Q&A: OFS Private Equity Firm Founder Patterson Talks Strategy Amid Trump, Upstream M&A

An industry legend legacy, entrepreneur, oilfield services CEO and private equity firm founder, Roe Patterson has virtually seen it all in a half century of life in oil and gas.

The son of Glenn Patterson, he grew up with Patterson Drilling Co., eventually branching out on his own at the turn of the century during the merger with UTI Energy that created Patterson-UTI Energy.

He joined Basic Energy Services in 2006 and rose to CEO as the company rapidly grew and acquired during the advent and early boom years of the shale revolution. He left at the end of 2019 amid financial struggles just before the pandemic.

In recent years, he’s taken over ClearWell Dynamics and Ventana Midstream. He also co-founded Marauder Capital with his former Basic colleague, Adam Hurley, as a private equity firm focused primarily on OFS and conservative investments.

In 2018, he even wrote the book about his father and the cyclical ups and downs of the industry: “Crude Blessings: The Amazing Life Story of Glenn Patterson, American Oilman.”

Roe Patterson spoke with Hart Energy’s editorial director, Jordan Blum, about the current state of oilfield services, dealmaking, his businesses and what the future looks like in 2025 under the new Trump administration.

This interview was edited for clarity and length.

Jordan Blum, editorial director, Hart Energy: Given the ongoing wave of upstream M&A, how do you see this impacting and creating issues for the services sector?

Roe Patterson, managing partner and co-founder, Marauder Capital: It’s certainly had an impact on the service providers. Typically, as companies are getting ready to either buy or be sold, they love to shore up their cash positions, which usually means a slight reduction in capex or opex. They may trim a little going into a deal just to shore up their cash reserves. Then, it takes a little time as the acquiring company assimilates staff. That consolidation of two operating segments in fields where they overlap usually creates a little bit of slack in service intensity. It tends to go away over time, and then there’s a big push to try to maximize the overall economics of whatever they’ve purchased.

But it does put a pause on things until the dust settles and until they figure it all out. Additionally, a lot of times we see these acquiring companies look at the portfolio as a whole, and they may divest some of the pieces that are not core to their strategy, and then we have to go through it again. We see those properties change hands again. There’s kind of a secondary and tertiary impact whenever they sell off the non-core assets. So, it definitely does shrink the customer universe.

Typically, these companies are doing more with less and that falls directly on the shoulders of these service providers. In terms of the efficiency improvements, our services sector is largely responsible for new technologies and building in new efficiencies. It’s almost like you’re working your way out of a job in some respects. That is the overall impact to the drilling and completion side of the business.

JB: How does this impact you and Marauder?

RP: I focus more on the production side of the business, both with my personal investments and with Marauder Capital. The production side is sticky, it’s less cyclically impacted and these services are necessary for every barrel of oil that’s going to move in the U.S. or every MMcf of gas that’s going to move.

I liken it more to infrastructure than the overall kind of traditional oilfield service image that most of the market has for oilfield services. These businesses are more downstream and more production- and midstream-oriented for existing wells and existing production. You’re not going to see an acquiring company go in and shut in wells. They don’t do that. They want to keep and maintain the acquired assets production rate. It takes them awhile to digest that before they get their drilling plans put together and go exploit that new inventory of targets that they now have. Most of these big acquisitions have been primarily driven by inventory improvement within somebody’s portfolio.

On the production side of the business though, we rarely see a lot of impact. We may not see new production coming on. The well count might stagnate for a little while, but it tends to bounce and come back to some norm after a period of time. And that’s usually about six months, maybe a year at the longest.

JB: On the production side, I wanted to get your take on what you’re most interested in, in terms of technologies and trends with artificial lift, production chemicals and anything else you want to highlight.

RP: Targets for us are both of the segments you mentioned. We love artificial lift, and we love production chemicals. We also look at a lot of water midstream, which has become a true midstream animal as we build more pipelines to take care of the wastewater capacity within each field. The hub-and-spoke model of going out and drilling saltwater disposal wells and then anchoring a truck fleet in a spoke around those hubs—that’s going away. We’re seeing much more efficiency and overall cost savings when we can tie all that in via pipe.

Another business we like a lot is in-basin power, where we’re providing either temporary or permanent power within a field to run artificial lift and to run compression and to run product transfer. Natural gas-powered electrical infrastructure—I think that’s a great segment.

We like contracted compression. That’s a very sticky business. The contracts aren’t always super long. They can be two years, three years. They’re not 10-year contracts, but they’re sticky. They rarely go away. It’s all of those businesses across that whole production gambit. When you get past the flowback, I get really interested.

