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How Bill Walton’s Son Nate Made $1 Billion In The Oil Patch
Nate Walton orchestrated what has turned out to be a lucrative investment for Ares Management
By RYAN DEZEMBER / Wall Street Journal
Updated Feb. 17, 2017
Nate Walton, the 6-foot 7-inch son of basketball great Bill Walton and older brother of Los Angeles Lakers coach Luke Walton, was born to star on the hardwood.
Instead, the former Princeton University basketball captain is winning in high finance.
A partner in the private-equity group at Ares Management LP, Mr. Walton orchestrated one of the most successful shale deals in recent years, expected to net more than a $1 billion within a year.
Ares’s shares jumped 11%—the stock’s second biggest one-day gain ever—after The Wall Street Journal in January reported its expected profits from the sale of Texas oil producer Clayton Williams Energy Inc., in which Mr. Walton had led Ares to invest during the depths of the recent oil-price slump.
The sale of Clayton Williams was part of a run that has lifted Ares shares 80% over the last year. That is tops among its rivals, including Blackstone Group LP and KKR & Co.
Nate Walton said Ares’s flexibility to buy corporate debt, equity or sometimes both has enabled the firm to tailor deals to entice energy executives into partnerships and boost returns. At a time when many financiers have aimed to acquire drilling fields on the cheap from beleaguered oil producers, Ares opted to invest directly in such companies.
“Rather than try to buy assets, we’re providing capital to companies that already have assets with real competitive advantages and strong management teams,” Mr. Walton said in an interview.
Some Walton family members have confessed that they don’t fully understand what Nate does for a living, and his emergence as a financier contrasts with his father’s hippie demeanor. Bill Walton wears tie-dyed shirts, even when announcing basketball games on ESPN, and he loves the Grateful Dead. As a star for UCLA and in the NBA in the 1970s, he became known for anti-establishment and environmental activism that some may find hard to square with his son’s oil deals.
“I’m a solar guy,” said the elder Walton, leaving it at that.
Nathan Whitecloud Walton was born in 1978, the year after his 6-foot-11-inch father led the Portland Trail Blazers to their only NBA championship. The second of four boys who grew up mostly in Southern California, Nate was the most scholarly of the bunch. As a 6-year-old, his mother recalls, he begged for a computer years before many people knew what a PC was.
“He was the smartest of all the brothers, by far,” said Luke Walton, who won two championships with the Lakers before becoming the team’s coach this season. “We had classes together. I’d get a B- and he’d get like a 98%.”
Nate’s parents, who are divorced, said their son soaked up the experiences afforded to the child of a star athlete. There were driveway shootarounds with basketball legend Larry Bird and banter with best-selling author David Halberstam over dinner.
Susie Walton, his mother, recalled a teenage Nate hitting it off with his father’s friend Timothy Leary and asking if the psychologist known for advocating psychedelic-drug use could become his godfather.
Nate Walton was wooed by big-time basketball programs but opted instead for the Ivy League.
At Princeton, Mr. Walton was an undersize center and team captain his senior year. The team’s famed offense of constant motion and back-door cuts flowed through him. “He was an exquisite passer just like his pop,” said Bill Carmody, one of Nate’s coaches at Princeton.
He had brief spell at a hedge fund in New York, where he lived with his college buddy, Brett Icahn, son of billionaire investor Carl Icahn, and another with the Boston Celtics front office.
He returned to California and on a lark ran for governor in 2003 to replace Gov. Gray Davis, who had been recalled. Campaigning in the family uniform of tie-dyed T-shirt, Mr. Walton finished 47th out of about 135 candidates, well behind the winner, Arnold Schwarzenegger.
Mr. Walton enrolled at the Stanford Graduate School of Business that year and joined Ares in 2006 on the credit desk. He was soon noticed by two of the firm’s founders, Bennett Rosenthal and David Kaplan, who moved him to the private-equity team and assigned him to the oil-and-gas sector. Over two years, his group studied some 200 oil companies for investment opportunities. Ares made only one investment in a closely held Texas oil company, though.
When oil prices collapsed in late 2014, distressed opportunities emerged, and Mr. Walton pounced. Ares bought Halcón Resources Corp.’s deeply discounted debt and emerged with a 20% stake in the company after the oil explorer exited from bankruptcy protection last year. Ares recently launched a firm that helps oil producers pay for drilling projects, and on Friday, the firm said it would invest in Gastar Exploration Inc., spreading $425 million over a loan, convertible notes and the struggling energy explorer’s stock. Mr. Walton is joining Gastar’s board, his sixth in the industry.
In the case of Clayton Williams, a company with prolific oil fields in West Texas but little cash, Ares made a $350 million loan last March, not long after oil prices had slumped to about $26 a barrel. Ares also bought shares in the company, on the open market and directly from Clayton Williams, which used the cash to prove its drilling properties were in a sweet spot.
With energy prices stabilizing at around $50 a barrel, Noble Energy Inc. agreed in January to buy Clayton Williams. Under the terms of the deal, Ares is due to triple its roughly $515 million investment.
Mr. Kaplan said Mr. Walton convinced Clayton Williams that Ares could get it through a tough period. “He said, ‘Let’s fix your balance sheet and go on offense’’’ Mr. Kaplan said.
