Firm Overview:
Driskill Energy Partners is a group based in Dallas Texas that has created a partnership focused purely on special situations investing in the E&P space. One of the principals at Mercer Park has known the CEO of Driskill (Mike Mitchell) for well over a decade from his days of working with the Bass family in Fort Worth. Due to the extreme short term volatility in oil pricing coupled with unprecedented levels of leverage has created an opportunity set that Mike has not seen in the 30+ years he has been in the business. Mike’ s experience goes back to building the Bank One energy desk (which subsequently became JPM’s and one of the best known among the large banks for doing unique deals. Mike then went on to focus on Private Equity at Encap and also build a DE novo energy banking unit inside of FBR. Mike launched his own business over 12 years ago and they have closed on over 5B of transactions since then. One thing we love about this is Mike’s sourcing – he has not done a single deal this is a competitive auction – every transaction he has done has been directly sourced with the companies themselves and they retain exclusivity.
Investment Strategy:
From where we are currently in the “cycle” we firmly believe that by leveraging proprietary sourcing and not taking excessive commodity risk nor parent company risk (by actually having ownership of the assets themselves) – we are creating a very strong base case target return in the low 20’s net to LP’s with the additional 2x-4x upside if oil recovers to anywhere above 50 over the next 3 years. The companies themselves are focused almost exclusively in the conventional E&P space with hard assets underground that are currently producing – so there is zero exploration. These are companies that have great assets but due to the shock in oil pricing are just under the gun to cure their balance sheet deficits before the Apr / October borrowing base re-calculations by the bank – which creates a timeliness for this. Creating highly structured transactions with non-competitive pricing allows them to really reduce their risk to commodity pricing and create an asymmetrical payoff pattern. Up until now Mike has effectively put some capital into these transactions himself and has syndicated out the rest to institutions like: Apollo / GSO Blackstone / Prudential / Wells Fargo etc. as they have all wanted to leverage his sourcing capabilities as he has boots on the ground in Texas for 30 years and truly knows where all the bodies are buried. Net/net where we are today though Mike is 100% convinced due to valuations and his ability to structure that being focused purely on principal only transactions (while co-investing with LP’s) is where the business should be. It is also important to note that Driskill, in addition to Mike’s sourcing / and structuring capabilities, have a very well experienced staff (30 years +) of engineers who analyze each asset and can effectively shock test those wells to ensure our valuation is attractive. It truly is a world class team. At a minimum I would say it’s worth a listen as Mike’s insight and networks of relationships (Trevor Rees Jones, Boone Pickens, Floyd Wilson, The Hunt Family among many others represent some of the most blue chip companies / families in the space). Lastly, every single transaction they put on has a very clearly defined catalyst as well as exit so unlike some of the other players in the space these are very event driven opportunities that are not beholden to short term commodity prices. From our perspective this is clearly the best way to extract alpha from the space.
Executive Bios:
Michael W. Mitchell – Chief Investment Officer / Managing Partner
Michael Mitchell formed MEA in April 2003. Since forming MEA, Mr. Mitchell has led the origination in, structuring and completion of M&A, recapitalization and financial advisory engagements with an aggregate value of approximately $5 billion. He has 30 years of extensive oil and gas finance experience. Prior to forming Mitchell Energy Advisors, Mr. Mitchell served as Managing Director and Dallas office head of the Energy Investment Banking Group for Friedman Billings Ramsey & Co. (“FBR”). During his tenure at FBR, Mr. Mitchell completed M&A assignments with an aggregate transaction value exceeding $900 million. He was formerly President and Managing Director of EnCap Energy Advisors, LLC, a wholly-owned subsidiary of El Paso Corp., specializing in providing comprehensive corporate finance advisory services to the energy industry with a focus on the E&P sector. Prior to EnCap Advisors, Mr. Mitchell was Senior Vice President and Managing Director of Bank One Corp.’s North American Independents Group, which focused on the Exploration & Production sector of the oil and gas industry. Mr. Mitchell had previously served as Senior Vice President and Managing Director of Syndications and Private Placements for the Southern Region of Bank One Capital Markets, Inc. Mr. Mitchell joined MBank Dallas (formerly Mercantile National Bank of Dallas) in 1984. Bank One Corp. ultimately acquired MBank Dallas in 1989 and subsequently merged with JP Morgan Chase & Co. He is a holder of the Series 7, Series 24, Series 28, Series 79 and Series 99 securities registrations.
Mr. Mitchell received his BBA from the University of Texas at Austin with dual majors in Finance and Petroleum Land Management. He is also a graduate of Southwestern Graduate School of Banking at Southern Methodist University. Mr. Mitchell is actively involved in oil and gas industry groups including the Dallas Petroleum Club where he is Chairman of the Advisory Board and past President. Mr. Mitchell is also a member of the Independent Petroleum Association of America where he has served as an Advisory Board Member and as a member of the Capital Markets Committee. He is also a member of TIPRO and the Board of Directors of the Dallas Wildcat Committee.
Stephen Ardizzoni – Head Of Business Development
Stephen Ardizzoni serves as Head of Business Development for the Direct Lending Opportunity Fund. Previously, he was the Chief Investment Officer and Global Head of Cantor Fitzgerald Investment Advisors where he oversaw the creation and management of all aspects of the asset management business. Mr. Ardizzoni led the acquisition and integration of multiple investment management businesses as well as the creation of a liquid alternatives platform. The group also specialized in providing investment advisory services to large institutional clients in addition to a business unit focused on managing and liquidating complicated assets for LP’s. Prior to Cantor Fitzgerald, Mr. Ardizzoni was the Global Head of Research for Union Bancaire Privee Alternative Investments (UBPAI), the largest investor in hedge funds globally with assets under management (AUM) at the time of $60 billion. Previously, he was Global Head of Credit and Event Strategies of UBPAI, where he oversaw $15 billion of the firm’s assets. He also served on several advisory boards including Icahn Partners and led the firm’s restructuring efforts on complicated assets. Earlier, Mr. Ardizzoni was a Managing Director and member of the Investment Committee at Crestline Investors, a $4.5 billion AUM Bass family affiliated alternative asset manager, where he oversaw the firm’s credit and event hedge fund strategies with AUM of $1.5 billion, including a dedicated $500 million distressed fund-of-funds for a large institutional client. Mr. Ardizzoni also sourced and managed proprietary transactions for Edward P. Bass. Previous to Crestline Investors, Mr. Ardizzoni served as a Senior Portfolio Manager for SMH Capital Advisors, managing institutional and high net worth assets with an investment mandate focused on High Yield, Distressed/Stressed, Convertible, and MBS debt. His responsibilities also included overseeing all of the firm’s trading operations. While at SMH he built an industry leading track record in the High Yield sector and was ranked the #1 performing High Yield manager in 2002 Investorforce.
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