Kaes Van’t Hof
Editor’s note: This profile is part of Hart Energy’s Hall of Fame series honoring industry pioneers and the Agents of Change in Energy (ACEs) who are leading the energy sector into the future.
A native of Newport Beach, south of Los Angeles, Kaes Van’t Hof excelled at tennis for the University of Southern California and played professionally for two years around the world.
But his unique background in athletics, business and accounting still shaped him as the ideal person to help lead upstart Diamondback Energy as the choice consolidator in the Permian Basin. Today, Diamondback, or FANG, is the top pure-play producer in the Permian and the basin’s third-largest overall producer, trailing only Exxon Mobil and ConocoPhillips, after the blockbuster deal this year to acquire Endeavor Energy Resources, the crown jewel in the Midland Basin.
As Diamondback’s president and CFO, Van’t Hof, 38, teams with Chairman and CEO Travis Stice, who carries the traditional petroleum engineering bona fides as a Midland native.
“I certainly know a lot more about the subsurface today than I did eight years ago when I joined Diamondback,” Van’t Hof said with a laugh in an interview with Oil and Gas Investor. “I think, overall, the business comes down to capital allocation and people. Our team is really, really good on the technical side and really, really good on the operations side. What I brought to the table was, ‘Hey, how do we finance this deal? How do we structure this deal? Should we go after this company or that company? Why should we do it?’ So, I was kind of providing more of that strategic side to the execution part of the business, which they were already so good at.
“I like to say I’ve had a front row seat for eight years to the best ever to do it. Travis would probably go down, certainly from a returns perspective, as one of the greatest, if not the greatest independent CEO of all time,” Van’t Hof continued before pausing and laughing. “That means there’s big shoes to fill at some point. He’s always been very good at letting us do what we do best and trusting the management team. He built this culture of Diamondback kind of being the underdog story that had to scratch and claw. Today, it’s a $50 billion-plus company.”
Much of Diamondback’s and Van’t Hof’s success comes from having a plan to grow through Permian dealmaking early on, executing and becoming the preferred buyers of investors and potential sellers, said David Deckelbaum, managing director at TD Cowen.
“A lot of that was just doing intelligent deals and, obviously, well-timed deals,” Deckelbaum said. “I think a lot of his career has been hallmarked by being opportunistic, by acting quickly and always sort of having a very holistic view of being an E&P company, not just an acreage-flipping company or top IP rate drilling company.”
Backhand Path to the Permian
The story of Diamondback in the Permian officially starts in late 2007 when the newly formed, Wexford Capital-backed Windsor Permian and Gulfport Energy Corp. teamed up to buy a 4,100-acre Permian position from Midland-based ExL Petroleum for a mere $85 million.
Van’t Hof decided to give up pro tennis and try his hand in finance, living in New York City and commuting to Connecticut as an analyst at Wexford starting in 2011.
The Wexford-backed, Windsor-Gulfport partnership vehicle became Diamondback Energy before it went public in 2012. Van’t Hof helped lead the IPO in New York.
“I was kind of a kid that didn’t know anything about oil and gas, but I knew how to model these businesses,” Van’t Hof said. “And, so, I was kind of the model monkey that had to go down to Midland and learn how to model an oil and gas company. That was Diamondback before it went public.”
However, Van’t Hof’s Diamondback journey wasn’t ready to continue just yet. “It was such a small company, there wasn’t a role for me there at the time.”
Instead, Wexford promoted Van’t Hof to lead as CEO of Windsor Drilling as it became Midland-based Bison Drilling and Field Services. He’d lead Bison until 2016.
“I was commuting from New York City to Midland, certainly the only person that’s ever done that,” Van’t Hof said, laughing. “So, I would come down to Midland on Monday morning, go back to New York Thursday night, and then check in at the Wexford offices Friday, but also live my 20s in Manhattan.
“That ran out when I moved to Diamondback full time. Travis wasn’t going to allow me [to commute] any more after that,” he said with a laugh.
But he also quickly grew to embrace West Texas living after initially making the move to Diamondback as its vice president of strategy and corporate development.
“Once you get involved in the community in Midland, it rewards you,” Van’t Hof said. “It rewards you what you put into it. Get out there, play golf, join the clubs, go to restaurants with friends, meet new people. It was a lot more social when I started at Diamondback than when I was at Bison because, at Bison, it was just me and a bunch of drillers in the field.”
At the time, Diamondback’s projected 2016 production was about 35,000 boe/d after making several modest, under-the-radar acreage deals in 2013 and 2014 that still combined to total about $1.4 billion.
Around the time Van’t Hof joined, however, Diamondback’s dealmaking really took off. Today, Diamondback is approaching 850,000 boe/d in the fourth quarter after the Endeavor deal.
Serving Aces
Starting in 2016, Diamondback launched a barrage of acquisitions that has continued through today, while balancing spending, cash flow and a fixed dividend, Deckelbaum said.
First came Luxe Energy for
$560 million, then the first really big splash in December 2016 with the purchase of Brigham Resources for about $2.5 billion.
Next, Van’t Hof helped lead the IPO of Diamondback’s minerals and royalties business, Viper Energy, in 2017. Viper is now itself a $10 billion business.
In 2018, within a week of each other, came the Ajax Resources deal for $1.2 billion, followed by the massive move for Energen Corp. for $9.2 billion.
Amid the pandemic in December 2020, Diamondback went on the offensive again, buying QEP Resources and Guidon Operating for a combined $3 billion.
And, in the fall of 2022, came the acquisitions of FireBird Energy for $1.75 billion and Lario Permian for $1.55 billion.
It all led to February 2024 and winning the bidding—and the confidence—of Endeavor and its legendary founder Autry Stephens, who died months later. The $26 billion deal, including debt, for Endeavor was by far Diamondback’s biggest move yet.
“They knew what they liked, and they kept going after it,” Deckelbaum said. “I look at Energen and QEP as both very classic opportunities where they were able to really get in there with initial scale and have this argument of, ‘I can do it better.’ It showed that they know how to integrate deals and they know how to integrate large deals. I think the two of those deals paved the way for them to do Endeavor. Investors have a history of looking back and being like, ‘Well, these guys actually know how to do these things.’
“I think that they had kind of firmly cemented their place as being the preferred acquirer for attractive companies that would be looking to exit,” he added. “To be perfectly frank, my view was always that Endeavor belongs with Diamondback. I think you really saw the will of these two organizations to combine and make something that worked.”
There have also been smaller moves of late, such as forming the Deep Blue water infrastructure joint venture, buying a stake in the EPIC Crude Pipeline and, in November, paying $238 million and swapping some Delaware Basin acreage for TRP Energy’s Midland position.
Now, Diamondback can focus on executing on its scale and inventory with longer laterals, simul-frac completions, and testing the Barnett Shale in the Midland Basin.
“Investors are all asking about shale longevity and how long can we do this?” Van’t Hof said. “I think, on a relative basis, we put ourselves in a really good position to do this for a long time.
“We’ve continued to see more zones get economic in this basin, more consistent output on well results, and that’s just a concerted effort by us to try to find the best rock available, and Midland has provided that for us.”
But he doesn’t want to take much personal credit.
“It’s not just about me. Our management team is all very young. I think the next generation of leadership is certainly starting to come into its own as more CEOs of legacy companies either sell or retire. There’s a new wave of youth in this business that’s going to be here for a long time and wants to promote American energy and prove that this is a lasting industry.”
—Jordan Blum, editorial director