Crosstex Energy CEO blends people and financial skills

Pipeline & Gas Journal, Oct, 2006 by Lew Bullion

Over its 10-year history, Crosstex Energy, Inc. has grown at a brisk clip to become a substantial force in the midstream energy business. A leader in that growth is Barry E. Davis, president and CEO, who demonstrates an optimum blend of people skills and financial expertise. How did Crosstex come so far, so fast? P&GJ recently visited with Davis and asked him about Crosstex Energy, Inc. (XTXI) and Crosstex Energy L.P. (XTEX). He led the founding of Crosstex in 1996 by accomplishing a management buyout of Comstock Natural Gas, Inc., where he had been serving as the acting president.

Crosstex has grown to be a significant midstream energy service provider with throughput of approximately 3 Bcf/d of natural gas or approximately 6% of marketed U.S. daily production, based on August 2005 U.S. Department of Energy data. Davis has been in the natural gas industry for more than 20 years, founding Ventana Natural Gas Co., a predecessor of Crosstex, in 1992.

P&GJ: Tell us about Crosstex and how it stays unique.

Davis: Crosstex is a Dallas-based midstream energy services company that provides a full spectrum of services necessary to move natural gas from the wellhead to the consumer. We are currently celebrating our 10-year anniversary as a company dedicated to delivering success.

Today we own and operate more than 5,000 miles of pipeline, 12 processing plants, four fractionators, approximately 160 natural gas amine treating plants and 25 dew point control plants. We have approximately doubled in size every year for the past 10 years. We've achieved sustainable growth through a disciplined strategy that includes both acquisition of underutilized assets, asset enhancement and organic construction projects.

Crosstex's culture drives the company's success. Our culture enables our team to cultivate synergistic working relationships with fellow members of the Crosstex team, as well as our customers. Employees are empowered to think like owners and have mutual respect for their colleagues' talents. Crosstex is a strong company built to last. We are committed to excellence in all that we do.

P&GJ: What is the biggest challenge facing Crosstex and you?

Davis: The greatest challenge for Crosstex and for the entire oil and gas industry is the shortage of skilled workers to meet the numerous opportunities that exist in this robust marketplace.

In addition, companies' heavy demand for supplies and equipment is not being fulfilled due to lengthy delivery times. This has increased the construction time required to complete projects.

P&GJ: Where did you grow up? What were your interests as a young person, and did you always intend to go into management?

Davis: I grew up in Frisco, TX a small town at the time, just outside of Dallas. Today, it is essentially part of Dallas. I played every sport as a child and that was a big part of my life through college at Texas Christian University (TCU), where I played baseball. After TCU, I started my career in banking, but soon became attracted to the energy business.

P&GJ: Which of your accomplishments do you find most satisfying?

Davis: What we've accomplished as a company has really been amazing. A great group has come together one-by-one over the last 10 years and through a passionate pursuit of a dream, we have created a great company that I hope lasts beyond any of us individually.

P&GJ: Would you describe the state of the North American and worldwide gathering and processing industry today and sketch the issues and trends that will affect pipelines, processors and distribution systems and those who construct and maintain them over the next several years?

Davis: Recent advances in drilling and operational technology have opened up numerous geographic locations in the United States for drilling opportunities. This has created additional gathering and pipeline construction opportunities to develop much-needed infrastructure for delivering gas from the wellhead to the consumer.

In addition to new drilling opportunities, LNG imports have created opportunities for pipeline projects that will deliver the imported LNG to market.

The current pricing differential between major producing basins and key market hubs has served as a catalyst for several significant pipeline projects that will "bridge" the gap to make needed supplies available to key market areas and ultimately improve net-back prices for producers. The Barnett Shale area is a great example, as we currently see projects that will connect this key supply to all Midwest and East Coast markets.

As far as processing goes, we are seeing dramatic volatility today. For example, the frac spread today is at an all-time high, whereas it was at an all-time low less than a year ago in the fourth quarter of 2005.

P&GJ: Tell us about your family. What do you enjoy doing when you are fortunate enough to have some spare time?

Davis: I have a true partner in every sense of the word in my wonderful wife of almost 22 years. We met at TCU and married shortly after graduation. We have two daughters, 13 and 12. We all love to travel together and spend time at our lake house not far from Dallas.