CARROLLTON, OH—The advent of fracking and other new extraction technologies have given a huge boost to the domestic energy industry, and will in a few years transform the US into a net exporter of energy, according to experts. In fact, by 2017, the US will surpass Saudi Arabia and Russia as the world's leading oil producer. The boom has begun transforming landscapes across the Midwest, and a new generation of real estate entrepreneurs has moved in to help drive those transformations.
One of those is Farid Guindo. Still in his twenties, Guindo was working as an energy analyst for Ospraie Management when he decided to launch Drill Capital LLC, a real estate company that will initially focus on projects in the booming Utica shale region in eastern Ohio, which has attracted thousands of oil and gas workers.
“I'm always looking for active opportunities to invest in,” Guindo told GlobeSt.com. And Drill just announced its first deal, a $5.2 million, 83-room, three-story hotel in Carrollton which will open in the second quarter of 2014 under the Wyndham Hotel Group brand.
“I felt like the timing was right,” Farid explained, to jump into the Ohio market, since the energy companies working in the state, such as Chesapeake Energy Corp., have already bought the land and completed much of the infrastructure they need to extract and transport the oil and natural gas, but the housing, retail and other structures needed by the rapidly expanding workforce remains insufficient.
As an energy analyst, Guindo said he “was constantly in conversation with executives at oil and gas companies,” and could study the business cycles in other oil-producing regions, such as Texas' Permian Basin and western North Dakota, currently undergoing revivals due to the technological advances in hydraulic fracturing. He saw, for example, that the Bakken region of North Dakota was considered a bit riskier by investors since it is so remote and unpopulated that they would be “making a bet entirely on the oil and gas business.”
By contrast, eastern Ohio, which has a greater population density, sits in a sweet spot, since the region has at least a modest level of built-in demand augmented by the energy boom. According to US Census estimates, Carroll County, the location of Guindo's new investment, has a population density of about 73 persons per square mile, more than seven times the density of North Dakota's Williams County, one of the centers of that state's energy boom.
“There are these strategic pockets in Ohio that are really attractive,” Guindo said. And building hotels now makes sense because many of the oil and gas workers, engineers and other travelers brought into the region have yet to set down roots or are transients.
“We're looking at this deal as the first stepping stone,” Guindo added. He is currently putting together a deal for another hotel, perhaps in southern Ohio, where energy companies have gotten more active recently. However, he also considers Drill Capital an asset manager focused not on hotels, but on the North American energy sector in general, and whatever investments or opportunities will arise. “I think what's happening in the US on the energy front is phenomenal.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
