Striking Oil – CrownRock by Lime Rock Capital (EP.428)

Capital Allocators – Inside the Institutional Investment Industry

Ted Seides – Allocator and Asset Management Expert

Investing, Capitalallocation, Business

4.8 • 806 Ratings

🗓️ 20 January 2025

⏱️ 70 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

When you think of the greatest private equity deals of all time, names like Google, Facebook, Uber, Dell, and Hilton come to mind. After a recent episode of Private Equity Deals, you might also think about 3G’s acquisition of Burger King.

But I’d bet you wouldn’t think about an oil and gas play called CrownRock. Lime Rock Capital created CrownRock alongside a management team with $96.5 million of cash and assets in 2007. Seventeen years later, sold the business to Occidental Petroleum for $12.5 billion.

Lime Rock’s original investment made 79x its money, a net IRR of 18%, and $7.5 billion in gains, which ranks in the top ten fully exited private equity deals of all time. It also exited a continuation vehicle that generated 3x its cost over the last six years of the deal’s life.

My guests to discuss the firm and its grand slam CrownRock deal are Lime Rock Managing Directors John Reynolds, Jonathan Farber, and J McLane.

Our conversation covers Lime Rock’s investment approach and the example of CrownRock. We dive into the initial investment thesis around vertical drilling, the three extinction threats to the business, innovation of horizontal drilling, management excellence, exit options along the way, and the ‘forever hold’ mindset that allowed CrownRock to compound extraordinary amounts of capital.

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0:00.0	Capital allocators is brought to you by my friends at WCM Investment Management.
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0:11.9	In my 30-something years investing in managers, there may be no one I've come across who does that as clearly and as well as WCM.
0:20.1	I've seen it up close as an investor in their
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1:26.9	This testimonial is being provided by Ted Sides and capital allocators who have been
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	...

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