LOLA Energy Plans to Seize Opportunities in Appalachia

With a $250M infusion of capital from Denham Capital, the management team from the Pennsylvania-based oil and gas company plans to look at three categories of opportunities in the Marcellus and Utica shale plays.

Despite the amount of activity in the Marcellus and Utica shale plays in Appalachia and oil trading below $30 per barrel, LOLA Energy sees areas of untapped opportunity in the region.

LOLA’s CEO, Jim Crockard, says there are three categories of opportunities in the Marcellus and Utica plays. Some of those teams currently operating in these areas were “late to the learning-curve party” and unable to flourish and survive, he says. “Those folks could benefit from partnering with someone like us.” Another category of opportunity is with those teams that know what they’re doing but have debt on their balance sheet and are looking to divest properties.

The third area of opportunity is greenfield leasing, he says, which “two years ago you wouldn’t have believed existed up here.” There was a land grab in 2005 and 2006, and some of those properties were never developed, but because most were on five-year leases with five-year extension options, there are some ready to change hands again, says Crockard. “We are flexible and nimble enough to develop it.”

In order to take advantage of opportunities they believed existed in the Marcellus and Utica shale plays, LOLA Energy’s four-member management team went in search of the right private equity firm to partner with. They were also in need of $250M of capital.

After spending the summer of 2015 talking to “probably 24 private equity firms,” LOLA found one with the criteria it was looking for—the right balance sheet, a similar vision of what to bring to opportunities in the Appalachia shale plays, yet different insights—in Denham Capital. Crockard says they also looked for a PE firm that had invested in companies playing in other oil and gas interests outside of the Marcellus and Utica so that they “weren’t all playing in the same sandbox.”

LOLA, based in Wexford, Pa., will be using the $250M of capital to develop a core-of-the-core greenfield leasing program, says Crockard. He and three other Pennsylvania natives who worked together in the past formed the independent oil and gas company with the goal of leasing, acquisition, exploration, and production of oil and gas properties.

Denham did not know the LOLA management team prior to meeting them in 2015, says Jason Craig, a director based in Denham’s Houston office. He cites the team’s history of successfully identifying and developing natural gas reserves in the Appalachia region as a main reason that Denham decided to make an equity investment. Per its portfolio construction strategy, the firm has no competing teams in LOLA’s focus area, Craig adds.