Western Land Services One of Nation's Leading Brokerage Firms

SCOTT BELLINGER, MICHIGAN OIL & GAS NEWS

LUDINGTON, Mich. — Western Land Services, which had its roots in a small independent oil company formed in 1974 in this west Michigan community by legendary Michigan landman T.T. “Tommy” Thompson, has evolved and grown over the past four decades to become one of the leading full-service land brokerage firms in the domestic oil and gas industry.

The most recent transition in a journey which saw current CEO John Wilson purchase the company — which was ­renamed from Western States Oil Co., Inc. to Western Land Services, Inc. — in 1992 and begin to shift its focus from more traditional land services to all aspects of oil and gas resource development, was the Jan. 1, 2017 announcement that 49 percent of the company’s stock had been sold to its employees, through an Employee Stock Ownership Plan, or ESOP.

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Western Land Services president Rich Collins talks about the company’s evolution from a small, traditional leasing company to one of the leading full-service brokerage firms in the nation recently at the company’s headquarters in Ludington.


 

The firm’s approximately 250 employees became beneficial owners through the ESOP, giving them a financial interest in the success of the business and making the positive bonds between Western Land Services teammates even stronger, according to a news release issued by the company earlier this year, representing a tangible way to reward those who have played a critical role in the company’s success since the beginning.

Wilson and Western Land Services President Rich Collins call the move consistent with their recognition of the contributions of each employee and their desire to share the rewards of that success. “The reasons for selling the stock were three-fold,” Collins said. “The ESOP is the best way to provide for future company stability, ensure a smooth long-term leadership transition and share the financial rewards of ownership with our employees.”

Wilson, who had been owner of Western Land Services for more than 25 years and retains a 51 percent ownership stake going forward, notes that he plans to remain CEO for the long term and said the executive management team at Western Land Services will continue in its current form.

Both Collins and Wilson point out that there had been numerous opportunities to sell the business in the past several years, particularly prior to the 2014 industry downturn when the value of Western Land Services was much greater than Wilson received from employees through the ESOP. “The energy business has been pretty darn rough for the last two and a half years,” Wilson was quoted as saying in a feature article published in February by the Ludington Daily News, “and we’ve suffered mightily.”

Wilson said the timing of the ESOP was about more than his bottom line, it was about a successful future for the employees, too. “I wanted my people to get a really good deal,” Wilson said.

During an interview with Michigan Oil & Gas News earlier this month at Western Land Services headquarters at 1100 Conrad Industrial Dr. in Ludington, Collins underscored just how rough the past couple of year have been for the oil and gas industry in general and Western Land in particular by noting the company’s falloff from a peak of nearly 700 employees prior to the start of the oil price collapse in mid-2014 to a low point of about 180 employees last summer.

While the falloff sounds dramatic, the change has to be considered within the context of where the industry had been trending, Collins said. “We’re at about 250 employees (plus contractors) right now, so on a percentage basis, we’ve grown about 40 percent since the low spot. That’s a nice little uptick.”

The story behind the industry’s downturn from mid-2014 to early 2016 both begins and ends with the price of crude oil — which fell from more than $100 per barrel in July 2014 to under $30 per barrel by February of 2016.

The compelling story of Western Land Services’ growth from a small firm offering traditional leasing services to one of the largest full service oil and gas and pipeline brokerage firms in the U.S. has been due in large part, Collins said, to the “shale ­revolution” that began in earnest in the mid-2000s — kicked off by the successful application of horizontal drilling and hydraulic fracturing technology to oil and gas pays not previously considered commercial targets in the Barnett Shale in Texas and the Marcellus Shale in the Appalachian Basin.

“The shale revolution created an immense need for land services in the U.S., like nothing we had ever seen before,” Collins said.

When the revolution hit, Western Land Services found that it was poised to help the industry meet the unprecedented demand for land services with a service portfolio that had been expanded in the 1990s to cover a broad range of resource development needs, including project layout and design, wildlife / environmental studies, field coordination activities and more.

A historical timeline of company milestones for Western State Oil Co. and Western Land Services featured on Western Land’s website, westernls.com, shows that the first big shale play that the company became involved in was Michigan’s Antrim Shale development, where it provided support services to Terra Energy LTD and was involved in the drilling of more than 7,000 wells.

“As far as I’m concerned, the Antrim was the first large scale resource play in the U.S.,” Collins said.

The company’s desire to branch out and offer a wider range of services was a perfect fit with the Antrim play, which expanded slowly from its start in Otsego County, Collins said. “The beauty of being in Michigan was, we cut our teeth on the Antrim. The Antrim really showed us how, it gave us a leg up on other leasing companies because we knew how to do resource plays,” he added.

Collins said Western Land took the knowledge it had gained from Michigan and took it out west, and then started applying it in other basins. In 1999 Western Land Services opened its first office outside Michigan, in Sheridan, Wyo., servicing the Powder River Basin coalbed methane play. It currently has offices in Michigan, Wyoming, North Dakota and Pennsylvania.

Shortly after the company first branched out from its Michigan base, Collins, a Ludington native who had joined Western States Oil in 1986, took a position with CMS Oil & Gas as manager of land, regulatory and government affairs, directing the drilling of over 500 Powder River Basin wells. Continuing to leverage his knowledge and experience with resource plays, he was involved in land acquisition and drilling of some of the earliest Marcellus Shale wells while with Epsilon Energy from 2007 to 2009 and worked southwest Pennsylvania and Michigan’s Trenton-Black River play with Trendwell Energy before re-joining Western Land Services in late 2013 as its president.

