Huntley & Huntley is a privately-held, Pennsylvania-based corporation now in its fourth generation of ownership and stewarded by private families since its founding in 1912 as a geologic and engineering consulting firm for the oil and natural gas industry. It has also been intentionally structured to remain small, agile, networked and opportunistic as the industry has grown, changed and fluctuated over the years. During its first eight decades in business, the firm performed reserve studies, reserve appraisals, project risk analysis, and feasibility studies for both privately-owned and publicly-held institutions. The firm’s first offices were located on the campus of the University of Pittsburgh to coincide with the University’s desire in 1912 to establish the first educational department in the United States focused on the technology of oil and gas, and possibly the first such department in the world. The firm’s original founders wrote the initial textbooks and outlined the original course curriculum that led to the first college degrees in this field.
As its reputation grew as a premier O&G consulting firm, HUNTLEY developed client relationships with many significant participants in the O&G industry, and acquired extensive information on most major and minor fields. It earned a reputation for delivering competent, reliable and professional advice and supervision to help its clients locate solid, low-risk drilling opportunities. Its diverse clientele included major O&G families, corporations, financial institutions, utilities and industrial concerns including legendary O&G pioneers such as M. L. Benedum, as well as many of the US based O&G companies that emerged during the twentieth century. The Company was acknowledged for discovering many major oil fields both within and outside of the United States. For example, outside of the United States, the most notable field was located at Lake Maracaibo in Venezuela.
HUNTLEY developed a strong reputation for competence and performance based upon a proven success ratio that was among the best in its field. Consequently, the Company gained the respect of owners, drillers, and operators of oil and gas wells and reserves. Through its success over the years, HUNTLEY built and accumulated some of the most extensive privately held geologic databases in the industry.
It also designed, constructed, and managed many national and international exploration and production projects. In 1995, the firm shifted its focus from being a geologic and engineering consulting firm to exclusively developing and producing oil and natural gas reserves. Huntley has interest in nearly 600 wells across the country. In Southwestern PA, Huntley operates nearly 400 conventional oil and natural gas wells and has interests in 47 unconventional Marcellus wells. By constructing these regional wells, Huntley has earned a reputation as Western Pennsylvania’s premier urban developer of oil and natural gas. In partnership with other esteemed companies, Huntley was one of the first to experiment and successfully prove the Woodford Shale of Southern Oklahoma to be an economic horizon. Huntley has acquired nearly 100,000 fairly contiguous acres in eastern Allegheny, western Westmoreland and southern Butler counties of Pennsylvania that are being prepared for Marcellus Shale development. Huntley is proud to be Southwestern Pennsylvania’s only legacy, privately-held oil and natural gas Company developing the Marcellus Shale, and we are committed to being best-in-class in all we do.
Transition to Upstream E&P Activities
Keith Mangini, a petroleum geologist who started working at HUNTLEY in 1978, acquired HUNTLEY in 1993. Mr. Mangini has served as its Chairman, CEO & President since then. From his background with the Company he realized that its knowledge of, and contacts within, the O&G industry could enable HUNTLEY’s business model to be advanced towards becoming an active participant in the upstream O&G industry. In 1995, he began to shift the Company’s focus from being only a geologic and engineering consulting firm to a developer and producer of oil and natural gas wells and reserves primarily in the Pittsburgh metropolitan region. He formed his first limited partnership in 1995 and since then has organized an additional 25 partnerships deploying over $125 million into the upstream sector.
Mike Hillebrand, a petroleum and natural gas engineer, joined HUNTLEY as a partner in 1996 to help implement the change in direction. Mr. Hillebrand serves as the COO and Executive Vice President of HUNTLEY.
Over the next fifteen years, HUNTLEY responsibly evolved into an upstream participant by drilling and operating over 400 conventional wells in the Pittsburgh metropolitan region, which earned the Company the reputation of being Western Pennsylvania’s premier urban developer of oil and natural gas wells.
The Company’s activities have not, however, been limited to Pennsylvania. For example, in partnership with other esteemed companies, Huntley was one of the first to experiment and successfully prove the Woodford Shale of Southern Oklahoma to be an economic horizon. In all, HUNTLEY has interests in nearly 600 wells across the country, plus holdings of various acreage or royalty interests.
Under the leadership of Mrs. Mangini and Hillebrand, the Company’s services were expanded to include intermediating between driller/ operators and financial investors; month-to-month management of producing wells and fields including well work-overs, stimulations, sidetracks, and facility expansions; collection and disbursement of production payments and royalties; and financial management and reporting to land owners and investors.
