WSJ: A Real-Estate Mogul Is Behind the Hottest Stock in the Oil Patch
No, not TPL (right now), but good information nonetheless. This ‘skin in the game’ ethos gets me fired up.
Mr. Goff first reported a stake in Contango last summer. He bought more than 18% of the company’s shares when they were trading for more than $4 and pushed the company to cut costs, particularly at its headquarters.
Messrs. Goff and Colyer joined the company’s board in August 2018. Mr. Colyer, who was 33 years old at the time and has worked at Mr. Goff’s side for more than a decade, assumed the CEO role. His first move was to cut his own salary in half.
“We’re going to eat our own cooking and keep costs low and try to get the upside,” Mr. Colyer said in an interview.
Messrs. Goff and Colyer said that in addition to running a lean operation in Contango’s Houston headquarters, they are hoping to grow without spending much on drilling, aiming instead to gather wells that are already producing oil and gas.
“There’s a whole host of avenues to grow without drilling holes in the ground,” Mr. Goff said.
The Texas Pacific Land Trust Investor 
Real-Estate Mogul Is Behind Hottest Stock in the Oil Patch — Update
September 30, 2019
05:14 PM ETPublished September 30, 2019 05:14 PM Eastern TimeDow Jones Newswires
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Contango Oil & Gas Co
Last 3 Months
chart image for Contango Oil & Gas Co
The hottest stock in the oil patch has a well-known real-estate investor to thank for its more than doubling in recent weeks.
Shares of Contango Oil & Gas Co. surged in September as the Houston energy producer refinanced with a stock offering and new credit line and announced two acquisitions. The driver of those moves was John C. Goff, a Fort Worth, Texas, real-estate magnate who has been making big bets on small energy producers since oil prices collapsed in late 2014.
Mr. Goff and affiliates own about 35% of Contango’s stock and say they aim to use the company to gobble up oil-and- gas wells that have been repossessed by lenders or those that are owned by teetering rivals or private-equity investors under pressure to sell.
“There are far too many small public companies, ourselves included,” Mr. Goff said in an interview. “Either they need to be consolidated or they need to go away.”
Energy stocks, particularly those of smaller producers such as Contango, have had a rough run in recent years.
Those included in the S&P 600 index of smaller companies have lost about 20% of their value this year and more than 80% since late 2014. They bounced back in the first half of September along with rising oil and natural-gas prices but have given up the gains over the past two weeks as energy prices retreated.
U.S. oil prices lost 3.3% Monday to close at $54.07 a barrel, bringing them below levels before the Sept. 14 attacks on Saudi oil-production facilities that sparked the rally in crude.
Meanwhile, natural-gas futures fell to $2.33 per million British thermal units Monday, which is about where they began September before an unseasonable and ultimately short-lived rise.
While most energy stocks followed the arc of oil and gas prices in September, Contango kept climbing as it struck deals to bolster its balance sheet and add drilling fields where oil and gas were already flowing.
The shares ended Monday at $2.78, up 12% for the session and 184% for the month. They started September under a dollar.
The latest deal came late last week, when Contango won a bankruptcy auction for the assets of White Star Petroleum LLC with a last-minute bid. White Star, which filed for chapter 11 bankruptcy protection in May, is one of several oil- and-gas producers left behind by late shale pioneer Aubrey McClendon, who died in a March 2016 car wreck. Contango agreed to pay $132.5 million for White Star’sOklahoma drilling land and several hundred producing wells.
Two weeks earlier, Contango sold $50 million of stock, a big slug of which was bought by Mr. Goff, and said it would use some of the cash to pay for the assets of Will Energy Corp., a closely held concern that had been cobbling together bank-owned oil fields. It also struck a new agreement with banks for a credit line.
“Everyone else is sitting around playing defense,” said Wilkie Colyer Jr., a lieutenant of Mr. Goff who was installed as Contango’s chief executive last summer. “The entire exploration and production space needs to enter into a huge wave of consolidation.”
Mr. Goff, who is chairman and chief executive of Crescent Real Estate Holdings LLC, made his fortune putting together a multibillion-dollar portfolio of commercial real estate, selling it to Morgan Stanley for $6.5 billion on the cusp of last decade’s financial crisis and then buying it back after the market collapsed.
Since oil prices collapsed in late 2014, he has dredged the bottom of the barrel of energy stocks looking for bargains. He bought up shares and debt of Resolute Energy Corp. on the cheap and scored big in March when the struggling oil producer was acquired by larger rival Cimarex Energy Co. He also bet on Texas Pacific Land Trust, which owns decades-old drilling rights over swaths of West Texas. Its shares have quintupled since 2014.
Mr. Goff first reported a stake in Contango last summer. He bought more than 18% of the company’s shares when they were trading for more than $4 and pushed the company to cut costs, particularly at its headquarters.
Messrs. Goff and Colyer joined the company’s board in August 2018. Mr. Colyer, who was 33 years old at the time and has worked at Mr. Goff’s side for more than a decade, assumed the CEO role. His first move was to cut his own salary in half.
“We’re going to eat our own cooking and keep costs low and try to get the upside,” Mr. Colyer said in an interview.
Messrs. Goff and Colyer said that in addition to running a lean operation in Contango’s Houston headquarters, they are hoping to grow without spending much on drilling, aiming instead to gather wells that are already producing oil and gas.
“There’s a whole host of avenues to grow without drilling holes in the ground,” Mr. Goff said.
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On Mon, Sep 30, 2019 at 9:50 PM The Texas Pacific Land Trust Investor wrote:
> tpltblogger posted: “WSJ: A Real-Estate Mogul Is Behind the Hottest Stock > in the Oil Patch No, not TPL (right now), but good information > nonetheless. This ‘skin in the game’ ethos gets me fired up. Mr. Goff > first reported a stake in Contango last summer. He bought more than ” >
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