Bob Simpson
Editor's note: This profile is part of Hart Energy's 50th anniversary Hall of Fame series honoring industry pioneers of the past 50 years and the Agents of Change (ACEs) who are leading the energy sector into the future.
In 1986, Steve Palko, Bob Simpson and Jon Brumley founded Cross Timbers Oil Co., later renamed XTO Energy, which was sold to Exxon Mobil for $41 billion in stock and debt assumption in June 2010.
The triumvirate had been pushed out of their executive positions at Southland Royalty after Burlington Northern Railroad’s hostile takeover in 1985.
Their plan for Cross Timbers: Acquire and exploit, particularly the somewhat neglected oil and gas properties that majors were dumping throughout the Lower 48 as they sought new prizes abroad.
Their first acquisition: A statue, Simpson confirmed to Hart Energy in 2005.
“Back in 1986, Steve Palko and I went to a fundraiser for the March of Dimes. They were auctioning this statue titled ‘I'll Be Back.’
“It’s a cowboy riding his horse out of town. He’s lost his hat, he’s lost his gun, he’s shaking his fist back at the town. He’s obviously been run out of town. We thought that was analogous to Southland’s hostile takeover in 1985 where they ran us out of town and took our company.”
With Cross Timbers, the trio was starting from scratch. “We didn’t have a stitch of production; the statue was our first purchase of anything.”
It became the company’s mascot, but the trio soon bought an oil and gas property in Major County, Okla.
Ten years later, “we had the same artist sculpt another statue, ‘I’m Back,’ which is of a guy tying his horse up to a hitching post, fixing to go back into the saloon,” Simpson said. “He’s got his gun. He’s got his hat. ‘I’ll Be Back’ was our slogan and we did it.”
Ten years later, XTO held some 6 Tcfe of proved reserves, producing some 1 Bcf/d and 42,000 bbl/d.
It had also entered the new shale business. The Barnett play was quickening all around its Fort Worth headquarters in the early aughts and XTO joined in 2004. As a Cotton Valley producer in East Texas, XTO knew about tight-rock gas. It made an initial acquisition for $120 million of 11,000 acres.
It followed that in 2005, buying out a first iteration of Antero Resources’ Barnett portfolio for some $700 million.
In 2008, XTO joined the Bakken oil play in North Dakota, buying Headington Oil for $1.85 billion in cash and stock and gaining 352,000 net acres in the Williston Basin. A few weeks later, it bought Hunt Petroleum Corp. for about $4.2 billion in stock and cash, gaining production and reserves throughout the U.S., including 15,000 net over Bakken.
Soon, Exxon Mobil swept in, making a roughly $31 billion stock offer in 2009, plus assumption of some $10 billion in debt, that closed in the summer of 2010.
At the time, XTO had 70 rigs drilling in the Barnett, Haynesville, Marcellus, Fayetteville, Woodford and Bakken shales, and conventional assets in the San Juan, Permian and Gulf Coast basins.
After the sale, Simpson and other XTO executives founded investment firm Morningstar Partners. Today, he’s chairman and CEO of newly public TXO Partners, with executive management consisting entirely of former XTO team members. Property is in the San Juan and Permian basins.
XTO co-founder Brumley had retired from the company in 1996 when the E&P was well on its feet and around the time of the “I’m Back” statement acquisition.
In 2011, he talked to Hart Energy about Simpson and team members’ growth of XTO and its exit to ExxonMobil.
“They did a great job,” Brumley said. “That’s a powerful management group—Bob Simpson, Palko, [Keith] Hutton, [Vaughn] Vennerberg, [Louis] Baldwin.
“[It’s] a great team that came early and stayed late.”
XTO’s buy-and-exploit strategy was “a game of inches,” Simpson told Hart Energy in 2005. “There will be two or three people around you [bidding for what you want] and you’ve got to beat them.”
—Nissa Darbonne, Executive Editor-at-Large