FOTB: ND native John Zimmerman puts oil investments to work
WILLISTON -- John Zimmerman brings his Wall Street expertise to North Dakota oil fields.
He also used his North Dakota expertise to attract oil investors.
The Minot native spent six years working for Goldman Sachs before deciding to return to his home state in 2005.
Zimmerman, who holds a master's degree in business administration from Dartmouth, saw the potential in the Bakken and formed Intervention Energy in 2007 with a group of former colleagues, basing operations in Minot.
At the end of 2011, the company had investments in 120 producing wells with another 115 in the pipeline. By the end of 2012, the company expects to have interests in about 350 wells.
But the team saw some discouraging results before the venture took off.
"What's turned out to be a pretty good story started out with two years of pain and frustration," said Nathan Ebeling, who worked with Zimmerman in New York and is a founder and managing member of Intervention Energy. "We paid our dues."
Zimmerman, 42, said the team's strategy was to acquire mineral leases at cheap prices. With the early Bakken development occurring in the Parshall and Sanish areas, Intervention Energy focused on acquiring leases in that vicinity.
"We didn't need them all to hit, we needed a handful of them to end up working out," Zimmerman said.
Early on, the group had some bad luck, including one unsuccessful well that ate up half the group's capital.
"We got gut-punched hard with our first project," Zimmerman said.
But the team spent a lot of time researching the oil industry. Zimmerman attended hearings at the North Dakota Industrial Commission to glean information from company presentations.
"We're market guys, not oil guys, but there was a wealth of information available to us," Zimmerman said.
He also drove through the Oil Patch to check out wells that were under confidential status, a six-month period when the production data is not released. Zimmerman looked for signs like how many tanks a well site had or the size of a flare to get a sense of which areas might be more productive.
Zimmerman put so many miles on his Jeep doing research and acquiring leases that he nicknamed it Chippy for all of the rocks the windshield took.
After a couple of years, their biggest hurdle was having enough capital.
If Intervention Energy has a 5 percent interest in a well that costs $8 million to drill, the company has to put up $400,000 toward the drilling cost.
"It's very intensive from a capital standpoint," Zimmerman said.
The handful of original members grew to about 30, with only Zimmerman and one other member based in North Dakota.
"I always said it was fun to bring outside capital and put it to work in North Dakota," Zimmerman said.
The company grew beyond what the group was capable of, and Intervention Energy entered into a $200 million financing agreement in January with Houston-based EIG Global Energy Partners to fund well developments over the next three years.
Ebeling said Intervention Energy was Zimmerman's brainchild.
"In all ways, he's been the leader and driven our execution," Ebeling said. "He deserves a lot of credit for starting Intervention Energy from nothing five years ago."
Zimmerman said he initially got some ribbing from his New York colleagues for wanting to return to North Dakota, but what's happening here now has worldwide attention.
"What's going on here has implications way beyond North Dakota," Zimmerman said. "I love the fact that my home state is, by and large, seen as a leader now, not as some sort of afterthought."
Dalrymple is a Forum Communications Co. reporter stationed in the Oil Patch.