The deepwater Gulf of Mexico has proven to be a windfall for Deep Gulf LP, a small, privately held independent in an exploration area traditionally considered too costly for an independent.

"We were among the first independents in the deepwater Gulf of Mexico," chief financial officer Jere Overdyke said at the Private Capital for Energy Forum, sponsored by COSCO Capital Management and Oil and Gas Investor in Houston in June.

Getting the money in today's market may not be the problem; rather oil and gas producers may have expectations different from their capital providers. Overdyke recommends that both teams coordinate their efforts to avoid conflicting business patterns and to ensure long-term partnerships. "Manage expectations. Marry up with someone who has a common risk profile."

And most of all, Overdyke warns about entering a seemingly positive deal and then getting stuck in a quagmire when it's time to leave. "It's easy to get into deals, and can be hard to get out, so have an exit plan in mind before entering."

The two-year-old company has private capital commitments of $150 million from First Reserve Corp. and Quintana Minerals, which gave the company a "hunting license." It is now involved in six deepwater projects and its share of costs is approximately $230 million.

Things weren't always going so well for Deep Gulf. In 2004, when it was still in planning, the market wasn't red hot and there was little interest in an independent like Deep Gulf in a location traditionally dominated by the majors, he said. The company operated in a "live or die" mode, having to strategically acquire profitable assets or go broke.

When the company first approached First Reserve, it was for a relatively small amount of capital, about $37.5 million. This amount was later bumped to $75 million and eventually $150 million, once the company had proven to be profitable and targets for acquisition grew larger.

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