JB: Going back to M&A, I wanted to get your thoughts on how the upstream dealmaking is going to trickle down to services M&A, and how much consolidation is needed there? Obviously, there’s been a lot of smaller deals, some bigger ones such as Patterson-UTI and NexTier Oilfield Solutions, but not a whole lot. How do you see it playing out?

RP: A lot of these segments in the production side or in drilling and completions are relatively fragmented. That’s a function, I think, of the lack of capital that’s been available to make the combinations work. There are not a lot of commercial lenders that are willing to provide capital to back those deals. Private equity in a lot of ways just got thumped pretty hard by taking the wrong strategy for roll-ups and LBOs (leveraged buyouts) and really played the game the wrong way. One, the multiples are depressed. Two, there’s not a lot of capital. So, we want to come in and underwrite the deals at these lower multiples. We’re not interested in businesses where we’ve got to go in and fix a capital stack, or we’ve got to go replace a management team, or we’ve got to go do a bunch of work to assets. If we can’t check all three of those boxes—good team in place with reasonable cash flow, good assets and then a cap stack that’s in decent shape—we would say, “No.” Historically, private equity said, “Yes. Two out of three ain’t bad.” But two out of three is really bad. You need to have all three.

The difference for Marauder is Adam and I are both operators. There’s pretty much not a segment within these production businesses that we haven’t run. I’ve run drilling and frac companies, too. We’ve got a pretty broad operational track record, and so we’re not reliant completely upon the team. We don’t want to have to go in and do major surgery to the team. But we can give the team lots of ideas, give them lots of efficiency improvement opportunities. If you’ve underwritten it to the depressed multiple that you’re buying it at, that’s OK because you can still make your returns. There’s way more room to the upside if the multiples do expand, and they should. We’re already seeing capital migrate back into the businesses starting on the midstream infrastructure side, but it’s trickling its way back into services.

If the industry remains relatively healthy and we don’t see a big crash, then we’ll see commercial lenders come back, we’ll see more private equity come back, and we’ll see more infrastructure funds and energy transition funds try to find their way in. They’ll nibble around the outside edges, calling it infrastructure or calling it midstream or calling it energy transition, when really, it’s just traditional oilfield service for most of us who have been in the game for 30-plus years. That’s OK, because we want them to come back with a truckload of cash, but we want to be invested before they get here. That’s kind of the crux in the thesis behind Marauder: underwrite it today and, if the multiple doesn’t move, then fine. But we think there’s some moonshot scenarios where the multiples will move, and we’ll be in a really good spot.

People like to see capital returned. They’ve been in OFS before when no capital was returned, and it’s been a downer for a long time. It makes M&A hard to do. If you’ve got any debt, or if you’ve got more debt than your peer, or maybe your peer is trading a halfturn more than you, these combinations are tough. Stock-for-stock transactions are difficult to do even in the best of times. They’re harder to do when there’s a shortage of capital and depressed multiples. So, I think M&A is coming for the service side, but it’s trickling down more slowly from what’s happening on the operator side. Until we see the public interest in the equities and the commercial lenders support the whole effort, I think it’ll be onesie, twosies for a while.

There are other dynamics that are green shoots. We have a lot of family offices that are enjoying yieldcos and investing in these spaces, and that’s a group of buyers that weren’t here, say, five years ago. There’s definitely still a capital void, and I think that’s filling, but it’s slow. There’s plenty of capital for these larger M&A deals on the E&P side. But It’s taking longer to get it to the service side.

JB: You mentioned if things stay pretty healthy, price-wise. How do you see pricing and other industry trends playing out in 2025 as we’re entering a new year and a new Trump administration?

RP: “Drill, baby, drill” doesn’t scare me because we are already drilling, baby, drilling. It’s not like there’s a bunch of stuff to go do. They could open up some federal lands, but those projects take years to plan and put in place. I don’t think the commodity prices justify a lot of big, aggressive growth on federal land today. There may be some activity in the deepwater auctions if Trump opens those up, but I don’t think that’s a needle mover. The thing he can do in the short term that would bolster the industry would be to free up the exports, specifically LNG. We have so much natural gas and the ability to provide it to a lot of the world that doesn’t have access to natural gas.

I guess you also asked about 2025. I think we’re stuck until China really starts to improve their demand numbers. We’re probably range-bound on crude in the $65 to $75/bbl WTI kind of corridor. Maybe it pops a little higher than that. I think there’s more upside potential than downside. There’s still a lot of demand out there, and we understate demand globally and overstate supply, especially non-OPEC and non-U.S. supply. If the prices aren’t good, that’s not going to come to fruition. So, betting that that supply hits in a depressed crude market is a bad bet.