Nate Walton orchestrated what has turned out to be a lucrative investment for Ares Management
By RYAN DEZEMBER / Wall Street Journal
Updated Feb. 17, 2017
Nate Walton, the 6-foot 7-inch son of basketball great Bill Walton and older brother of Los Angeles Lakers coach Luke Walton, was born to star on the hardwood.
Instead, the former Princeton University basketball captain is winning in high finance.
A partner in the private-equity group at Ares Management LP, Mr. Walton orchestrated one of the most successful shale deals in recent years, expected to net more than a $1 billion within a year.
Ares’s shares jumped 11%—the stock’s second biggest one-day gain ever—after The Wall Street Journal in January reported its expected profits from the sale of Texas oil producer Clayton Williams Energy Inc., in which Mr. Walton had led Ares to invest during the depths of the recent oil-price slump.
The sale of Clayton Williams was part of a run that has lifted Ares shares 80% over the last year. That is tops among its rivals, including Blackstone Group LP and KKR & Co.
Nate Walton said Ares’s flexibility to buy corporate debt, equity or sometimes both has enabled the firm to tailor deals to entice energy executives into partnerships and boost returns. At a time when many financiers have aimed to acquire drilling fields on the cheap from beleaguered oil producers, Ares opted to invest directly in such companies.
“Rather than try to buy assets, we’re providing capital to companies that already have assets with real competitive advantages and strong management teams,” Mr. Walton said in an interview.
Some Walton family members have confessed that they don’t fully understand what Nate does for a living, and his emergence as a financier contrasts with his father’s hippie demeanor. Bill Walton wears tie-dyed shirts, even when announcing basketball games on ESPN, and he loves the Grateful Dead. As a star for UCLA and in the NBA in the 1970s, he became known for anti-establishment and environmental activism that some may find hard to square with his son’s oil deals.
“I’m a solar guy,” said the elder Walton, leaving it at that.
Nathan Whitecloud Walton was born in 1978, the year after his 6-foot-11-inch father led the Portland Trail Blazers to their only NBA championship. The second of four boys who grew up mostly in Southern California, Nate was the most scholarly of the bunch. As a 6-year-old, his mother recalls, he begged for a computer years before many people knew what a PC was.
“He was the smartest of all the brothers, by far,” said Luke Walton, who won two championships with the Lakers before becoming the team’s coach this season. “We had classes together. I’d get a B- and he’d get like a 98%.”
Nate’s parents, who are divorced, said their son soaked up the experiences afforded to the child of a star athlete. There were driveway shootarounds with basketball legend Larry Bird and banter with best-selling author David Halberstam over dinner.
Susie Walton, his mother, recalled a teenage Nate hitting it off with his father’s friend Timothy Leary and asking if the psychologist known for advocating psychedelic-drug use could become his godfather.
Nate Walton was wooed by big-time basketball programs but opted instead for the Ivy League.
At Princeton, Mr. Walton was an undersize center and team captain his senior year. The team’s famed offense of constant motion and back-door cuts flowed through him. “He was an exquisite passer just like his pop,” said Bill Carmody, one of Nate’s coaches at Princeton.
He had brief spell at a hedge fund in New York, where he lived with his college buddy, Brett Icahn, son of billionaire investor Carl Icahn, and another with the Boston Celtics front office.
He returned to California and on a lark ran for governor in 2003 to replace Gov. Gray Davis, who had been recalled. Campaigning in the family uniform of tie-dyed T-shirt, Mr. Walton finished 47th out of about 135 candidates, well behind the winner, Arnold Schwarzenegger.
Mr. Walton enrolled at the Stanford Graduate School of Business that year and joined Ares in 2006 on the credit desk. He was soon noticed by two of the firm’s founders, Bennett Rosenthal and David Kaplan, who moved him to the private-equity team and assigned him to the oil-and-gas sector. Over two years, his group studied some 200 oil companies for investment opportunities. Ares made only one investment in a closely held Texas oil company, though.
When oil prices collapsed in late 2014, distressed opportunities emerged, and Mr. Walton pounced. Ares bought Halcón Resources Corp.’s deeply discounted debt and emerged with a 20% stake in the company after the oil explorer exited from bankruptcy protection last year. Ares recently launched a firm that helps oil producers pay for drilling projects, and on Friday, the firm said it would invest in Gastar Exploration Inc., spreading $425 million over a loan, convertible notes and the struggling energy explorer’s stock. Mr. Walton is joining Gastar’s board, his sixth in the industry.
In the case of Clayton Williams, a company with prolific oil fields in West Texas but little cash, Ares made a $350 million loan last March, not long after oil prices had slumped to about $26 a barrel. Ares also bought shares in the company, on the open market and directly from Clayton Williams, which used the cash to prove its drilling properties were in a sweet spot.
With energy prices stabilizing at around $50 a barrel, Noble Energy Inc. agreed in January to buy Clayton Williams. Under the terms of the deal, Ares is due to triple its roughly $515 million investment.
Mr. Kaplan said Mr. Walton convinced Clayton Williams that Ares could get it through a tough period. “He said, ‘Let’s fix your balance sheet and go on offense’’’ Mr. Kaplan said.