“There were some plays in Kansas that Western was part of when I was at CMS,” Collins said. “Then when the shale revolution hit we (Western Land) had a couple of resource plays under our belt, and clients valued that knowledge.”

Collins explained that Western Land had achieved the ability to tell clients that they could do more than a traditional land brokerage firm and become a one-stop shop for leasing, putting together a pipeline system, permitting and regulatory, surveying. “All the things that you need that you need to have done, not just to get the wells drilled but to get the wells on production, we were going to do all that.”

Some companies remain reluctant today to turn over such a broad scope of work, Collins said, adding, “We were fortunate enough to have some clients along the way who allowed us to do that. Terra was great at giving us that flexibility to help them do that, as was CMS Energy out in the Rockies, and since then we’ve had several companies that have allowed us to do that for them, in Appalachia and in the Rockies and elsewhere.

It’s one thing to be able to offer a broad range of services in the busy times, Collins noted, but when leasing slows down and the work focus shifts to title, abstracting or GIS work, the company realized that the array of services it offered brought with it a need to cross-train its employees.

“We’ve forced ourselves to diversify and grow in areas that 10 years ago weren’t considered traditional land services,” Collins said. “That’s enabled us to keep that base level of employees, keep them going.”

“We’ve got a lot of people who can build an abstract, can go into a courthouse and run a lease title, they can go and sit behind their computer and map out GIS work,” Collins said. “All of our lease buyers know how to go buy right-of-way for pipelines.” A key part of the company’s beefed up human resources role, Collins said, was the development of a library of some 40 online training videos that employees can view on their computers to assist them in learning new skills.

Looking forward, Western Land CEO Wilson noted last week that, “Being in the land business, it’s hard to predict what the future might bring.”

One area of its service portfolio that has been particularly good in recent years, Wilson said, has been the company’s development and refinement of its data ­management, geographic information ­services (GIS) and mapping capabilities.

The company has compiled and maintains leasehold (takeoff) data for nearly all of Lower Michigan, the Utica / Marcellus play area in parts of Ohio, Pennsylvania and West Virginia and has expanded their coverage into the Eagle Ford and Permian in Texas, Wilson said. “I would love to be able to do the same in Oklahoma,” he added.

Wilson said the company feels that the tools that it has developed in this area give Western a leg up on its competition. “We look to continue to expand our capabilities and build on the success we have had with these products,” Wilson said. “It makes for a nice intro to Western Land Services,” he noted, “people usually buy maps first when then begin working a new area.”

Western Land Services has expanded staffing of its Grand Rapids office, which was opened in 2014, to support the GIS and mapping functions, Wilson said, in part due to a housing shortage in the Ludington area.

In addition to empowering Western Land Services employees by helping them expand and enhance their individual skill sets and giving them a financial stake in the company through the ESOP, Wilson has developed deep roots in the community of Ludington and Mason County since joining Western States Oil in 1980.

“John truly loves this area, he loves Michigan, wants to see Michigan do well and wants to see Mason County do well,” commented Collins of the man that hired him as a landman more than 30 years ago. “Even people that live in this community don’t fully grasp the ‘footprint’ Western Land Services has in the industry nationwide,” Collins said. He noted that, like many other active companies in the oil and gas industry in Michigan, the wealth created by the company’s work was not created locally, it was created in places like Pennsylvania, Texas and in other parts of Michigan.

“The fact is that the wealth that is generated is brought back and has a direct and significant impact on the state of Michigan, Ludington and Mason County,” Collins said. “It’s a huge ripple effect,” he added referring to the jobs, salaries and wages and taxes paid as a result of the company’s activities.

The scope of Western Land Services’ impact on the local community was ­expanded significantly in 2012 with the establishment by John Wilson and his wife, Anita Wilson, of the Pennies From Heaven Foundation (PFHF) as a family foundation.

Based on the concept of teaching a man to fish, rather than just giving him a fish, the Foundation strives to fight poverty by filling needs in transportation, child care, education, housing, health care and jobs, according to the Foundation’s executive director Monica Schuyler.

The Foundation researches needs and investigates best practices so that it is not just creating programs and writing checks, but is aiming to support the community’s greatest needs and help put people on a path to self-sufficiency, according to the Pennies From Heaven Foundation website, pfhf.org.

Among the programs that the Foundation has supported or helped establish are: the Lakeshore Resource Network, which will feature the new Lakeshore Food Club, which is under construction and expected to open in June; Neighbor to Neighbor, a partnership between PFHF and Habitat for Humanity’s Neighborhood Revitalization Program; OakTree Academy, a non-profit child development center; and the Gateway to Success Academy (G2S), a new grade 6 through 12 public charter school specializing in educating students that need something different in order to succeed.

Located in the Mason County community of Scottville, the Gateway to Success Academy was constructed utilizing an old grocery store structure, with the building project completed last summer in time to open for the fall semester. Approximately 115 students from eight local school ­districts currently attend G2S, Schuyler said.

John Wilson’s experience with the OakTree Academy child development center has shown him that it is difficult to efficiently operate day care centers and he is looking to engage on the state level to help make the west Michigan region more work force friendly for working families, Schuyler said.

Just as many in the oil and gas industry and in Ludington are not aware of the breadth and depth of the work being done throughout the nation by Western Land Services, many in Ludington and Mason County are not aware of the Wilsons’ role in founding and supporting the Pennies From Heaven Foundation, Schuyler noted recently. “John prefers to have any attention focused on the work the Foundation is doing, not on himself or his family,” Schuyler added.

“We’ve had fun,” Wilson said of the experience that he and his wife Anita have had in establishing and supporting the Pennies From Heaven Foundation. “Everything we have given, we’ve gotten more back out of it.”

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