Posted By Lyndsey Kleven, Communication Manager,
Wednesday, May 8, 2019
The member spotlight series features OOGA members making an impact with their membership. If you would like to recommend someone to be highlighted, please contact Lyndsey Kleven at: firstname.lastname@example.org
Ray Walker grew up on a farm in Clyde, Texas, a small town outside of Abilene. Walker is the oldest of five children. The one family tie to the oil and gas industry was his grandfather, who was a roughneck in the Kilgore East Texas oilfield days back in the 1940s. He took Walker out to his first rig shortly after graduating high school. This was his first experience in the oil business—and it seemed pretty interesting to him.
When Walker graduated high school with a class of 33 students, he then went on to Texas A&M University and studied Agricultural Engineering. Arriving at Texas A&M was a whole new world. When he attended his first college course, there were more students in the class than the entire K-12 school district in Clyde. To pay his way through college, Walker roughnecked on an oil rig. He graduated in 1979 with more than 70 job offers. Walker accepted his best offer—to go work for Halliburton in the oilfield.
Walker’s first role at Halliburton was on a well control team fighting well fires all over the world. The reason he was put on this team was because he was good with a slide rule and could do calculations quickly. He spent nearly three years in this position and continued to grow his career and expertise within Halliburton over the next 12 years, becoming a “frack guru” and publishing author of multiple papers on this expertise.
In 1991, Walker went to work for Union Pacific Resources Corp (UPR), the exploration and production arm of the Union Pacific Railroad. His first role there took him to Carthage, Texas where he ran the entire east Texas gas plant. Two years later he moved to Fort Worth and was the east Texas team leader. Walker stayed in Fort Worth for the next nine years and went on to become the U.S. Onshore Operations Manager for UPR.
As one of the early pioneers of horizontal drilling and completion techniques, Walker holds a uniquely rare expertise in this break through technology. He has also published on this subject matter expertise and is truly looked to as an expert in water frack and horizontal drilling.
“It was pretty exciting,” described Walker. “It was brand new. It was one of those things where we did a few wells, and it worked, and the next thing you knew we had 40-50 rigs running. At one time I had 40 rigs reporting to me, so it was quite an experience.”
The year 2000 became a turning point on multiple fronts, there were two things that happened deemed “tornado one” and “tornado two.” Tornado one was an actual tornado that hit downtown Fort Worth and destroyed the 40-story building where the UPR offices were located. Tornado two was that Anadarko Petroleum Corp came to town to buy UPR.
Walker did not want to go to Houston to work for Anadarko. When he was approached about starting up a new company, it took his interest. The next five years brought three different start-up opportunities that were private equity backed. Two of them worked, one did not at all, as the money fell apart in each of the ventures, it became Walker’s golden rule that, “he who has the gold makes the rules.”
Frustrated from the start-up hurdles, in 2006 Walker found comfort in taking his industry expertise to consulting. Within the first couple months, a friend at Range Resources called Walker and described a well near Pittsburgh that they couldn’t frack after the first horizontal attempt. Since Walker had designed and pumped the very first frack job ever done on a shale well in 1982 for George Mitchell, he was the natural go-to person for this job. Walker thought he was going to Pittsburgh, Texas but after some clarification on asking what the Marcellus was, he realized he was going to Pennsylvania.
In early 2006, Walker went to Pittsburgh as a consultant for Range Resources. A few months later, he was offered a full-time position. The next thing he knew Range wanted him to start a new office in Pennsylvania. Walker ended up as employee number one in this region. The entire Marcellus play was three wells making 800mcf a day. Walker remained in Pennsylvania for the next four and a half years (or five winters as he described it) as the COO of Range Resources. Once the Pennsylvania operation was up and running, Walker moved back to Fort Worth and started contemplating retirement. In April 2018, he officially retired from Range Resources. This didn’t last long and, after three months, he started consulting again.
The Encino Energy Story
Walker was in Houston and happened to run into John Pinkerton, former CEO at Range Resources. Pinkerton knew Walker was consulting again and wanted him to meet Hardy Murchison, the President and CEO of Encino Energy. It didn’t take Murchison long to convince Walker to work for him a few days a week, and as Walker describes it, “I basically never left.”
Walker recounted that this May, he will have worked in the oil business for 44 years. “I can honestly say every day since then has been an adventure. It has been an exciting career, it has been challenging and there’s so many different aspects of it that make it interesting.”
In the web of relationships, Murchison worked for Pinkerton at Range Resources in the 1990s. He left Range to go back to attend Harvard Business School, thinking he would come back to work for Range at a later time. That did not happen, and Murchison went on to become a managing partner at First Reserve Corporation, a private equity company. After some time in the private equity world, decided he wanted to start his own company—which he did in 2011 by forming Encino Energy
Murchison believed it was a good time to be a buyer in the market and started acquiring minerals, non-oppositions and a few wells to operate. This progressed for the next few years and started becoming an increasingly competitive marketplace around 2015, with billions of dollars in private equity coming into the industry. Pinkerton’s vision was to stop messing around with the little stuff, or as Walker described, “Pinkerton says, ‘let’s quit hunting rabbits and let’s start hunting bears.’”
“Encino Energy spent about two years looking at assets in the Permian, Eagle Ford, Utica, Marcellus, even looked at the SCOOP And STACK, and after all of that the Utica won out,” explained Walker. “It was the best economics, best potential, best upside and it became a match made in heaven.”
Murchison had developed a partnership with the Canadian Pension Plan, $300+ billion pension plan, the third largest in the world. The partnership made sense for both parties involved that were looking for a long-term investment, that was very different from any normal private equity fund that you hear about.
“It’s hard to describe how unique the Encino story is and our vision, because we really are long-term,” said Walker. “We’re not a public company that has to live quarter-to-quarter, and we’re not a normal private equity deal where we’re worried about having to flip this deal in a few years. We really are interested in generating stable activity and cash flow, and doing things the right way.”
They announced in July and at that time had 26 people employeed in Texas. Walker came on board full time in August, and what evolved from six weeks of consulting was that Encino needed a COO to help build the organization, stand up the system and build a team that can go drill. What it means for Ohio are intentions of steady work for service companies, jobs for its employees for generations to come, with Walker estimating that there’s 50 years of drilling in the Utica.
After spending time in Pennsylvania, Walker met people there who knew what they were doing in the industry and fostered relationships working together over the years. This lended itself to Walker being a founding member of the Marcellus Shale Coalition (MSC). He saw the importance of trade organizations that are well organized and have consistent messaging, which seemed to hold the most weight with legislators and regulatory agencies.
“The one thing I always admired about Ohio was that they avoided a lot of the mistakes we made early on in Pennsylvania,” explained Walker. “We were going up the learning curve, and I think OOGA looked at that and went up the curve a whole lot faster and smarter, which is a good thing.”
Walker recalled the first time he met with ODNR, and how different that experience was from meeting with Pennsylvania’s regulatory agency. He felt welcomed and that they were actually interested in helping them start drilling in Ohio. He also noted that OOGA’s overall approach to working together with regulators and legislators has been developed very positively, compared to many other states he’s done work in.
“I understand how important a strong trade organization is, and I see that with the Ohio Oil and Gas Association,” said Walker. “There was never any question in my mind that Encino was going to get involved in OOGA and would like to play a big role. We’re investing hundreds of millions of dollars, I think it’s critical that we have a strong organization representing the industry and that’s here to help the members succeed in Ohio.”