The oil and gas (O&G) industry is steeped in both tradition and innovation, and it’s exciting to see how new technology and processes transform the industry year after year. At Allegiance Capital, we often get a bird’s eye view of burgeoning changes in O&G because we work closely with so many middle-market O&G technology and field service companies.

 Oil and Gas: It’s a Texas Traditiontexas lonestar state silver star round frame

In Texas, where oil is king, tradition, personal responsibility and a handshake still mean something. You’ll find that middle-market O&G businesses – from oil field services to O&G technology firms – more
often than not, have ownership with deep roots in the oil patch. These are people who worked in the oil fields, came up with an idea that would improve how the industry works or minimize a problem, and then built a business around it.


In the old days, deals were sealed with a handshake. If you owned a business and made a mistake, you had to make it right. When you performed as promised and expected, the business became yours to lose, especially if you had competition waiting in the wings. Trust and honor were non-negotiable.

While there are fewer handshake deals today, middle-market O&G business owners still work to make things right in Texas. Trust and honor are still at the heart of these companies, most of which are family businesses that pass from one generation to the next. These businesses will grow and contract as the market dictates, then reach a stage necessitating a transition of ownership. At this point, business owners can choose to sell all or part of the business, recapitalize (in order to expand), or take some chips off the table so the senior owner can exit.

New Processes and Technology Breed Progress

I’ve enjoyed watching O&G evolve since I first became involved in the industry as a petroleum engineer in the 1970s, then moved into various project work, planning and staff roles during my 17 years at the Atlantic Richfield Company. Things were different back then.

In those days, watching the men work the oil rigs was like watching a ballet – the drilling crew all had to be in synch with each other. I can still see the deckhands lining up pipe, tightening pipe and balancing on the monkey board. It was a sight to behold. At the same time, human error was a much bigger factor then than it is today. If the men fell out of synch, the whole process would slow down (meaning money lost), and even worse, someone could get seriously injured.

Technology has changed how men (and women) work in the oil fields today. Various forms of automated drilling rigs are becoming the norm, which has taken many workers out of harm’s way. While this may sound bad from a labor perspective, other technological advances have led to job growth in the O&G sector and the industries that support it.

The technology that enables directional and horizontal drilling and improves fracturing techniques has led to the shale oil boom we’re experiencing in Texas and elsewhere today – that means more jobs. In fact, industrial employment in Texas as a whole grew 2.5 percent from May 2013 to May 2014 (an addition of 31,198 jobs), with the O&G extraction (shale) industry leading the way (10.7 percent increase), according to Manufacturers’ News Inc.1

Rising Rig Counts and Oil Production, Good for Middle-Market M&A

It’s an exciting time in the O&G industry in Texas. As of mid-July, rig counts were up again thanks to drilling operations in Texas locations including the two O&G basins with the top rig counts: the Permian (up to 563) and Eagle Ford (up to 218).  In April, Texas and North Dakota accounted for nearly one half of all oil production in the U.S.2

With all of this activity happening in the Texas O&G industry, M&A opportunities for middle-market O&G businesses are plentiful, too. At Allegiance Capital, we’re excited to be on the front lines as tradition holds strong and technology continues to drive Texas O&G industry growth. As leaders in middle-market M&A, especially in the O&G space, we are honored to assist in transitioning these great traditions to the next generation.


Photo Source: © Russ Allen –


1. Nowlin S. “Oil-and-gas activity spurs strong manufacturing job growth in Texas.” Austin Business Journal website, July 10, 2014. Available at Accessed July 17, 2014.

2. Sakelaris N. “Texas Boasts the Two Most Active Spots for Oil-and-Gas Drilling Rigs.” Dallas Business Journal, July 15, 2014.  Available at Accessed July 17, 2014.



Keywords: middle-market; middle-market O&G; O&G; oil and gas industry; M&A opportunities; M&A activity; Texas O&G; Texas O&G industry