According to the CDC, it’s been about 14 days since I penned my open letter to CDEV (January 2020) suggesting they find a merger partner. To say it wasn’t well received is an understatement. Perhaps I could have been more tactful. Perhaps I should have let Elon be the one to break the glass ceiling of tongue in cheek activism. Lessons learned, I suppose. Re reading the letter today, it doesn’t sound so controversial but time has a way of softening things.
Nonetheless, this morning and only 2+ years later, Colgate and CDEV have announced a merger to create the largest pure play Delaware oil and gas company. We could talk metrics and valuation and synergies, but why bother? The only two things that actually matter right now? What is oil price over the next 3 years going to be and that bigger is better- always. Personally, I think oil trades much higher as a result of the significant global capital underinvestment and continued sanctions on Russia (which I would lift for exactly that reason). And, as ESG continues to dominate the investment landscape for the time being (recession and stock market collapse have a way of re-focusing investors to things that matter… like cash flow), the scale achieved by the new company allows them to compete for public dollars. I like the deal and I’m happy for both teams.
On a personal note, we founded OneEnergy and Colgate around the same time. Our teams collectively banged around the Permian, kicking and scratching and willing our companies into existence. We found rock that we liked, executed the plan and did the best we could for our investors and partners. But, I must say, to have watched what Will Hickey, James Walter and the entire team at Colgate have accomplished… I can’t even tell you how impressive it is. And now, with a larger public company to continue to co-lead, in combination with the CDEV folks, the next chapter will be equally impressive. Oil and gas entrepreneurs are a wonderful bunch full of creativity, ingenuity and guts. I love to see people have success while bringing energy to an energy starved world. Congratulations.
DRW once again your observations are littered with common sense, a keen understanding of the business, intelligence, and a splash of smart-ass. As to your last paragraph, I could not agree with you more. I had the pleasure and opportunity to design and execute Colgate's first two wells. The small team was young, lean, and aggressive - and still is! Amazing to see the fluid cooperation between Will and James. Their energy and optimism permeated the entire group. Truly an example of how good things can happen to good people. Hey, I hear they are looking for a few directors... Might be time to remind them that you are ready, willing, and able. HA Miss your contributions to the LI community. Perhaps it will be soon time to take your message to the Twitterverse? I hear that a change in management there is imminent, and intelligent...