Tom Ward, who co-founded Chesapeake Energy Corp. and then went on to create SandRidge Energy Inc. before being forced out earlier this year, is back in the game with a new Oklahoma City-based exploration and production company.
Ward, 54, who founded SandRidge in 2006, was replaced as chairman and CEO in June by the board of directors, which said its decision was based on the best interests of the company and its shareholders (see Shale Daily, June 20).
Tapstone Energy LLC has leased space in the downtown Oklahoma Tower in the central business district with a "handful of employees," Ward said last week in Houston at the Bloomberg Oil & Gas Conference.
As to where Ward might invest remained a question, he said, according to a transcript of his presentation. However, producing properties, i.e., mature, are better than areas that would require extensive exploration.
"I like areas that are out of favor, maybe natural gas properties," he said. "I am long-term bullish on natural gas prices in the U.S."
Ward is personally funding Tapstone but said he might consider outside private equity, as his former Chesapeake partner Aubrey McClendon has done with his new venture, American Energy Partners LLC. McClendon was ousted from Chesapeake on April 1. The duo founded Chesapeake in 1989.
"My ideas tend to be larger than my pocketbook," said Ward. "We might need help along the way if we come across an idea worthy of having a partner." If he wanted "XYZ private equity company to invest with me, they tend to be fairly 'graspy' of what they want of my time. If I'm funding myself, I can wake up and decide if I'm going to work at the Boys' Home or at the office that day."
Ward has plenty of money with which to make that decision. In addition to the savings he likely has built up from his tenure at SandRidge and various other deals, including some with Chesapeake, he received $53.5 million as a lump sum cash payment when he was forced out at SandRidge, as well as an accrued vacation payment, the value of restricted stock that he would have received over the next three years, and his base salary for a period of three years.
To help finance Tapstone,Ward secured a private loan for his new venture from Tulsa oilman George Kaiser, and documents filed in September with the Oklahoma County Clerk indicated that Ward used proceeds he received from his stake in the Oklahoma City Thunder, the NBA basketball team, as collateral for a private loan; the amount was not disclosed. (McClendon also owns a piece of the Thunder, as does Devon Energy Corp. Executive Chairman Larry Nichols.)
There are no plans to take a company public, he said.
"Today is the first time in decades that you have access to private capital...When we started SandRidge and Chesapeake, the private equity market was different from what it is today. If we wanted to run a company of any size, it had to be in the public market because that's where the capital was. That's not the case today..."
Activist shareholders who questioned some of Ward's personal financial transactions may influence his decision on whether to take any company public.
An independent investigation of Ward's related-party transactions in the Mississippian Lime did not merit a termination for cause, but his employment was terminated because the board felt new leadership was "desirable." He had been under fire for more than a year for the way he ran the company, similar accusations that dogged McClendon.
McClendon's various energy entities are being financed through private equity; he recently secured more than $1.7 billion to finance some Utica Shale development (see Shale Daily, Oct. 10).
As to whether he could withstand being ousted from another company he created again, Ward was retrospect.
"You always have to have your bags ready to be packed and have thick skin; don't take things personally," he said. "More than that, you just have to perform. Once you're at a CEO level at a publicly traded company, your company has to perform or you'll be replaced. Investors are expecting to have performance...If that doesn't happen...move on to something else."
A CEO is like any other employee at a public company, said Ward. They work at the will of the board. "I was no different from anyone else. It reminded me that in life, it's best to take an open-hand policy. If you grasp hold of things, it can be harder to let go. Knowing that when you come to work that you are an at-will employee and can leave at any time gives you an easier exit whenever that time comes."