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Power Player: GC Does Deals Over Decades, Both as a Lawyer and a BusinessmanKeith Head knows energy deals from beginning to end. As vice president, general counsel and corporate secretary for Harvest Natural Resources Inc. in Houston, he's been on the front end of deals identifying and valuing potential acquisitions.
Keith Head knows energy deals from beginning to end. As an executive responsible for corporate business development, he's been on the front end of deals identifying and valuing potential acquisitions. In his legal positions, he's been on the back end of other deals, handling the legal documents and negotiations involved in acquisitions initiated by business managers.
As vice president, general counsel and corporate secretary for Harvest Natural Resources Inc. in Houston, Head brings that combined expertise to a company that has expanded its exploration and production activities in West Africa, Indonesia, China and Oman since he joined it in 2007. Harvest Natural reported revenue of $206.2 million in 2011, growing to $216.8 million in revenues for the first three quarters of 2012.
Head spent the first 23 years of his career essentially with the same company, Texas Eastern Corp. of Houston, as it morphed through mergers with Panhandle Eastern Corp. and Duke Energy Corp.
After earning an undergraduate degree in business administration in 1979 from the University of North Carolina at Chapel Hill, Head earned an M.B.A. and J.D. from the University of Texas at Austin, finishing both in 1983.
Head grew up in Middletown, Ohio, where his father had worked for one company his entire career, Armco Steel Corp., now AK Steel.
"To me, working for a company, that was just my mindset," he says about his decision process when he graduated with his advanced degrees.
His first job after graduating was as an attorney in the legal department of Texas Eastern Corp. of Houston.
During his first few years in-house, Head says he worked on several transactions for Texas Eastern, including selling refineries and propane companies.
In 1989, Texas Eastern was acquired by another Houston-based pipeline company, Panhandle Eastern Corp., for $3.2 billion, he says.
"And so I became a lawyer in the Panhandle Eastern legal department, as did most of my colleagues," he says.
He continued to do transactions work. In 1994, Panhandle bought Denver-based Associated Natural Gas Corp. and changed the name of the combined company to PanEnergy Corp. Head was heavily involved in the acquisition of Associated Natural Gas. When Pan Energy offered the veteran deal lawyer the chance to get involved with the front-end of the acquisition process, he said yes.
"My position was director of corporate development, and so my area of responsibility was to look at possible transactions to grow the various business units that PanEnergy had and then work with our business unit to identify and try to acquire additional companies," he says. "What I liked about that, instead of being brought into something after the fact or after it had gotten at least some sort of traction, we were on the front end trying to put that [deals] together," he says.
"When it came time to negotiate and put together documents, then lawyers came in at that point," he says. "It gave me an opportunity to utilize the business background that I had in the various areas of my business degree, such as accounting and finance and those kinds of things."
In his corporate-development role, Head was part of the team that negotiated the acquisition of PanEnergy in 1997 for about $8 billion by Duke Power Corp. of Charlotte, N. C. to create Duke Energy Corp.
Head worked in various business development positions for Duke Energy until 2001, when he moved back to the legal side of the business as senior vice president and general counsel for Duke Energy North America. (DENA). He made that move because he thought DENA was poised for greater growth than the international business unit.
"At that point, I came back into a more traditional legal role," he says. "I really was responsible for all of the legal issues that DENA had to deal with in the business across the board. At that time the company had [$1 billion] in earnings before interest and tax. It was a significant business unit." *
But at the end of 2001, Enron Corp. went bankrupt and shook the energy markets, creating liquidity and credit problems for DENA and as well as other companies, Head says. By 2003, Duke Energy decided to sell off DENA, Head says.
"As GC, I was involved in trying to create an exit strategy and then work our way from a large organization with many people to not only selling our assets in our business but also having to deal with downsizing our organization," he explains.
DENA had about 1,000 employees at the time and about 18 in-house lawyers. Head stayed on until the end of 2006, when the Duke Energy divestiture of DENA was complete.
As he had been winding down DENA, Head says legal recruiters contacted him, and he learned about an opportunity at Harvest, where then-GC Kerry Brittain was retiring.
Harvest was looking for someone to grow the company internationally beyond its holdings in Venezuela, he says. Several of the Harvest executives and board members with whom Head interviewed for the job knew many of the people Head had worked with at Duke and PanEnergy.
"We had common links in terms of people we had worked with over the years; it certainly helped me [get the job]," he says.
"I did not have a background in exploration and production, but from a transaction standpoint, and legal standpoint, deals are very similar across segments of the industry," he says.
Head says he uses outside counsel for matters such as transactions, securities law and litigation and often turns to Fulbright & Jaworski partner Harva Dockery, who has been handling corporate matters for Harvest for more than a decade. Dockery is working with Head on an agreement the company announced in June for the $725 million sale of the company's interests in Venezuela to PT Pertamina, the national oil company of Indonesia.
"When there is an issue or a problem, he researches the background, he analyzes the problem, and then he calls us and then we work through it together," says Dockery of Dallas. "But he doesn't just call outside counsel and say, 'There's a problem.' He very much takes it on a team approach, and we analyze it with him and work together."
The closing of the deal with PT Pertamina is subject to the approval of the governments of Venezuela and Indonesia and a majority of Harvest's stockholders. Head says the company has not announced an expected closing date.
Thomas Moore, a partner with Baker Botts in Houston, also is assisting Head with the PT Pertamina deal.
"He has a unique combination of experiences, having been a developer in the Duke/PanEnergy business development group, putting together deals not from the legal side but from a commercial side," Moore says. "Plus he has very good legal skills. That's a very unique combination."
Best Practices: A Fruitful Harvest
Since Keith Head joined Harvest Natural Resources Inc. in 2007, the company has expanded its exploration and production activities in West Africa, Indonesia, China and Oman. Head is vice president, general counsel and corporate secretary for the Houston-based company.
Texas Lawyer research editor Jeanne Graham emailed Head some questions about best practices. His answers are below, edited for length and style.
Texas Lawyer: What criteria do you consider most important when selecting outside counsel?
Keith Head: Relationships are very important. Whenever possible, I try to bring in outside counsel with whom I have worked successfully. My decisions are based more on individual attorneys than on firms, although for mergers and acquisitions and transactional work it's important to use a firm with a deep bench and multiple areas of expertise. And I like to bring in people I enjoy being around and who are easy to work with.
TL: For what types of legal work do you typically hire outside counsel?
Head: In addition to mergers and acquisitions/transactional work, we use outside counsel for such areas as financing, securities law and litigation. These are areas I don't work in routinely and it's helpful to have someone who deals in these areas daily someone who knows all of the issues, best practices, what's market, etc. I also rely on a couple of global firms who provide in-country expertise and can work directly and efficiently with our international business people.
TL: What can outside counsel do to perform beyond your expectations?
Head: Work and relate well with our business people to help Harvest achieve its objectives, whether it's dealing with transactions, operations or commercial issues. I like to hear our business folks tell me that they accomplished what they wanted with the help of our outside counsel and not in spite of them.
TL: What one thing from your previous work experience is helping you most on the job today, and why?
Head: I've always felt that having a business background both educationally and from the experience of working on the commercial side has helped me provide legal advice that is commercially practicable, as well as being able to prioritize and understand the commercial value of a legal issue.
TL: What do you see as the most important role you play as general counsel for Harvest Natural Resources?
Head: I think a key role for any general counsel is to help solve issues or develop alternatives so that the company meets its business objectives while still limiting its legal exposure.
* The original version of this story included an incorrect number for company earnings.
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