During a decade spent with Pioneer Natural Resources Inc., Brian Hansen amassed expertise in engineering, analyst, investor relations and vice president roles. In 2014 he shifted fields, moving from the operator to the private equity side to join Vortus Investments, a middle-market firm founded by Jeffrey W. Miller and Brian C. Crumley. Hansen, a principal on the investment team, helps source and screen deals and guide the portfolio companies’ capital plans and budgets.

A graduate of Texas A&M University in petroleum engineering, Hansen joined Pioneer as a reservoir and operations engineer on assets in South Texas and the Permian Basin. As the years went on, he was involved as Pioneer sold its far-flung holdings to focus on North America. He worked with the Permian Asset Team as vice president of subsurface and development, leading a team of 50 that would help define the industry’s concept of stacked-play potential and downspacing in the Wolfcamp and Spraberry plays.

Hansen holds an MBA in finance from Southern Methodist University and enjoys track driving and Muay Thai kickboxing. Recently, he described Vortus’ investment approach.

Brian Hansen

Investor What led you to join Vortus?

Hansen I wanted to do something entrepreneurial, and I had gotten to know the Vortus principals through my years in the industry. Their asset development-focused business plan tied in well with the decade-long lessons I had learned at Pioneer.

Investor What is Vortus’ wheelhouse?

Hansen We are focused on the upstream onshore in North America, in the sub-$100 million market. A distinguishing feature is that when we make an investment, we already have an asset in place or at least identified. We like our dollars to go toward the drill bit in the form of development dollars, to grow production and de-risk development potential.

Having assets in place means we aren’t backing management teams with an equity line of credit as they look for assets. We don’t have to compete in M&A auctions and we can underwrite directly to the asset. This takes a lot of the risk off the table.

Investor What investments have you made?

Hansen We have an oil-focused investment in the Permian that really speaks to our strategy of identifying the right assets at the right point of the value-creation cycle. Initially, the asset had Wolfcamp B production, and we’ve utilized our development capital to establish high-quality production in the A and C. We’ve dramatically grown the daily production rate and improved the productivity of new wells through the application of modern completion techniques.

We made an investment in East Texas/North Louisiana and later added offsetting assets from a large public operator. Our development capital helped increase production through a combination of acquisitions, low risk recompletions and drilling conventional vertical wells. Reducing lease operating expense is also a big lever to pull for value creation.

Investor What is the market like today?

Hansen The big drop in commodity prices has differentiated low-quality from high-quality assets. In parts of the Permian, for example, we’ve seen recent transactions with the same implied cost per acre compared with several years ago in some cases, because they are high-quality assets.

You need technical expertise to know the real quality of an asset and you have to have high-quality assets to have positive returns, especially today. There is competition out there, but we haven’t seen others with the same technical focus that we have. Half of the members of our investment team have petroleum engineering backgrounds with asset management experience.

Investor What do you think will be your pace of investment?

Hansen Our investment process involves a lot of upfront work, so that’s a pacing mechanism. We expect to have another investment closed in December (2015) with one more in the first quarter. Two to three investments a year seems to be a good pace for us.

Investor Your thoughts on commodity prices?

Hansen We think $55 to $60 may be a long-term price for oil, but we make investment decisions based on where we can hedge production today. There are quite a few high-quality assets in the U.S. where those prices can offer an attractive rate of return.

Investor A deal that helped shape your career?

Hansen I’d say it was Pioneer’s $1.7 billion JV in the Wolfcamp with Sinochem in 2013. There were dozens of people involved, but as a key person from the Permian Asset Team, I was able to help leverage Pioneer’s extensive vertical well database to demonstrate horizontal potential across a vast acreage position despite the minimal number of horizontal wells on production at the time. Participating was a transition point in my career.

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