Vaalco Energy chief executive Cary Bounds is proud of turning the company around after a long period in financial limbo, jettisoning the debt, settling an onerous rig commitment and building up a $48.6 million cash base.

“We’re now looking to acquire more acreage across west and eastern Africa wherever we can manage the above-ground risk,” he says.

Bounds was born in Tulsa, Oklahoma into a family of wanderers, his father a petroleum geologist who moved the family to Texas, where Bounds was raised in the leafy Houston suburb of Spring Branch. It was, he says, “a great place to grow up in the 70s.”

He attended Texas A&M University’s Agricultural and Mechanical College for a BSc in petroleum engineering.

“I had that early exposure to the industry from home," Bounds recalls. "It was part of our culture, and I’d been taken around by Dad as he worked his way through Louisiana, Mississippi and the Gulf Coast.”

Preferring numbers to geology, Bounds launched himself into intense studies over five years while working every summer, once in a sheet metal factory.

“The rigour of that experience motivated me to finish my degree,” he explains.

As a freshman in 1986 he saw the oil price fall off a cliff. “My class size was 200, falling to 26 by the time I graduated," he says. "Everyone was abandoning the profession and the industry was hurting with layoffs all round. But Dad said times will change, that it’s all cyclical — and he was right.”

After successively interning with Conoco, Bounds kicked off his career among the nodding donkeys of western Texas.

“It was classic exposure and the transition was seamless, having secured pension benefits from my final year, allowing me to slot right into the role of production engineer.”

He spent several years on the patch, connecting up onshore production and handling huge waterfloods, “then gravitating towards the massive secondary recovery projects, including the deep oil plays and shallow gas pockets in south-west Texas”.

Breakthrough

His team learned to adapt technology for novel application, successfully deploying hydraulic fracturing to the Eumont fields and plays in New Mexico’s Permian basin, tight gas reservoirs with low permeability, a technique later applied to shale. “I feel this was a real breakthrough,” he says.

From 2007, Bounds sought to transfer these skills to another gas play, this time in Mozambique, with a little known Houston startup called Terralliance Technologies, which operated offshore, “and also onshore on the Zambesi block, where we drilled a duster,” he says.

Bounds says anti-American sentiment was rife at that time and he recalls fraught negotiations with the government while explaining the risks.

“You have to find the decision-makers and must get to know the people to drive any project forward,” he says.

The bigger challenge turned out to be his own boss, Terralliance founder Erlend Olson, a former NASA electrical engineer with great expectations but no fossil fuels experience.

With oil at $145 per barrel, the company raised $1.1 billion, but the operation’s airborne exploration techniques over-reached, as did Olson himself, and the project ended badly.

Bounds jumped ship in 2010 for Noble Energy, first handling mergers and acquisitions challenges in the North Sea as it moved to disengage from non-operated oil and gas equity across 10 fields, and in 2013 heading up a business unit to refocus on Africa, notably Equatorial Guinea.

“That was an exciting time for me as business unit manager with an engineering background,” Bounds recalls, adding that the company had a floating production, storage and offloading vessel, platforms and tie-backs to accomplish, as well as "two reservoirs in production with fluid storage challenges".

"I left in 2015 only because Vaalco offered a role as chief operating officer in a company with similar assets, and I believed I could make a difference,” he says.

Almost immediately the oil price began to tumble, potentially compromising the value of Vaalco’s African asset base. Bounds had little idea just how much restructuring the company needed at that point.

Balance sheet

By the first quarter of 2016, he says, “Vaalco was netting back less than $30 a barrel on produced crude, with $15 million in debt as well as a $15 million penalty for three undrilled exploration wells in Angola on the balance sheet and a rig commitment with Transocean through mid-2016 in Gabon, which we couldn’t afford.”

Cash was tight with the Gabon licence set to expire in 2021. There was no growth trajectory, and three senior managers were resigning as Bounds was coming in as chief executive.

“I didn’t want to be the one who bails out when things get tough,” he says.

He set about rebuilding the management team, getting the engineers in every day to monitor production in real time.

“They watched the wells like hawks, and changed the pumps out while we focused on the profit margins, cutting costs and making every dollar count.”

By releasing “lots of creativity”, he helped Vaalco kick production back up with minimal investment, improve cash flow, pay off all debt, negotiate settlements with Transocean and in Angola, and get the Etame licence in Gabon extended for 20 years.

“This was our crowning achievement in a country we know well, where we built a strong network. We're now looking to replicate our success there and elsewhere in Africa,” Bounds says.

With a market capitalisation of $120 million, New York-listed Vaalco has traded on the London Stock Exchange since September, with Bounds actively pursuing M&A opportunities across Africa.

“I want to see the company valued at $500 million by 2025 via organic growth.”

He says his time in Mozambique taught him a deeper appreciation of the travails others face, and how a significant fossil fuels development could dramatically change the lives of people for the better.

Bounds has learned patience over the years and is now on a mission to take his three teenage daughters out of their US comfort zone. His eldest has just returned from helping out at an orphanage in Uganda.

“It’s all about the kids these days,” he says.

Vaalco's leader knows no Bounds