Choosing private equity out of all the options for an oil and gas company in need of money is a choice each company makes for different reasons. "My wife looked at this question of why we chose private equity and said, 'Let's be honest. You were in debt. That's why you went to private equity,'" quips Randy Olmstead, president of Tulsa, Oklahoma-based Mid-Con Energy Corp. "We thought we needed more money than the banks would give us. It's still expensive to get equity, so we plan to supplement it." For some of the panelists at the recent COSCO Private Capital for Energy conference in Houston, their source of capital at the time was just not working out. "We had already spent a lot of our own money, so we went to private individuals," said Mark Wilson, president and chief executive of Tulsa-based Coronado Resources LLC. "We had a hard time dealing with them. Even the really wealthy ones had a hard time understanding the E&P business and committing. "When we found people wanting to join Coronado, we realized we could build something much larger than we originally thought, but we needed financial backing. Greenhill Capital Partners and Lime Rock Partners understood the approach we wanted to take, and they have been flexible with taking a long-term view to build something from the ground up." For Jeff Mohajir, president and CEO of Kansas City, Missouri.-based Genesis Gas & Oil LLC, it was the COSCO conference itself that convinced him of employing private equity. "We sought private capital because Cameron [Smith of COSCO] told us to," he said. "I attended the COSCO seminar in 2004 and what resonated was that there is private capital willing to back entrepreneurial companies and treat them like partners. I thought using the private-equity structure would be a better vehicle for creating value and I also enjoyed the partnership of private equity." Wilson left the public arena of Williams Cos. Inc. to build a company from the ground up. His first stop was to access private capital and he has a long-term view that could eventually lead to taking Coronado public, though Wilson isn't in a hurry to do this. "I believe for Coronado and for me, it's much better to think of a public avenue later rather than earlier," he said. "Having been in a public company at the beginning of SOX (Sarbanes-Oxley) and all the regulations, I don't think I'd want to spend all my time trying to get analyst and public investor attention." Mohajir was most surprised by the process of accessing private equity. "We were five guys with track records and no projects. We met with 24 companies originally in March and by the first week of April, we were receiving term sheets. In early May, we closed. I was very impressed by the speed of the process. It went very fast. Two days after we closed, we were already approved to make our first acquisition." James Hunt, president and CEO of Dallas-based Regency Gas Services LLC, said the best advice for someone thinking of accessing private equity is to work both sides of the deal. "Work your opportunity up, but also work hard to get your money," he said. "You have to know what the private-equity guys want and you have to know what pockets your deal will fit in best. Know where your money is going to come from before you need it."

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