The gas equation is different. There’s a lot of demand for natural gas in places that don’t have access to it today, or don’t have appropriate access. Europe, Japan, South Korea and India all need more natural gas. Those are the traditional places for LNG export, but there’s a lot of African demand that’s growing. LNG has a lot of green shoots to the upside, and I think gas prices this year probably have way more upside potential than crude does.

JB: I wanted to circle back from the services standpoint. You said the companies are almost working their way out of the job. I wanted you to maybe elaborate on just how the industry is becoming a victim of its own success in a way with the efficiencies.

RP: Let’s talk about that in a couple of different views. The efficiency improvements have created the industry’s current condition where we can drill a lot more with less, right? Our frac technologies, our drilling technologies, our directional technologies all continue to improve, but we’re reaching what I would say is a climax of efficiency improvement. In other words, we’re not going to drill these wells in a day.

We’re kind of maxing out on technological advancement because we’re starting to see the limitations of all of the drill pipe, the frac equipment, etc. So, we’re just not going to continue to see the quantum leaps in technological advancement. We’ve done a lot in a 10-year window. Heck, we’ve done a lot in a five-year window. But I don’t see big jumps coming that are going to cut well costs by half. We made those improvements, and they’re probably pretty sticky for a while.

The target inventory that we’re drilling today is not the best target inventory. We’ve drilled the best, Now, we’re going backwards. If you want to grade them—Tier A prospects, Tier B, Tier C—we’re definitely drilling a lot more Bs and Cs than we ever have. The wildcatting and the ability to go find more Tier A inventory is very limited. We’re now going back to figure out how we can do more with the Bs and Cs. Or, can we reenter the As and use some new refrac technology? I like that because that usually spells more maintenance, more production work, more intervention, which is where I focus, anyway. That’s music to my ears. I think there’s going to be more of these tertiary recovery programs, such as water floods and CO₂ floods, that are very creative but very service intensive, that are going to be maximized.

JB: Can you go through the Marauder origin story a little bit? It’s just a little over a year old. I wanted to get your take on how it came and how you developed the focus on more of the production services side.

RP: Adam and I worked together when we were both at Basic. I was there 14 years and left in 2019; dodged the pandemic. Adam wasn’t as lucky. But we kept seeing this big arbitrage of the multiples that are at OFS versus what’s in infrastructure or what’s in energy transition, etc. How do you take advantage of that was always our question. He saw some of the things I did with Ventana Midstream and ClearWell Dynamics where I used my money combined with some partners that I know well and put together capital to go make the kinds of purchases that we have targeted within Marauder. It was late 2023, and we finally decided on a fund that is run by two ex-operators and looks at things through our lens. You’ve got to have those three things: people, assets, capital. Then, how can we underwrite it at a depressed multiple and grow the business.

It’s a lot easier to go in and be a buyer of credibility when you’ve got a standing pool of capital behind you. Without a standing pool, it’s hard to get their attention sometimes because they see you as they see a lot of potential buyers. You’re a joker broker. You want to sign an LOI (letter of intent), but then you still have to go raise your capital, which may or may not happen. That’s why we created Marauder. It’s a small fund, relatively speaking. It’s a $100 million fund. We are on our second raise right now. We really have stayed away from institutional money. We’ve stayed away from monies that are pooled together, be that maybe an endowment at a university or a pension fund that has a very heavy ESG mandate and a lot of reporting requirements.

We’ve been dealing mainly with family offices, high net worth individuals who understand the business. They see the opportunity, they understand the need, they just don’t know how to play it. So, we become that vehicle to play it. Multifamily offices, guys that just need doers and operators like us to be able to go play the game. That’s really what Marauder is based on.

JB: Having a relatively smaller fund, I think you’re seeing more interest in capital partnerships, joint acquisitions. Is that a rising industry trend overall?

RP: Yes. With all of our contacts within the capital space, we’ve stumbled on some pretty good opportunities to team up with people to come in either in front of or behind someone and help maximize the value in a deal. There’s a lot of co-investing opportunities for our LPs. People have to be creative on how to assimilate this capital. The need is there, the desire and the want for consolidation in the service space is there. It’s just a function of how do you back it, and how do you underwrite it, and where’s the capital come from? Getting creative and finding good partnerships is definitely part of the answer, in my opinion. It’s part of the recipe.

We don’t want to be the operator. That’s certainly not the mandate of Marauder that we go in and take over the day-to-day. But we can absolutely be very good coaches to operators. Sometimes it’s because they’re fighting the fight every day and that stuff is just not glaring to them. It’s a forest-for-the-trees kinds of things. We can come in with that 50,000-ft view approach and say, “Hey, have you thought about adjusting this, closing this facility, selling off a segment that underperforms, and what the impacts would be to your cash flow and EBITDA?”

