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UT System regents authorize hiring of a CEO to oversee oil lands

University of Texas System regents on Monday authorized hiring a chief executive officer to oversee the system’s vast West Texas lands, which are rich in oil and natural gas deposits.

A consulting firm recommended last year that the UT System hire a CEO and expand its staff in Midland in light of a dramatic increase in drilling. Royalty payments and other revenues, which benefit UT System and Texas A&M University System institutions, have increased 400 percent since 2006 to a record $1.1 billion last year.

“We just feel like the West Texas lands are such a significant asset for the state and for the UT and A&M systems that we want to put an elevated focus on it,” Paul Foster, chairman of the regents, said in an interview. “We want somebody that has industry experience and who is recognized in their field and who will bring a higher level of not only expertise but recognition to this very valuable asset.”

The UT regents authorized their staff to complete negotiations with a candidate for the position but declined to identify the person publicly. Francie Frederick, general counsel to the regents, said the person has not been named because an employment agreement has yet to be nailed down.

Related: UT researchers say gas production could plateau in coming decades

The regents outlined “terms and conditions of employment” in a closed-door session and stipulated that the agreement be submitted to the Board of Regents for final approval.

The American-Statesman reported last month that the UT System faces several challenges in managing its 2.1 million acres, three-fourths of them in an oil patch known as the Permian Basin. Besides lacking expertise in engineering and certain other areas, the system has sometimes overlooked the interests of ranchers who for generations have leased the surface for grazing livestock.

What’s more, the regents have doled out $511.9 million more from the oil-revenue-fed Permanent University Fund in a four-year period than the board’s own rules permit, the Statesman’s analysis found.

Foster said he expects the CEO to come aboard early in the first quarter of next year. If the CEO recommends hiring additional staff members, “I certainly think the board will be supportive,” Foster said. The sharp decline in oil prices in recent months “just heightens the need to make sure we’re managing these assets as judiciously as we can,” he added.

In other action, the regents approved agreements with several companies to advance the UT System’s online and competency-based learning programs, earmarking $14 million for contracts with two of those companies.

The regents had a closed-door discussion about legal issues related to an ongoing investigation of admissions practices at the Austin campus. Kroll Associates Inc., an investigative and compliance firm, was hired by the system to determine whether admissions decisions are made for reasons other than academic or holistic merit.