Positioning for the Future
During its first 100 years, HUNTLEY became well regarded as a small, agile, proven, prudent and responsible E&P participant with experience in both operated and non-operated positions in major resource plays. It was operated with its founders and owners’ capital, consulting and investing expertise and related profits, and through limited partnership syndications supported by individual investors. As the technology evolved to support unconventional drilling, which would produce significantly more productive wells but which also required much more substantive drilling budgets, HUNTLEY saw that its business model would have to evolve to attract more significant capital partners.
In 2012, HUNTLEY embarked on its 2nd Century with the formation of its first institutionally funded joint venture, Huntley & Huntley Energy Exploration, LLC (HHEX). In launching HHEX, HUNTLEY contributed significant assets and secured $220 million of committed capital from institutional energy partners to build an unconventional natural gas shale play in the Marcellus/ Utica Region in Southwestern Pennsylvania (the HHEX Play). Between 2012 and 2015, under HUNTLEY’s leadership and management the HHEX Play was successfully initiated:
- Roughly 80,000 acres of prime geology were acquired and assembled,
- A resource optimized development and operating plan was formulated and linked with a proprietary industry leading Development Planning and Evaluation Tool (“DPET”) used to optimize long-term corporate development planning and analysis for asset management, and
- The HHEX Play was advanced to a point where additional capital was needed, and a top-notch operating team had to be recruited to move forward with production and towards monetization.
During 2015, HUNTLEY implemented its recapitalization and growth plan for HHEX to its institutional partner. Despite the difficult market environment in March 2016, the recapitalization plan was for an additional $250 million of capital committed on terms and conditions favorable to HUNTLEY. Since then, an experienced operating team has been recruited and the company acreage is now being delineated and progressing to move into its first operated unconventional production.
One of the Company’s primary objectives when launching HHEX in 2012 was to demonstrate that its historic competencies could remain relevant as the industry began to apply new technologies to advance unconventional drilling to unlock the tremendous resource potential still available in the USA. As the Company has done repeatedly during its first century with finding, evaluating, organizing and managing conventional oil and gas plays, it has now demonstrated its ability to successfully apply the same fundamentals to finding and organizing major unconventional plays, as HHEX will be viewed as one of the more significant plays in the Marcellus & Utica Region. This was the first step on the path that the Company intends to pursue with direct investment capital during its second century.
Going forward, the Mangini and Hillebrand families intend to own, govern and operate HUNTLEY as a nimble and sustainable business so that it will continue to grow and prosper into the next generation and potentially for another century. HUNTLEY will remain focused as an upstream participant that can identify, analyze, secure, manage and capitalize attractive O&G plays in North America during a time of industry turbulence and transition. To accomplish this objective, the Company has been strengthening its business governance processes, executive team, HR functions, relationships with industry participants and service companies, and financial and administrative systems to further professionalize its organization and operating activities using proven best practices for multi-generational, private businesses that include:
- Ownership and business governance structure and processes,
- Generational transition and succession management processes,
- Corporate development practices and processes,
- Aligning organizational design, an independent board of directors, new senior team members, and a
- Defined business model & capitalization plan.
Given the material changes that have transformed the O&G industry during the past decade, and the pressures on asset owners and balance sheets from the downdraft of the past several years, Management has concluded that there remain tremendous opportunities for small, agile E&P businesses for the foreseeable future. The Company believes that it will be able to attract and profitably deploy direct investment capital into both conventional and unconventional onshore properties in the United States. As a result and as the HUNTLEY Management team has demonstrated competency as the industry has shifted from conventional to unconventional plays, the owners of HUNTLEY have been preparing to pursue a future strategy that would leverage the skills and experience of HUNTLEY’s Management team by focusing on three types of activities:
- To assemble and/or manage prospective acreage positions with significant resource potential, utilizing both internal and external prospect generators to achieve financial returns by improving and eventually selling those prospects to industry partners while retaining upside through over-rides and carried interests (“Prospect Generation and Sales”);
- To acquire low-risk working interests in producing oil and gas fields in North America based upon a thorough subsurface understanding of the field and a plan to redevelop and improve the field performance. The Company will then either hold the enhanced asset longer term or sell to another operator (“New Opportunities in Old Fields”); and
- To acquire and provide full or partial management of oil and gas properties and drilling programs to drill low-risk, delineated non-producing acreage in repeatable, low cost, development areas (“Drilling Factory”).
The Company expects to remain focused on actively seeking hydrocarbons in land-based plays in the United States and primarily in the Marcellus & Utica region and the Mid-Continent. HUNTLEY intends to continually look for undervalued assets that could establish new core areas for the Company, and to take a flexible approach to structuring operated and non-operated growth opportunities through leasing and assemblies, acquisitions or property exchanges, farm-ins, and joint ventures. The Company will also continually evaluate its holdings and activities to take into account industry trends that could present monetization windows or opportunities for strategic asset sales.