Oilman Forms New Firm

By JOHN STANCAVAGE World Business Editor 7/31/2007

Veteran Tulsa oilman Randy Foutch is creating another locally based petroleum company that he says could employ 175 people in a few years.

Foutch has spent most of this year putting together Laredo Petroleum. He has reached a financing agreement with global private equity firm Warburg Pincus for up to $300 million. That amount could be increased to $500 million with the approval of the investors.

Combined with an additional $300 million in bank financing, Foutch will have substantial backing to pursue both acquisitions and exploration and development.

"We want to build a long-term, legacy-based Tulsa oil and gas company," Foutch said in a telephone interview Monday.

The company will target the Mid-Continent region, where Foutch and his team have experience. Foutch is well known in the industry for creating Lariat Petroleum and Latigo Petroleum, both based in Tulsa and also capitalized by Warburg Pincus.

Lariat was founded in 1997 and sold in 2001 to Newfield Exploration Co. for $333 million. Latigo was formed in 2002 and sold in 2006 to Pogo Producing Co. for $750 million.

At the time Lariat was sold, it employed about 100 people, mostly in Tulsa. When Latigo changed hands, it had about 140 employees. Most of those jobs remain locally based with the new owners, Foutch said.

Laredo will have more capital than either of those companies and thus have the capability to grow larger, he said.

Foutch said he considered taking public both Lariat and Latigo but received purchase offers that were better for investors.

This time, he said, the goal will be for Laredo to exist as an independent company for many years, although a public stock offering someday is a possibility.

"Our intention is to yield an economical return for investors over a long period of time," said Foutch, who is president and CEO of the new company.

Those stakeholders will include employees. Laredo, which has offices in the Bank of America building at Sixth Street and Boulder Avenue downtown, currently has a staff of 25.

Every employee -- from the top to the bottom -- will own a piece of the company, he said.

Foutch's business plan and ideas about corporate culture helped him recruit Jerry Schuyler, an executive who previously spent 30 years at a variety of companies, including Arco Oil and Gas, Dominion Exploration and Production, and St. Mary Land and Exploration.

"Randy told me it was very important to him to build a company where people truly like to go to work," said Schuyler, who moved to Tulsa from Houston to be Laredo's chief operating officer.

"He believes this is absolutely critical to the success of the company. This was too good of an opportunity for me to pass up."

TULSA WORLD FILE
Foutch also has hired some colleagues from his earlier companies, including Pat Curth, Oran Hall and Mark Womble.

The CEO said his company will create the kind of good-paying jobs that are typical of the energy industry. And, he plans to recruit locally whenever possible.

"We're pleased to be part of the new, vibrant Tulsa," Foutch said. Laredo is off to a fast start with the recent $75 million acquisition of Austin-based Jones Energy Ltd. The deal includes 130 producing wells located primarily in Hansford County, Texas.

The new Tulsa company has one rig working in the area and plans to add a second by year-end.

"We believe this transaction will provide a strong platform from which to pursue additional opportunities throughout the Texas and Oklahoma panhandle areas," Schuyler said.

John Stancavage 581-8314

Laredo Petroleum
Initial financing: Up to $800 million
Focus: Oil and natural gas exploration and production; acquisitions.
CEO: Randy Foutch
Headquarters: Tulsa
Employment: 25
Telephone: 513-4570

By JOHN STANCAVAGE World Business Editor