From zero to $122.5 million: Dennis Ferstler and Dan Kellogg grew their Alpine Resources Inc. over 20 years into a multi-million-dollar company, all out of cash flow and leverage.(Portfolio Growth)

Publication: Oil and Gas Investor

Publication Date: 01-JAN-05

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Dan Kellogg wanted to be a car-maker. Dennis Ferstler planned to sail the world's oceans, a la Jacques Cousteau. Their dreams brought them eventually to the Gulf Coast oil and gas industry, founding privately held Alpine Resources Inc. in Houston and eventually amassing a fortune of producing assets along the Texas and Louisiana coasts.

Their financial strategy resulted in a successful asset sale this past summer for $122.5 million in profit that belonged 100% to them.

A native of South Bend, Indiana, Kellogg's introduction to the upstream energy business was upon his recruitment by Exxon out of engineering school at Purdue University. He had planned to work for General Motors, but moving to the South and finding oil and gas seemed more exciting, especially in the industry's go-go days, the 1970s.

"The energy industry is where I saw more opportunity than I saw in an auto-maker office or plant. Exxon had a program for educating its new engineers to understand petroleum engineering," Kellogg says. He was put to work on Exxon's onshore assets in South Texas, based in Corpus Christi.

Ferstler found his way to Exxon too. Upon getting a degree in oceanography from Southampton College on Long Island, he set out to make a living in the field. "Jacques Cousteau didn't make his fortune at what he was doing. In fact, he puts money into it, and no one told me that," Ferstler recalls.

He returned to school for a degree in geology. "I enjoyed studying the processes of earth science." Exxon enlisted him and put him and his degrees to work on its offshore assets based in New Orleans.

The pair didn't cross paths, however, until several years after they left the major oil company. Kellogg had joined a Houston independent, Wainoco Oil & Gas, which operated wells onshore the Gulf Coast, and then set out on his own, independently marketing properties. "This was before Randall & Dewey and Albrecht & Associates. I was locating sellers of properties, doing evaluations and presenting the properties to buyers."

Meanwhile, Ferstler had gone to Texas Eastern and then Texas Oil & Gas. Finally, in 1984, Ferstler formed his own production company, which later became Alpine Resources. He met Kellogg in 1985 when they...

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