Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.
This week, I'm going to step out of the public arena and highlight a truly exceptional (and reclusive) CEO in the private sector, Jeffrey Hildebrand of Hilcorp Energy.
There are plenty of well-run publicly traded companies, but every so often a privately held company catches my eye that I feel deserves a pat on the back. Today, it's Hilcorp's turn.
As you might imagine, finding out production, location, and other information about a privately held oil and gas exploration and production operator can be difficult. Thankfully, Hilcorp's website helped fill in some of the missing pieces.
Kudos to you, Mr. Hildebrand
Hilcorp employs approximately 1,000 people in 11 different regions, including the Cook Inlet in Alaska, the Gulf of Mexico, and the Rocky Mountains. Hildebrand founded Hilcorp, building it up little by little since 1989 by purchasing predominantly discarded assets by major E&P oil and gas companies and utilizing its superior technology to develop those assets and, occasionally, to sell those assets for a profit.
Hilcorp did exactly this in September, agreeing to part ways with three fields in the central Gulf of Mexico shelf that it had acquired previously from Chevron. In total, Hilcorp received $550 million by selling these properties to EPL Oil & Gas, helping that E&P company double its proven reserves and boost its oil output to approximately 20,000 barrels per day.
That payment -- in addition to what's forecast to be a 70,000 barrel-per-day (bpd) production count, according to Forbes -- allows Hilcorp to focus on its two primary areas of projected rapid growth: Alaska and its Utica shale acreage.
According to the U.S. Geological Survey, the Cook Inlet in Alaska could yield 600 million barrels of oil and 19 trillion cubic feet of natural gas. That's great news for Hilcorp, which has acquired bounties of acreage in the region from Chevron previously and more recently from Marathon Oil, where it agreed to pay $375 million. Since it acquired Chevron's properties, Hilcorp was able to boost its Cook Inlet production from 6,500 bpd to 8,000 bpd, but it's also seen natural gas output taper a bit. However, when all is said and done, Hilcorp will own 70% of all Cook Inlet natural gas production, which should play right into its hands when President Obama's energy independence push stabilizes gas prices and boosts demand. Hilcorp spent more than $230 million in developing the Cook Inlet in 2012 and could spend an additional $150 million to $200 million in 2013 according to Platts.
Hilcorp's Utica shale acreage could offer some very lucrative returns as well with its announcement of a joint venture with NiSource (NYSE: NI ) in July of last year. Total investment in the first phase of this joint venture will be $300 million and involves the construction of midstream pipeline infrastructure and a natural gas liquids processing facility to support natural gas production in the region. There is still a gigantic opportunity to build upon our existing midstream pipeline infrastructure that I would suspect deals like this between upstream E&P companies and midstream- and downstream-skilled companies will become the norm.
A step above his peers
In addition to garnering exceptionally lucrative deals, which has helped grow Hilcorp to become the third-largest privately held E&P company, Jeffrey Hildebrand has done a phenomenal job in motivating his employees and rewarding the communities his company operates in despite the fact that he's the sole shareholder in the company.
To begin with, Hildebrand might be offering the most robust, across-the-board monetary perk I've ever seen. In 2006, Hildebrand began a campaign known as Double Drive, which aimed to double Hilcorp's value, its oil-field production rate, and its net oil and gas reserves by 2010. If met, he promised each employee a voucher for $50,000 toward the purchase of a new car. With that goal met, approximately 700 employees received a $50,000 voucher in 2011. The new drive, dubbed Dream 2015, will award Hilcorp's 1,000 employees with a $100,000 bonus – that's right, $100,000 – if the company again doubles its value, net production, and reserves by 2015.
Hilcorp, despite being privately held, is also the cream of the crop when it comes to community donations and encouraging its employees to give back to the community. Hilcorp gives $2,500 to each new employee to donate to the 501(c)(3)-approved non-profit organization of their choice upon hiring. In each year following an employee's initial year, Hilcorp will match dollar for dollar up to $2,000 to qualifying non-profit organizations. Since its inception, Hilcorp's employees have donated $5.26 million via this method.
On top of donating, Hilcorp employees often volunteer their time in their local communities and Hilcorp itself aids employees with children by providing educational scholarships.
Two thumbs up
After reviewing the numerous strategic moves Hildebrand has made as CEO and the bounty of rewards that this leader has promised and previously delivered to his employees, it's not difficult to see why Fortune 500 selected Hilcorp as the seventh in its list of "Best Companies to Work For" in 2013. Hildebrand has made incredibly smart deals and is doing a fantastic job in supporting his employees and the community -- a job that I feel is worth two emphatic thumbs up!
Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, head on over to the CEO of the Week board and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry -- you can still weigh in on other members' selections.
One energy name you must keep your eyes on
With the swelling of the global middle class, energy consumption will skyrocket over the next few decades, so long-term investors know that you want exposure to this space now. We've picked one incredible natural gas company that presents a rare "double-play" investment opportunity today. We're calling it "The One Energy Stock You Must Own Before 2014," and you can uncover it today, totally free, in our premium research report. Click here to read more.