KASE LAWAL: SHOWCASE IN BLACK ENTERPRISE MAGAZINE AS OWNER OF THE SECOND- LARGEST BLACK BUSINESS IN AMERICA.
KASE L. Lawal approaches the podium with his usual serenity. He looks at the crowd of more than 200 well-wishers who travelled from all over the country - and across the globe to pay tribute to his company, on its 20th anniversary.
It’s a lively affair. Houston’s Kuumba House Dance Theatre entertains the crowd. Thunderous drums and syncopated chants fill the ballroom as the group performs a variety of South, West, and East African songs and dances in traditional festive garb. As the room grows silent, Lawal begins his tale of growing up in Nigeria, migrating to America to pursue an education, and eventually launching an oil drilling and exploration company.
Not to be mistaken for a reckless wildcatter, Lawal is analytical and explores all options before committing to a business strategy or resource. Even in conversation, he pauses guardedly before responding to questions. He carefully weighs each word, communicating with precision and economy when conveying his message.
Lawal continues with an anecdote about CAMAC’s early days, when he flew around the world to secure financing and land the deals needed to grow his company. His oldest son, Kase Jr, was in nursery school at the time, and the class was asked to discuss what their parent did for a living. “Several students raised their hands and yelled “fireman, policeman, teacher, nurse, lawyer and real estate agent,” recalls Lawal. Then the teacher asked the younger Lawal about his father’s occupation.
“It was then that Kase, who frequently saw me off at the airport for business trips and who also had the occasion to travel at an early age said, ‘He works at the airport and passes out peanuts.”
Jokes aside, this enterprising CEO has good reason to celebrate. He has taken CAMAC (No. 2 on the BE industrial/Service 100 list with $1.5 billion in sales) from humble beginnings to an oil and gas exploration and production giant that trades crude oil and natural gas in Africa and Europe as well as wholesale electric power in the United States. CAMAC affiliates own or lease oil and gas reserves on and offshore in West Africa and Colombia. Deals are in place to enter oil-rich Venezuela.
With the price of oil reaching a record-high $75 a barrel, CAMAC is positioned to meet or exceed the 51% revenue growth it achieved in 2005. But that’s not the only thing driving Lawal. Determined to economically empower African-Americans, his company has entered the financial arena. Through the recent acquisition of a controlling stake in the only black-owned bank in Texas, Lawal plans to offer community members greater access to capital. He’s also considering a private equity fund to invest in minority-owned businesses as he expands his oil drilling operations into new regions. Due to Lawal’s visionary zeal and the expansion of his business and financial empire, Black Enterprise (magazine) has named CAMAC International our 2006 Company of the Year.
Hot Texas Tea
The oil industry is in the midst of one of the largest booms ever. As the world grows more industrialized, the demand for - and price of - oil continue to climb. “The oil industry itself is in great shape,” says Jim Ritterbusch, president of Ritterbusch & Associates, a provider of industry research. “You’re looking at prices that are within reach of record-high level right now. To the extent that those lofty share prices reflect the health of the oil industry, you just have to say that it’s in really, really good shape, possibly better shape than it’s even been.”
That’s not to say that higher prices are equivalent to bigger profits. The industry is a cyclical one. The cost of funding oil rises and falls in tandem with that cycle. While the price of crude oil has risen about 30% over the last year, Lawal maintains that the cost of extracting the precious liquid has escalated more than 100%. For instance, he cites a lease CAMAC signed in December for a rig that can drill as deep as 12,000 feet to the seabed. The cost to CAMAC: $320,000 per day.
“That rig came off contract in October last year at $127,000 per day,” he recounts. “Suppliers are in that cycle now where they can make all the money they can because they know if oil goes down to $15, they’re going to market those same rigs for $70,000.
Oil drilling is a risky business, it costs a lot to drill an exploratory well. To defray those costs, Lawal partners with some of the oil and gas goliaths. CAMAC obtains the drilling rights and, at the same time, gains access to the deep pockets of industry leaders, such as Conoco and Chevron. Under the terms of the agreements, the partners split the profits. “So, we can go into a partnership where we own the actual field and we’ll share in the profit, but they put up the up-front capital to actually go in and drill the exploratory well. In some cases, we hedge our risks by partnering and doing it that way,” says Willard Jackson, one of the directors of CAMAC’s board.
