Quick. Name a female CEO in charge of an oil and gas company in the United States. There may be a handful, but in a business dominated by men, Lisa Stewart stands out.

Stewart helms Sheridan Production Partners, a privately held producer based in Houston that made its entrance into the U.S. oil business this year. She helped create the company with the financial backing of private equity firm Warburg Pincus.

Before taking the leap to create Sheridan, Stewart spent two-and-a-half years rebuilding El Paso Corp.'s decimated exploration and production (E&P) business (see NGI, Aug. 7, 2006). El Paso CEO Doug Foshee had personally recruited Stewart from Apache Corp., where she'd been calling a lot of the shots for its E&P unit (see NGI, Jan. 13, 2004). No one questions her credentials or her gender.

"I'm an enigma," Stewart told NGI during an interview Wednesday. She was hard pressed to think of any women who are running oil and gas production companies. But that was not a concern to Warburg. She said the equity partners never asked her to prove that she would be able to run Sheridan.

"It's kind of interesting," she said. "I didn't have to make the case to Warburg. We talked about it for a long while. It was always going to be more of a partnership...For me, this really takes my experience at Apache, which was largely in the M&A [mergers and acquisitions] world and helping to grow that business, and then building on that with the things I learned at El Paso," she said. "I had enormous influence at Apache, and then I was managing the process at El Paso, and that was an enormous step up."

The private E&P "started up as a blank sheet of paper. I've had the good fortune of working with my primary partners at Sheridan for a good, long time. We have a common vision. This is unique only in that for most people to be in this position, I work because I want to work."

She is running the entire show with Warburg's financial wherewithal and its blessing.

Warburg's Jeffrey A. Harris, who is a partner in the private equity firm's energy practice, said Stewart and Sheridan's senior management team "have an excellent track record and tremendous experience both in acquiring and operating mature oil and gas assets. The team's quality reputation and expertise position them to build a geographically diversified portfolio of oil and gas properties while generating superior risk-adjusted rates of return."

Sheridan's management team has a long bench of experience -- and camaraderie. COO Jim Bass had been senior vice president of El Paso E&P's Texas Gulf Coast region; he also is an Apache alum. Eric Harry, vice president of acquisitions and the general counsel, joined the company after working at El Paso E&P where he also had been general counsel, executing nearly $8 billion in acquisitions and divestitures. And CFO Tim Blaine served as vice president and controller at Kerr-McGee Oil & Gas, where he was responsible for all aspects of the company's worldwide E&P accounting operations.

Last week, Sheridan and Warburg completed a $1.3 billion fund that will be used to invest in mature natural gas and oil assets in basins across the United States and in the Gulf of Mexico (GOM) Outer Continental Shelf. The company's portfolio will play to the management team's expertise.

"We will be looking in the traditional oil-producing states -- Texas, Oklahoma, Colorado...along the Texas Gulf Coast, and Gulf of Mexico assets on the Shelf," she explained. She couldn't detail any specific properties, but said, "We are going to be trying to obtain mature assets that still have a fair amount of life left in them."

"Clearly, we are in a period now from the final course [of funding] that we are becoming active in the data rooms," said the CEO. "We have nothing to announce at this time, but we are very active in the market...We don't want to stray, we are very focused on our mission at hand, and that is to find some mature assets and apply our operational expertise."

Sheridan's portfolio will likely be 60-70% weighted to natural gas.

"The United States has become much more gas-prone in the last few years. We'd like to have some oil and gas diversity, but it will probably be 60-40, 70-30..."

A lot of properties in a lot of basins will be considered. Several companies have publicly announced U.S. asset sales, including El Paso, which last week said it will sell some GOM and South Texas assets by early next year (see related story).

"Those are exactly the kinds of things that public companies are selling that we are looking at," she said. "These companies say that 'for us to grow our production, our reserves today, there are certain assets that aren't really helping us achieve that.' That's exactly what we're looking for." Several private energy companies also have "similar assets" that Sheridan may consider.

Unlike the E&P master limited partnerships, Sheridan is a "fund that has been funded by endowments, mostly institutional investors and endowments," Stewart explained. Sheridan's business strategy will be to buy the direct working interests in assets, and the fund's properties would be owned by the general partner of the fund. There's little chance of moving into the public arena.

"I'm not really wanting to be public," Stewart said of Sheridan. "Being private is the right structure for us, matching a traditional fund structure and distributing the cash flow back to investors in time. It's the right structure."

Sheridan currently has about 25 people, including the business development and technical teams, "and we are poised to begin executing our strategy," Stewart said. As properties are acquired, Sheridan is expected to eventually employ 80-100 people.

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