The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 14 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Farber: Private equity investors irrationally sell 3x to 5x winners too early
“There's an anchoring effect in private equity, like in every area of investing, that is not rational. It's a very real and tangible thing. In our business, That's manifested by people looking at a three bagger or five bagger and saying, well, that's a great de…”
Farber: CrownRock exit driven by completion tech reaching theoretical maximums
“There's only so much resource that you're ultimately going to recover, and we just felt like we were getting closer to the sort of maximum economic recovery point, and that, that changed the risk calculus. You had this big asset, you had market risk in retaini…”
Farber: Exxon's Pioneer deal removed two of CrownRock's best potential buyers
“The flip side of that was the business had been so successful that we got to a size that very few companies could afford to bid in that process. And the deal that John was talking about with Exxon taking out Pioneer, that took two of our best buyers off the ta…”
McLean: CrownRock's management had greater respect for capital than any team Lime Rock ever met
“I think their biggest differentiator relative to every other management team that we've ever dealt with is Tim Dunn and his lieutenants and partners had a greater respect for capital than any other management team I've ever met.”
Farber: Current lower ROI energy environment offers peak risk-adjusted attractiveness
“I think we're very driven by conditions in the industry today, and ironically, that is probably creating an overall lower ROI scenario, but one which on a risk-adjusted basis, we think is among the most attractive periods of investing that we've seen.”
McLean: CrownRock grew from under 40k to over 160k barrels per day
“And at that point in time, we were producing a little under 40,000 barrels a day, and we had projections to get well over 150,000 barrels a day if we held it for another five years. We briefly got over 160,000 barrels a day right before we sold the investment.”
McLean: CrownRock investment created well over 200 millionaires
“Well, ultimately every employee of Crown Rock was an equity holder. I mean, that was a big part of the overall compensation scheme that we had there. Well over 200 millionaires were kind of birthed from the Crown Rock investment.”
McLean: CrownRock returned 79x while the public XOP index returned 0.9x
“If you looked at the E&P oil and gas index, the XOP of independent producers over the ownership period of Crown Rock, where we realized on that one specific investment, a 79 X ROI, The return on that index was .9 X. You lost 10% of your money.”
Reynolds: CrownRock's success cannot be replicated across standard energy PE deals
“There are attributes of the people, the Midland Basin, that you just don't replicate.
It's a very special case, and there's probably some danger in thinking there's an application in a postmortem for everything we do going forward, because there's certainly no…”
McLean: CrownRock required only $100M of primary equity in total
“We committed seventy-five million dollars. The management team contributed twenty-five million dollars in properties, so the only primary equity that was ever invested in the business was a hundred million dollars.”
McLean: Most management teams make poor decisions by prioritizing growth over cost of capital
“Most of the time, management teams are so focused on growth and so uninterested in the cost of capital it takes to achieve that growth.
They end up making really poor decisions along the way”
Reynolds: Lime Rock exited two early investments that went bankrupt within five years
“We owned an oil sands company in Canada, first deal we did. We owned a shallow water jackup drilling company in the Gulf of Mexico, and our second fund outsized ROIs in both cases. In both cases, within five years of our exit, those companies were bankrupt.”