Like so many other oil and gas veterans, Houstonian Bob Schwartz says retirement does not suit him very well, even though he’s been in the business in one way or another for 55 years.

“I’ve retired from FMC Technologies, I’ve retired from the University of Texas and I’ve retired from Energy Ventures. I just don’t stay retired,” he said. “I love the excitement of putting deals together. It’s fun. But I am of an age where you have to love doing it, and do it with a group of people you really like.”

The latest job for this graduate of Oklahoma University (1959) is to open the Houston office for Cascadia Capital LLC, a boutique investment banking firm in Seattle with offices in five other cities that is focused on technology, including oil and gas. He’s a senior advisor for energy and applied technology, helping with strategic advisory, corporate finance, private capital and more for middle-market oil and gas tech companies.

After OU, he was a U.S. Army infantry platoon leader and then received an MBA from Harvard before joining Exxon. Along the way, he taught entrepreneurship and technical commercialization at UT for 10 years. He also spent five years with the Houston Technology Center, helping that nonprofit start its energy-focused program. His passion is working where new technology and commerce intersect.

Investor: Why team up with Cascadia?

Schwartz: The company has always had a very technical focus and originally did some oil and gas, but by 2006 it was mostly funding renewables. About a year ago they decided to get back into what I’d call conventional oil and gas and energy technology and approached me to open a Houston office. I was impressed with what they wanted to do. We have three senior bankers committed to energy full time: Cascadia founder and CEO Michael Butler and partner Jamie Boyd in Seattle, and me in Houston.

We see a real opportunity for a boutique firm like ours here, but we are going to be patient.

Investor: What’s your impression of this so far?

Schwartz: We just looked at an interesting opportunity where management came to us for help. Another investment bank had shopped them to more than 75 companies! That’s not what we do. We’d look at their position within the industry, who do we know in their space, and we’d put this company in front of maybe five to 10 companies or private-equity firms with a customized story and positioning to compel a counterparty to move forward. It’s a much more focused approach. Our sweet spot is $25- to $250 million.

Investor: Why did you get into oil and gas?

Schwartz: An uncle was a mentor and an executive with a large oil company. I was very close to him and from the time I was a kid, I wanted to be in oil and gas. I went to work for Exxon for 10 years and the education I got there was incredible. I started at the Baytown refinery outside Houston, but I’ve always worked at the intersection of technology and commerce. Then at Conoco I worked for Bill Doty, the man who invented Vibroseis.

My wife says I’m the penultimate engineer, always trying to fix everything. My MBA thesis at Harvard was on economic design, but I didn’t want to be an engineer per se. Sure, I could design something, but would it make any money?

Investor: What was your goal at the Houston Technology Center?

Schwartz: I was consulting on the side while teaching at UT when I joined them in 2002 to start their energy program. I told them, “You are a nonprofit, so if you want to be successful, you need three things: 1) a value proposition for the companies you want to come to your incubator; 2) a value proposition for the big companies like Halliburton and Schlumberger or Shell and Exxon to donate. They have to see legitimate companies they can invest in. And 3), since we have to have a volunteer staff, they have to think there’s something in it for them, that they can help young companies grow.

Investor: What technologies do we need for the future?

Schwartz: Renewables are tough economically, but my grandchildren are going to need them. Technologies that better utilize people will find traction—like big-data mining. Look at how many fewer people there are working in oil and gas today and how little R&D is being done. While the shale revolution is incredible, in the end we are still turning a rotary table to the right. It’s a manufacturing process now, so can you get these reservoirs to produce in a more efficient manner?

Offshore, we need much more standardization of facilities and to do separation before wells are tied back. We need to “Lego-ize” it to reduce costs. We need to use more natural gas, such as in fleets.

Investor: A key lesson learned?

Schwartz: When I was working for Bill Doty at Conoco on a deal in the Permian, I discovered I’d made a big error in the paperwork while we were negotiating a gas sales contract with a utility. It would’ve totally ruined the economics. I went in and admitted it, even though I was afraid I’d get fired. But I learned two things: Always double-check your numbers, and have integrity. He told me if I had blamed someone else for it, he was going to fire me. He appreciated that I owned up to it.

Comments