By Olaf Growald
For Frank Starr and Crimson Energy, 2014 was both the best and most-trying year of the company’s now 21-year history.
Starr is one of the true maverick oil men of North Texas, and he helped build the Fort Worth-based Crimson Energy on daring risk-taking. Since founding the company in 1998, Starr has created and then sold three different oil companies for what he estimates to be a total of somewhere between $250 million to $300 million. But as any oilman can tell you, the ability to turn those companies into profit-driving machines is dependent on a few critical factors.
Perseverance and an ability to weather the storm of fluctuating oil prices are chief among them.
Starr was well established in North Texas by 2014 when he sold a company built from the ground up for a third time that year. Starr’s business model has been as simple as it’s been successful: Put in capital up front, drill wells in lucrative areas, multiply the value of the business, sell high after three to five years, rinse and repeat.
Even within a model that’s never yielded less than 2.4 times the original investment, 2014 was a bumper crop. The sale yielded more than three times the initial investment in the company, and Starr was riding high.
Then, around Thanksgiving 2014, oil prices plummeted from $90 a barrel to $24 just as Starr was building the fourth iteration of Crimson Energy. All of a sudden, Starr and his group were faced with a true run-toward-the-roar moment.
“The oil industry is an incredibly capital-intensive business,” Starr said. “Every well we drill is $5 million to $5.5 million. You have to make sure you can get a return on that. And you’re looking for something where you can grow it and get multiples on your money. It just takes work. It’s constant work to improve your processes and your business.”
Sometimes the safest place to be is the one that feels the scariest. Lions — with their intimidating teeth and deafening roars — are designed to provoke fear. But the real danger lies with the smaller, quieter lionesses. In the animal kingdom, the lion’s job is to roar and send prey scattering away from the startling noise — right into the path of the waiting lionesses, the true hunters. If gazelles knew to run toward the frightening sound, they would have a better chance of survival. The roar doesn’t represent the real danger.
Likewise, humans sometimes have an instinctive desire to shy away from pursuits that look and sound scary. But often, running toward those challenges and conflicts is the best (or only) way to grow and meet our goals. In business, those who run from the deafening noise never reach their full potential, while those who turn and face the fear thrive.
In 2014, Starr was faced with that moment, one of many since he stepped out in faith in 1998 to create a company with a business model that had yet to be widely adopted in the field.
So, Starr and his group started pouring their own money into the company as investors let the market stabilize. It took them two years of effort, faith and perseverance before Vortus invested in 2016 and the company got back to a normal pace. Since then, Crimson Energy continues to pile up momentum as they look toward the future, which always seems up in the air in the oil and gas industry.
“It’s all a team effort,” Starr said. “It’s all of us together that makes it work. I had a dream, and I had faith to accomplish my dream. There were some really dry spots. You just keep working through it and make good decisions, and treat people fairly and be honest with people. If you work hard and pursue your dream, things work out. We’ve gone through cycles of oil prices being high and low, and when it’s low, you hope you’ve got an equity partner that stays with you, and you do your job of going out and drilling wells and persevering.”
One area where Starr is most proud of Crimson Energy is the workplace environment. Crimson Energy employs 14 full-timers and 10 contract workers in the field, making it a smaller, more agile company in an industry with multiple billion-dollar behemoths. The leadership team takes pains to make sure everyone is celebrated and rewarded, even in the more difficult moments.
Starr believes that workplace intimacy is what has made Crimson Energy so successful over its more than two decades of life. Even in a slightly depressed market, as it is now, Crimson Energy continues to make waves in the industry and has firmly established itself as a serious player in a crowded field.
“It’s just about treating people properly and well,” Starr said. “I learned all that from my father. I worked for his business from the time I was 9 years old, cleaning toilets. I just worked my way up. A lot of the things I have are things I learned from my dad. You look back at your life and the people that have touched it, and things you learned at the time you didn’t even realize you were learning until you had to go deploy them, and you realize the importance of all those people.”