Oil & Gas advisory Opportune marks 10th anniversary
The birth of Opportune was on June 5, 2005. The partnership formation papers were filed, and, as luck (or some higher authority) would have it, David Baggett, the Managing Partner (big title for a then one-person firm) of Opportune, received his first lead for a client. A college friend of his needed an expert in an oil and gas royalty dispute and had four firms in.
“I remember walking into the meeting with no business cards and looking at the glossy brochures on the table from the firms that preceded me,” recalled Baggett. “After about 30 minutes, the principals left the room, returning shortly to tell me that they canceled the upcoming interview with one last firm so that we could start immediately.” From these humble, albeit auspicious beginnings, over the past 10 years Opportune has grown into a leading energy professional services firm, serving energy clients worldwide through offices in the U.S. and Europe.
Baggett has six partners now. Years ago one of the partners said Opportune needed a mission statement. It was more than a page. “All the right words were in there,” Baggett says. “We shortened it to just this: ‘Add value to clients.’ He says: “With this client-centric focus in mind, staff training isn’t about effective selling, communication or time management. It is 100% focused on adding value to clients.”
When Baggett was a partner at Deloitte, the firm’s Managing Partner would begin each meeting with the same speech—that is, what was the team’s purpose. “I took comfort in that,” Baggett recalls, “so I start every meeting with our mission statement and core values. It is the foundation of the firm that doesn’t waiver.”
Large-group meetings are rare, though. “There is not a standing meeting on the calendar. We don’t have Monday morning management meetings. Our revenues are only happening if we’re working with clients. We’ve done a good job of keeping it market-facing, keeping it externally focused.
“Internally, I have very few non-negotiables. One is that we’re not going to have revenue goals. If you’re doing the right things, with the right people, in the right markets, the revenue comes. We don’t have score cards. Teamwork is very important to us. We celebrate every success as a team success—and we only deem it a success if the client finds success as a result of our work.”
Service Line Expansion
During the past 10 years, Opportune has diversified its service offerings but continues to work exclusively within the energy sector. “In 2007, we were doing great. We had grown organically,” he says. “Most of our work was around financial due diligence on M&A and other deals, but there are cycles. We needed to diversify.” Opportune started a process and technology group, originally offering energy trading risk management-related services. “It was a big investment for a small company. We struggled out of the gate with that. Within the year, however, we landed some big projects. When the financial-market crisis commenced in the second half of 2008, the firm’s due diligence work slowed to next to nothing as deal-making slowed for almost a year. “Our diversity was a good thing at the time,” he says. “That was our first big bet. We’ve made several since, and they’ve all been good bets. We have over a dozen service lines now.”
Opportune took on a restructuring job during the 2008-09 cycle and is working again on restructuring projects as a result of the downturn in commodity pricing. Also in 2009, it commenced a tax practice, added valuation services and acquired PetroAcct (now Opportune’s outsourcing practice), which handles back-office accounting and land administration for upstream clients. Half of the acquisition was from an affiliate of Houston-based EnerVest., which owned 50% and then represented some 70% of the firm’s business.
“We’ve built outsourcing from something small and totally dependent on EnerVest to more than 100 upstream clients with over 30,000 oil and gas wells.” This year, Opportune acquired 90- plus-year-old, petroleum engineering firm Ralph E. Davis Associates Inc. and purchased chemical-engineering firm Nexidea. “In both cases,” Baggett says, “they could understand how—on our platform in terms of capabilities and client base—we could be more successful together.”
With petroleum and chemical engineering capabilities, “now, when doing valuations, due diligence or restructurings, we not only have the financial expertise but also the engineering and operational expertise.”
Opportune has kept the Ralph E. Davis name on the reserves-analysis business unit. “Ralph E. Davis has been around over 90 years and has a great reputation,” Baggett says. Nexidea’s name has been changed to Opportune, meanwhile. “We’ve been around longer, and I didn’t want to confuse people about whether they’re being served by Nexidea or Opportune. We are one firm.”
Energy Sectors
What makes Opportune unique is that it only works in the energy space. “I didn’t originally form it to be an energy-only professional services firm, but since about year two, all we have done is energy,” Baggett says. “I have found that companies and private equity firms don’t want to hire generalists—certainly not in Houston. The only people we have here are experienced energy people.
“Our revenues are fairly equally weighted among upstream, midstream and downstream,” Baggett comments. “Many companies in the marketplace think that a predominance of our work is upstream, but that is not the case. Not surprisingly, we have more upstream clients, but our midstream and downstream assignments are typically larger.”
Opportune is also aggressively expanding its presence in power and oil field services, with several recent wins to show for it. “Our initial meetings with clients and prospects usually consist of our industry leaders with the company’s executives,” Baggett says. “We typically don’t come in the door to sell a particular service line. Our objective is to understand the company’s needs and educate the company on what tools we may have to help them. what tools we may have to help them.
“One of our biggest challenges is getting our clients and contacts up to speed on our current capabilities, which are constantly expanding,” Baggett says. “I can’t tell you how many times companies have said they would have used us for a particular assignment if they had known we had that specific capability.”
From left to right Opportune executives: John Vanderhider, Dean Price, Josh Sherman, David Baggett, Matt Flanagan, Don Jefferis, John Echols.
Experience
Friends helped him start the firm and have helped him grow it, including Jim Vanderhider of EnerVest. “I believe most start-ups need a steady source of revenues, and in the early days, EnerVest provided it. “People have had faith in us to hire us for very important projects and initiatives when Opportune hadn’t done it before—faith that we could bring the right resources to bear. They hired a firm that didn’t have an established name at the time; they took a chance on us. This anniversary is a celebration of our clients.”
At 29, Baggett was the then-youngest partner in the history of Deloitte, which he joined in 1981 and where he worked for 15 years. From there, he worked under retired Shell Oil Co. President John Bookout as his Senior Vice President and CFO at Contour Energy. Subsequently, as President, COO and CFO, he built Round Rock, Texas based construction consolidator American Plumbing & Mechanical. that grew to some 6,000 employees. It became under water in 2003 under the weight of too much debt. “I knew business failure for the first time in my life,” Baggett says, “which gave me a different perspective.”
Baggett keeps an empty bottle of Silver Oak wine in his office; it had been signed during an office Christmas party in 2008 by every Opportune employee and his or her spouse. All of their names fit—and not written in small format, either. The firm now has around 300. Three of the Big 4 accounting firms have offered to buy Opportune along with a handful of private equity firms. Baggett doubts Opportune will ever do that. “We are having too much fun. The best is yet to come.”
