While Alabama might be where he resides, West Virginia will always be home for Fairmont State University alumnus Rusty Hutson, Jr.
Hutson is the Chief Executive Officer of Diversified Gas & Oil and is the fourth generation in his family to work in the oil and gas industry. He began his business in 2001 while still continuing in a successful banking career as the Chief Financial Officer of Compass Financial Services at Compass Bank in Birmingham, Alabama.
“I was the first person in my family to graduate from college, so that was pretty special. Going to Fairmont State really worked out and it didn’t hold me back in anyway,” he said. “At the time everyone wanted to go to West Virginia University but looking back, this was the best thing for me. It was a great experience and I am pleased to have graduated with an accounting degree.”
Hutson said after graduation he got into banking and that’s how he ended up in Alabama. While he was working, he decided to start his own oil and gas company.
“From 2001 to 2005 I was working all day and then coming home to work evenings with the oil and gas company which I had started by acquiring some wells from a seller in Doddridge County,” he said. “I bought the wells, she owner financed 75% of the purchase price and I took out an equity loan to close the deal.”
The company grew modestly, Hutson mentioned, utilizing debt and other financing sources. They drilled wells in West Virginia and then began to acquire assets. The last three years are when the bigger opportunities began to present themselves.
“A lot of the larger companies started to focus heavily on the Marcellus-Shale and we saw an opportunity to acquire what were deemed ‘conventional producing’ assets, which are the mature wells in West Virginia that have been drilled since the early 1900s,” he said. “We saw an opportunity there and that’s when we realized we needed to be in a position to take advantage of it because those opportunities are going to come fast and furious. There were going to be large packages of wells with a lot of production and we needed to be in a position to take advantage of them.”
Soon thereafter, Hutson met a gentleman from London and he went to make a presentation in 2015 for a potential IPO.
An IPO is the process by which a company offers shares of its stock to new investors, thereby going public. Although the presentation was not successful, they instead issued a publicly traded bond and raised about $13 million.
“We took that money and we put it to work on some new assets, acquired assets from Seneca in Pennsylvania and also from Eclipse,” he said. “Then we went back to London and initiated the IPO again and we were successful. We executed the largest E&P IPO in London since 2014 at $50 million in February of 2017.”
After that finish line was crossed, Diversified Gas & Oil closed on the acquisition of Atlas Resource’s Appalachian Assets and raised another $35 million in London. That led to the announcement of four o larger deals in 2018. Alliance Petroleum, CNX (the old Consol Energy), EQT assets in West Virginia and Kentucky and Core Appalachia. In total, these acquisitions totaled approximately $1 billion and took equity raises of over $500 million to close.
“The biggest thing was pushing through and not quitting on the IPO like we could have after they turned it down the first time. We pushed through and were able to get it across the finish line,” he said. "Now we employ over 950 people between Ohio, Pennsylvania, West Virginia, Virginia and Kentucky. Weoperate over60,000 wells in the (Appalachian) basin.”
As a member of the Falcon community, Hutson recently returned to campus to talk with current students in the School of Business about his experiences and share encouragement and wisdom as they look ahead.
“I think it’s lost in today’s society that the American dream really does exist. I think a lot of people hear about it but they don’t really know how they can do it. We didn’t have anything growing up, we were not rich for sure. Just fight. Get up every dayand go to work.Don’t chase money. The money will come if you’re doing what you love.”