Title: The Red-Vested CEO
Author: Linda Flis
Publication: The Outcrop, April 2002, p. p. 1, 6-7
As the new President and Chief Executive Officer of Western Gas Resources, Inc., RMAG member Peter Dea represents a new breed of CEO, one with a strong environmental ethic and an upbeat outlook for opportunities in the Rockies. It is unusual for an exploration geologist to find his way to the helm of a company that was originally focused on the gathering, processing and marketing of natural gas, but the company now has upstream assets in some of the hottest plays in the Rockies, and is positioned for growth. Fresh off his success as President and CEO of Barrett Resources, Peter Dea is now prepared to lead Western through an exciting period of exploration for and development of the vast untapped natural gas resources of the Rockies. He is an eloquent spokesperson for industry, whose opinions have been sought by major print and television media across the country.
Some of his most important lessons and values trace back to the earliest days of his career.
It was his love of the outdoors and his dream to ski powder that led him from Massachusetts to Crested Butte, Colorado. He first studied psychology at Western State College in Gunnison, but switched to geology because the mountains he passed every day stimulated his curiosity. In the 1970’s he initially worked in hard rock mineral exploration, including two field seasons doing helicopter-supported field work in Alaska. He still relies on the valuable skills he developed there. “There was a solid emphasis on observation, intuition and a lot of thinking, because we were doing grass roots exploration. We had to pay a lot of attention to the rocks and the geology. When you’re a surface mineral geologist, you’re largely relying on what’s on the surface and what’s in your mind to extrapolate what’s going on down below.” In those days he wore a red vest so that he could be easily spotted by the helicopter pilots at the end of the day. He still has that vest and some vivid memories of that experience. He recalled that after his first three weeks in Alaska, he was chased by a large black bear and its two-year-old cub. “After that I decided that I’d better have a gun, if for no other reason the first five bullets were for the bear and the last one for myself, so I carried a .41 Ruger. I doubted that a pistol would have done much damage to the bear, but there was a lot of psychological comfort in just having a gun, even though I’m not a hunter or shooter by nature.”
He worked as a consultant and college professor for a few years before moving to Corpus Christi to work south Texas as a production geologist at Exxon in 1982. Although he was not in the exploration department, he showed his strong and independent nature early by persuading the conservative managers of the production department to drill three rank wildcat wells. Another highlight of his career with Exxon was working in the Special Trades Unit, which was formed to look exclusively at outside-generated deals. “When I finally transferred to Denver, there were initially 300 people in the office. Then we downscaled to 100, and then we downscaled to six. I was the lone geologist in that group of six. I think we were the first company that exclusively focused on and actively advertised for outside-generated prospects. Over the course of a year we screened about 400 outside-generated prospects and would take about five to drill. We got to see a lot of great diverse geology, became pretty familiar with a lot of different creative deal terms, and met a whole lot of people in the industry. The interesting thing that not many people realize is that we were the first company to go to a geological convention, which was the Rocky Mountain Chapter of AAPG in Billings, and set up a booth with a big sign that said “We buy and sell prospects.” It wasn’t until years later that NAPE (the North American Prospect Expo) took off.
After leaving Exxon in 1991, he formed his own company, Nautilus Oil and Gas. Then in 1993 he went to work for Barrett Resources as an exploration geologist, and by 1999 he rose to Chairman of the Board and Chief Executive Officer there. One of his most notable accomplishments at Barrett was the Cave Gulch discovery. He related how Barrett came to take that deal. “I started looking at the Wind River Basin and one of the prospects that had been brought in was the Cave Gulch prospect, that Larry McPeek had put together. …At the time we thought it would be a 50 Bcf project, despite many surrounding dry holes and very complex surface structure. By looking at the dipmeter, log analysis, and the decline curve on one key well, I convinced Bill Barrett and Paul Rady that it was worth the risk. We also had to put the leases together, which was another major hurdle, because Phillips had the leases tied up. I worked pretty hard with our landman to tie up that lease, which we got for $25 an acre. It was about to expire, so we put a federal unit together and we literally got a test off within two days of when that lease would have expired. The Cave Gulch #1 flowed 10 Mmcfpd and 116 BCPD proving up one of the giant gas discoveries of the decade in the Rockies. Most successful companies through their evolution have a company-building project, and Cave Gulch was in essence that project for Barrett. …Cave Gulch really launched Barrett into a whole new arena. We had 64 Bcf of proven reserves prior to Cave Gulch, and a couple of years later we had 600 Bcf, and when we finally sold to Williams in August 2001, we had 2.1 Tcf.”
“As importantly, Plains Petroleum, out of Denver, was seeking a white knight at the time, since they were in the middle of a hostile takeover by Cross Timbers. Long story short, we did that deal with Plains. Since they were two or three times the size of Barrett, and we were the survivor, the only way that Barrett had the financial, reserves, and production wherewithal to come close to merging with Plains was Cave Gulch. Barrett had a market capitalization of $200 million in 1994. Now we were a 600 Bcf company, had grown to over $600 million market cap and were well on the way to tripling reserves and quadrupling market cap.”
Peter then led the company through a period in which Barrett was a hostile acquisition target. “I was really proud to be part of a strong team of outstanding geologists, landmen, engineers, and legal and financial businessmen, who worked very well together. Collectively we were able to increase our market capitalization a billion dollars in the last year of the company’s history. I recently read in the Denver Post, where the 30 largest publicly-traded companies in Colorado has lost $263 billion in 2001. Barrett stood out as one of the three companies that had a positive gain in that time frame. As the Post reported, Barrett’s market cap increased a billion dollars in that last year, 2001. Overall it was great to be part of that team. It was an honor to have the opportunity to lead Barrett, particularly in the last couple of years. Not only was it a great working environment for the employees, but we had stellar performance and return to our shareholders.” Shell was an ardent pursuer, but the company sold to Williams in the summer of 2001 at a 67% premium above the pre-Shell-offer share price.
He then took three months off to marry Cathy Carpenter, and with their three sons, Drake, Austin, and Cort, they moved homes, went scuba diving in Belize, and started a cabin outside of Crested Butte. He joined Western Gas Resources in November of 2001.
Western explores for and develops gas properties in the Rockies, with producing properties located primarily in the Powder River Basin of northeast Wyoming plus Jonah Field and the Pinedale Anticline area of southwest Wyoming. It has over 650 employees and operates 18 gathering, processing and treating facilities located in the Rockies, Mid-Continent, and West Texas. The company buys and sells natural gas and natural gas liquids (NGLs) nationwide, and has proved reserves of 408.5 Bcf of gas. Peter is optimistic about the future. “Where we see the real upside potential is more in the upstream, the exploration and production side of the business. We’re extremely well-positioned. Our position in the coalbed methane play in the Powder River Basin is frankly unrivaled by any one in the industry and gives us a great platform for growth as does our position in the Green River Basin. We’ll also be looking at new growth projects, particularly focused on Rocky Mountain natural gas, that are complementary to our core competencies in tight gas sands and coalbed methane. And the beauty of Western Gas Resources is not only do we have a profit center in the production of gas but also we have profit centers in the gathering and compression and the marketing of natural gas, so we can reach a little bit deeper into the value structure than a pure E & P company.”
Peter Dea has had an illustrious career so far, and his future at Western Gas Resources promises to be challenging. He thinks this is an exciting time to be in our industry and he encourages aspiring geologists, landmen, engineers, and computer scientists to look at a career in the natural gas and oil industry.
This article was based on an interview published in the Rocky Mountain Oil Journal (1/25/02-1/31/02, vol. 82 No. 5).