CEO JOHN SIMON DISCUSSES PLANS WITH OGFJ
EDITOR'S NOTE: Houston-based Bennu Oil & Gas has assembled a portfolio of oil and gas resources in the Gulf of Mexico, offshore Louisiana and Texas. We spoke recently with the company's CEO, John Simon, who has worked more than 38 years in the oil and gas industry. Prior to Bennu, Simon spent 24 years at Hess Corp. Before Hess, Simon worked for Tenneco. The vast majority of his career has been focused on the Gulf of Mexico and offshore West Africa.
OIL & GAS FINANCIAL JOURNAL: Thank you for speaking with me, John. I'm sure you get this question all the time, but what is a "Bennu?"
JOHN SIMON: The Bennu is an ancient Egyptian deity and a symbol of renewal, creation, and new life. Typically depicted as a heron, the Bennu is connected to the Phoenix legend in Greek mythology.
OGFJ: You've been busy since Bennu's founding in November 2013. The company acquired assets, built the balance sheet, and put a management team together. Walk us through that process.
SIMON: Bennu Oil & Gas LLC is a privately-held E&P company focused on the production, development, acquisition, and exploitation of crude oil and natural gas assets in the Gulf of Mexico. The company was formed in September 2013 to acquire key GoM producing properties, infrastructure, and certain exploratory blocks from the ATP Oil & Gas estate. The acquisition closed Nov. 1, 2013, along with a second lien term loan - to provide working capital, address property-related liens and obligations, and to buy out certain Net Profit Interests/Overriding Royalty Interests. Bennu is an LLC with 30-plus owners, and trading has been active since formation. Our leadership team has 178 years of cumulative experience acquiring, exploring, developing, exploiting, and operating oil and gas resources around the world - especially offshore and in the GoM.
OGFJ: What were the characteristics of the assets you acquired?
SIMON: Our assets are GoM focused with 28 leases (eight producing) totaling 116,000 gross acres (110,000 net acres). We have averaged between 10,000 and 20,000 boe/d production since inception with 80%-plus oil, and the portfolio also contains a collection of attractive investment opportunities. Our Jan. 1, 2015 1P reserves were 36 MMboe (~79% liquids). Finally, other opportunities are emerging from ongoing sub-surface interpretation efforts focused on promising prospects in our current leasehold. We are particularly excited about deeper Miocene prospectivity on AT 62/63 offsetting recent discoveries in the area (e.g. Vito, Power Nap) and which we intend to test with an exploration tail on our AT 63 #5 PUD project.
OGFJ: Sounds like you've established a firm foundation for growth. How does the term "Bennu" capture the essence of your operational strategy in the deepwater Gulf of Mexico?
SIMON: The Bennu is symbolic of our business strategy to create value from the ongoing oil and gas renaissance in the Gulf of Mexico, and to exploit our portfolio of assets to their full potential.
OGFJ: With your team starting from the ground floor, you had a wide array of options from which to choose an operational focus. Why did you choose the Gulf of Mexico?
SIMON: The GoM assets acquired from the ATP estate included a solid production base as well as a set of promising exploitation and exploration opportunities. Our management team is well suited to leverage these to create value.
OGFJ: Talk more about one of your key producing assets - the Titan production facility. What benefits does Titan bring to Bennu, and what near-term goals do you have for this facility?
SIMON: The Titan production facility is located in Mississippi Canyon Block 941 in approximately 4,000 feet (1220 meters) of water. Titan has a capacity of 25,000 bo/d and 50 MMcf/d with adequate space for capacity upsizing. The Titan is currently utilized by Bennu's Telemark, Mirage, and Morgus Fields, with tie-backs planned for the MC 941 #5 and AT 63 #5 PUD projects. It is also well-suited to serve as a host for third-party production tie-ins in a very active area. We have established maintenance and integrity management programs to ensure reliability and longevity.
OGFJ: How does Bennu plan to fund investments for opportunities you intend to pursue?
SIMON: Our focus going forward will be to diversity our portfolio through partnering on our existing opportunity set, while contemporaneously seeking to participate in quality opportunities owned by other GoM players with whom we will strive to build longer term mutually beneficial relationships. Our overarching investment objectives are to pursue lower-risk, value-creating opportunities with attractive returns, and to profitably and sustainably grow production and cash flow. Our current business plan is premised upon Bennu self-funding identified investments alongside joint interest partner contributions. This is indeed the plan for our two attractive PUD projects, MC 941 #5 and AT 63 #5; outreach efforts to secure partners for these opportunities are now underway. However, we will also be on the watch for value-accretive GoM opportunities fitting our investment criteria for which incremental funding would be required, and we are confident such funding would be accessible to us.
OGFJ: Bennu is operating alongside some of the industry's largest E&P companies. Looking longer term, what are some of the company's aspirations as an operator in the Gulf of Mexico?
SIMON: First and foremost, we are fully committed to protecting the environment and the health and safety of our employees and contractors, and conducting our operations in full compliance with all applicable regulations. Our aspirations are to deliver sustainable and profitable growth, to be a highly respected operator, and to be a preferred partner in the Gulf of Mexico.
OGFJ: Do you have any plans to take the company public?
SIMON: That is certainly a possible future outcome of Bennu's journey. For now, however, we are focused on delivering the business plan, and creating value for our investors.
OGFJ: Thank you for your time.
