industry, Mississippi Resources LLC is sure to optimize its current operations and transfer its success to all future endeavors.