A lot of times they say, “Yeah, I know exactly what you’re talking about. I don’t have the money, and I haven’t been given permission from my old sponsors because they don’t want me to do anything. They just want me to sit here in place and not screw anything up until they can get out.” We see a lot of stranded companies that are just stuck. Some of these companies we look at are within portfolio funds that were a 10-year fund, but they’re a 14-year investment. That’s a perfect target for Marauder because we can come in and be a fresh owner with fresh ideas and fresh capital, and we can take the handcuffs off these management teams and allow them to go do some more strategic thinking. I also think partnering up with good capital providers and teaming up, as you mentioned, is a path forward that is a potentially powerful one.

JB: Ventana and ClearWell are separate from Marauder. Can you talk to me about their strategies?

RP: Ventana was all Haynesville water-gathering assets that were based around the old hub-and-spoke trucking model where you strategically put saltwater disposal wells within a market and then built trucking fleets around them. What we’ve done is replaced a large portion of the trucking capacity with pipelines. Two years ago, the customers loved to own the water infrastructure, and they weren’t very keen on the service company owning it. It’s flipped now. They’re more keen on owning their hydrocarbon infrastructure and spending their money at the drill bit and at the frac. That’s been a shift that fell right in our lap.

We do like owning the transmission and the pipelines themselves. But, if a customer wants to pipe to us and own that infrastructure, that’s fine. The shift Ventana has made is going to more sticky pipeline infrastructure to all of our saltwater disposal well facilities. We’ve added a lot of pipe. We’re adding more pipe today. We’re drilling additional wells. We’ve just completed two this year. We have a permit for the third. We want to keep growing the pipeline infrastructure to the saltwater disposal facilities and get that water off trucks, which is more expensive and dangerous.

ClearWell was the workover rigs that were in Pioneer Energy Services. Patterson-UTI bought those assets in the middle part of 2021. They did not want the wireline and the workover pieces. They wanted the drilling piece. We bought those workover rigs and the wireline business. We subsequently sold the wireline business to Caliber [Completion Services], and we kept the workover business. We went in and spent capital where they weren’t spending it. We shut down locations that we thought were not profitable. We brought a super amount of efficiency to all of their fieldlevel systems.

We created a plug-and-abandonment, well decommissioning fleet that they didn’t have before. No major surgery; just a little knob turning and creating business segments that make more sense, and closing segments that don’t. We focused back on the traditional workover business and doing what they do best, and then creating a well-site decommissioning business that fit that portfolio of assets. It’s the youngest fleet in the industry. We really don’t run any rigs older than 2008. We have a lot of sophisticated equipment on location. All of our rigs are high-spec. The rigs are taller, our derricks are a little taller. When we built the well-site decommissioning P&A fleet, we did the same thing. We use a lot of automation. We have a much more sophisticated system for everything. That has allowed us to lock up work with the majors. We haven’t been on a huge growth trajectory. We’re running about double the rigs than we were when we bought the company in January 2022. Sometimes, growth for growth’s sake or scale on a multi-basin platform doesn’t really bring any added benefit. You end up creating lots of silos of G&A and more fixed costs, but you don’t necessarily see it impact your bottom line. There was never an IPO strategy or anything like that. Let’s grow it, let’s do it within our own cash flow, and that’s worked really, really well.

JB: Are ClearWell and, more broadly, Marauder focused on specific basins? Or are you pretty basin agnostic?

RP: Basin agnostic for the most part. Obviously, the Permian still has a lot of really positive attributes because it’s still the largest oilfield in the world, but it’s a very tough place to operate. It’s very competitive and the margins are skinny. Sometimes, you look at a certain business and you say, “Why is their Permian division the poorest performing?” It’s because of the makeup of the business. Within ClearWell, we’re agnostic, but we stick to what we’re best at. We haven’t shown up in the Permian in a big way. We nibble around the edges of the Permian now. There’s a lot of well-servicing capacity there and a lot of providers, and it’s tough to keep employees in the Permian. They jump around, they job hop.

So, we like these markets where we’re one of maybe four or five service providers rather than one of 20 or 30. We still have a Williston footprint. We created a Barnett footprint and an eastern Permian footprint. And then we’ve doubled down on all of our efforts in the Gulf Coast, the Eagle Ford, the Woodbine, southern Louisiana and deep South Texas where we have economies of scale and we have roots that we can maximize. That’s been our model. It’s worked well. Don’t step out just for stepping out.

Now, Marauder is basin agnostic. We look at a lot of Permian stuff. We look at things all over the Lower 48, but we’re more interested in the business itself. How profitable is it? How profitable could it be if the right levers were pulled? Again, if it’s major surgery, it’s probably not for us. It just takes too long within a fund life to make those things happen.