James Hackett is taking back the reins at Alta Mesa Resources Inc., the Oklahoma-focused shale producer that’s seen its market value drop from nearly $4 billion to less than $500 million. The shares soared as much as 29 percent in response.
The former Anadarko Petroleum Corp. chief executive has spent the past year as Alta Mesa’s chairman. Now, Hackett will take over the company’s helm, replacing Harlan Chappelle as CEO on an interim basis. Hackett, 64, said a series of “disappointments” left him feeling as if he had let investors down.
“I feel very spiritually inclined to do well,” Hackett, who left his post at Anadarko to attend Harvard Divinity School, said in an interview. “And that’s something we haven’t done at this company.”
Hackett attributes part of the company’s struggle over the past year to sector-wide challenges. The S&P 500 Energy Index has sunk 42 percent since peaking in mid-2014, while the broader S&P 500 index has gained 26 percent over the same period. But he also cites Alta Mesa’s inability to operate efficiently and a steep learning curve when it came to drilling in Oklahoma.
In August 2017, Hackett acquired Alta Mesa Holdings LP, a closely held independent producer in Oklahoma’s Stack play, and Kingfisher Midstream LLC, a pipeline company, via a blank-check company he formed with backing from private-equity firm Riverstone Holdings. At the time, the company was valued at about $3.8 billion.
In addition to Hackett, a group of three industry veterans from private equity advisory firm Meridian Energy LLC are joining Alta Mesa. Randy Limbacher, former CEO of closely held Samson Resources Co., has become president, with Mark Castiglione, previously a senior vice president at Quantum Resources LLC, as his chief of staff. John Campbell, who served as the chief operating officer at Quantum, is the new COO of upstream at Alta Mesa.
The management change will help turn things around for the company, said Derrick Whitfield, an analyst at Stifel Nicolaus & Co., in a telephone interview. The new leadership effectively wipes out concerns that the company will one day be forced to declare bankruptcy, he said.
“The debt guys were starting to circle around” Alta Mesa, Whitfield said. But with Hackett and his new team, “this is not a going concern now.”
“There’s absolutely no way they’d be tying themselves to a bankruptcy,” Whitfield said.
Hackett said the company understands how to better space wells, among other operational challenges that had irritated analysts and investors who were promised a quick ramp-up in output. “We’re still very optimistic about what this part of the Stack can yield,” he said.
And while the lowest oil prices in more than a year will certainly provide a new hurdle as Hackett takes back control, he said he’s ready.
“I’m happy to do it again,” said Hackett, who will continue taking the Vonlane luxury bus to Austin once a week to teach a class at the University of Texas on moral leadership in economics. “I think the team that resigned felt they had enough time.”
Credit: Bloomberg, By Rachael Adams-Heard with assistance by Kristine Owram