Vantage Energy LLC: Experts At What They Do
The 1973 Arab oil embargo sent a strong message to American consumers and businesses. It reinforced that reliance upon foreign oil is both foolhardy and a risk to national security. Accordingly, U.S. electric utility companies responded by replacing petroleum with domestically mined coal, nuclear energy and natural gas. Subsequently, the U.S. is currently not dependent on any foreign sources of energy for all our electric production. And it is companies like Vantage Energy LLC (Vantage) that have allowed the U.S.’s energy production facilities to become self-sufficient.
Vantage is a private company focused on the acquisition, development and exploration of unconventional oil and natural gas projects onshore in North America, primarily gas shales. Founders Roger Biemans and Tom Tyree started the company in December 2006. The company – located in Englewood, Colo. (part of the Denver metropolitan area) – got its start when Biemans decided to leave EnCana Oil & Gas, one of Canada’s largest oil and gas companies, in July 2006.
“I was approached by a number of investors after I left to explore the possibility of launching a private company. They were convincing enough, and trusted my reputation in the industry, so I did it,” reveals Biemans. “I had friends who thought I should do it, and I had always imagined myself going out on my own, and so far it’s worked out really well.”
Engineering Background An Advantage
Biemans, who has a background in technical engineering, says that such advanced operating experience in the geo-science and engineering field is what sets Vantage apart from its competitors as it develops properties with significant potential. “We tend to focus on technically based approaches to our operations,” he says. The company utilizes the latest in state-of-the-art exploration technologies, including 3-D seismic, micro-seismic, horizontal drilling and multi-stage high-volume/high-rate stimulations to successfully complete its projects.
Vantage has attracted the backing of several well-known private equity firms, including Riverstone Holdings, Lime Rock Partners and Quantum Energy Partners. The company has a combined line of equity of close to $485 million, and employs roughly 25 personnel between its Colorado office and its regional office in Fort Worth, Texas, and Waynesburg, Penn.
Under Biemans and Tyree’s leadership, the company has aggressively purchased or leased land in Texas, Wyoming, Colorado, Utah and Pennsylvania. The company’s acquisition of oil and gas leases on the Roan Plateau in Colorado smashed existing state records for a federal lease sale. In 2008, Vantage bought the rights to roughly 40,308 acres that primarily cover the top of the plateau in western Colorado. Vantage spent $57.6 million to acquire the leases, eclipsing Colorado’s previous one-day sale record of $11.8 million that was set in 2006.
Doubling Production In Six Months
In total, the company has amassed roughly 150,000 acres of land in various locations around the country, with its holdings in Texas, Utah and Pennsylvania as its largest. Biemans outlines that, while the company has acquired significant land holdings, it is just now getting into an aggressive production stage. Vantage, in conjunction with its partners, produces roughly 20 million cubic feet of natural gas a day, but Biemans estimates that the company is working towards doubling that number within the next six months.
The biggest challenge the company faces – other than the regulatory challenges that are common in the industry – is the fluctuation in the price of natural gas. Energy producers sign lease agreements with homeowners associations and individual property owners that give those groups generous signing bonuses – up to $25,000 an acre – and royalties on the oil and gas extracted from the land.
“Typically, when we’re ready to break ground on a new project, we have property owners cheering us on, and in the case of a recent project in Arlington, Texas, we have 7,000 new friends that will benefit financially,” continues Biemans. “We always honor our signed leases with landowners, though it can difficult at times when gas prices have dropped and the leases no longer make good business sense.”
Biemans also notes that Vantage was founded prior to a major economic downturn in 2008 and 2009, which was felt in all sectors, but the company’s technical experience has allowed it to succeed. “Gas prices are one-third of what they were when we founded the company,” admits Biemans. “We had to make adjustments to strategies and areas of operation to ensure that the projects made sense. But on the flip side of that, our competition started backing away from projects and allowed us to step in and pursue some higher-quality projects that, with our technological advantage, we can make profitable even with the lower prices.”
As technology continues to improve, opportunities like Appalachia’s Marcellus Shale – a basin that was considered impractical to explore for years prior to horizontal drilling techniques – will continue to present themselves. It’s going to be the companies that combine technical proficiency with solid backgrounds in business management that will present themselves as the most attractive to investors. Vantage Energy LLC, under the leadership of Roger Biemans and Tom Tyree, is a shining example of what that type of company looks like.