Hi, I am Nissa Darbonne, the executive editor at large for Hart Energy, and we're visiting today with Christina Kitchens. Christina is the founder and managing partner of 3P Energy Capital. Christina just spoke at Hart Energy’s Energy Capital Conference we've hosted here in Dallas. Christina, first thank you very much. I appreciate it and enjoyed your remarks. To follow-up to some of your comments downstairs, yourself and your fellow panelists were asked about foreign investment, foreign investors looking to invest in U.S. E&P, and what generally each of you has been seeing. What have you been seeing?

Christina Kitchens, founder and managing partner, 3P Energy Capital: So we were talking about family offices backfilling capital that's exited the space, particularly institutional and private equity dollars, and how meaningful that family [office] capital would be. And the topic of international capital was brought up that if there was material movement of international capital into the space, that would be really helpful. And there's certainly family offices and sovereign wealth funds that are looking at domestic opportunities in the U.S., especially alongside big oil and gas family offices. But it's on the earlier cusp of that type of investment. And I think, and my peers seem to share the opinion, that there'll be more of that coming into the market. But right now, it's an educational process of looking at deals and opportunities in the U.S. and there's not been a whole lot of capital yet deployed, but certainly [there is] a lot of interest.

ND: Well, further toward that education process, schooling on U.S. E&P, there was one perspective client, for example, that wanted to invest but also wanted to become an operator itself. I think that you maybe made other suggestions along these lines. What was your thinking there?

CK: Oftentimes family offices, if they're putting a material amount of money into a transaction, then they sometimes believe that they have the capacity or could have the capacity to operate. There's a preference toward control, and that could be having an operated asset or having a significant governance role into the operator or just having pretty good terms under a JOA [joint operating agreement] as a non-operated participant. But I've had many family offices that need to put sizeable dollars to work and with the preference to operate. Sometimes they can add people to their team and perhaps be a good operator in the area that they're pursuing. And sometimes my recommendation is that they look at good non-op opportunities and cut their teeth there and then reassess the opportunity to operate down the road.

ND: Tokyo Gas and Osaka both took that approach in investing in the Haynesville. It worked out very well for each of them. They're now majority owners.

CK: And largely doing that too with Tokyo Natural Gas, with Castleton [Resources], with marketing companies and so forth. And so they're having an entry point if that's through relationships and having a line of sight on product and how it moves in a region or relationships in a JV [joint venture] with a large operator in that area. There's plenty of different ways to sort of make that market approach, but I think [there are] certain flavors that work better for some family offices versus others and how they enter a region and with who they enter it with.

ND: And then earlier today, [out] of all the wisdom and intel that you shared with attendees, what would be one bit there that you might choose to share with our website viewers?

CK: Yeah, I would say if a company or a management team, [has] a need or desire to look at family offices as a capital source to keep in mind to have patience. There's really no cold calling in this space in the family offices. They will maybe look at an email, but they're not necessarily going to take meetings or take a real deep dive on anything without having some level of understanding. Either [through building a] relationship or somebody knows somebody. [But] there has to be a way to parlay into the office that has more substance to it versus just thinking you can reach out, introduce yourself and your team and your deal is good enough. It doesn't work that way. So be patient, build relationships, know people that know people and just keep on trying to move forward. Have a good team, a good asset and you'll eventually see success on it.

ND: Thank you very much, Christina. And thank you for joining us. Stay tuned here, at hartenergy.com for more actionable energy industry intelligence.

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