Coming to America
One could say that Lawal is representative of the immigrant success story. Born in 1954 in Ibadan, Nigeria, the entrepreneur was raised in what he calls a large, traditional, devoutly Muslim family. His father was a politician and his mother was a textile trader. As a young man, Lawal had dreams of coming to the United States, though he had no idea he’d become an entrepreneur.
“Coming to United States has always been something that youth during our period grew up with, which was the influence of the Western education - the movies, the television, he recalls. Even in his late teens, Lawal exhibited the discipline needed to become a successful businessman. He read everything he could about the United States and how he could get accepted into an American college. “He obviously had to be a risk taker to be the first person in his family to pack up and leave Nigeria and come to the United States with not much more than the clothes on his back,” says Texas State Sen. Rodney Ellis. “That was a big move, a bold move. He was willing to take the plunge.”
After doing his research, Lawal moved to Georgia in 1971 and attended Fort Valley State College, a historically black institution known for its biology and chemistry departments. It was a turbulent time to start a life in this country. The black liberation movement was raging, and the United States was still embroiled in the Vietnam War. Lawal later transferred to Texas Southern University, where he graduated with a bachelor’s degree in chemical engineering at the Deer Park Refinery.
“Of course, I didn’t want to be wearing the hard hat. I decided I wanted to go for my business degree so I could wear suits. I knew I had to go back for further education in business, thus I enrolled, and Shell paid for my MBA programme,” says Lawal, who earned his MBA in finance and marketing from Prairie View A&M University in Texas.
A few years later in 1977, Lawal landed a job as a research chemist at Dresser Industries, which is now Halliburton. Over the next decade, he would hold several positions within the oil and finance industries, including executive position as Suncrest Investment Corp and Baker Investment.
Striking it rich
While in finance, Lawal learned of a business opportunity that would change the course of his life: A new venture with a group of entrepreneurs from Cameroun, the nation that borders Nigeria to the south and east. “They were setting up this tobacco and cigarette manufacturing plant, and they gave us the opportunity to do the procurement of the tobacco for them from the United States,” he says. Cameroun-American Corp. was formed in 1986 to purchase tobacco from US, and sell it to the Cameroonian cigarette manufacturer, who in turn sold the cigarettes throughout the Middle East. Eventually, the company would be known by the acronym CAMAC. Lawal, his wife and children would come to own 80% of the entity, and the remainder was divided up among Lawal’s brothers and sisters.
In 1989, CAMAC moved into the oil business upon the urging of Rilwanu Lukman, a former oil minister for Nigeria and later secretary general of OPEC. Through his connections, Lawal, who holds joint US-Nigeria citizenship, secured exploration rights in Nigeria. In 1991, he began production in partnership with Houston-based oil giant Conoco, which provided the financing for oil exploration. That alliance reportedly produced more than 20,000 barrels of oil per day. CAMAC would go on to form several such partnerships over the year.
CAMAC was able to achieve significant revenue growth through the integration of “upstream service” like the exploration and drilling of oil and gas and “downstream services” such as the trading and refining of products. As a result, CAMAC’s revenue grew from $114.3 million in 1999 to $979.5 million in 2001, earning the top spot on the 2002 Be Industrial/Service 100 list.
In 2003, the company split its operations. Lawal’s firm is an American company that manages a range of international oil exploration and production ventures, while other members of his family control a separate incorporation offshore entity in which Lawal doesn’t hold any equity interest.
Today, analysts are waxing positive on CAMAC, a hot company in an even hotter industry. “Getting into the oil business at least in the production and exploration sectors that CAMAC has managed to work its way into, requires a huge amount of capitalisation, and they’ve done a good job at raising and growing that capital,” says Ritterbusch. “It looks like a good, solid, growing company. It’s very impressive.
Much of CAMAC success would not be possible if not for Lawal’s political acumen. Securing drilling rights requires an intimate knowledge of the local political and regulation landscape and the ability to successfully manoeuvre through it, avoiding the pitfalls. Knowing the decision makers is critical to his business success. “He’s developed relationship not only in this country but in other parts of the world,” says Lee P. Brown, the former Mayor of Houston who serves on CAMAC’s board of directors. “He’s someone who can drive up to the president of Nigeria’s gate, they look in the back to see who he is, and the gates open up like he’s at home. We went with him to Namibia, and he calls the
president and the prime minister and they all rearrange their schedules to meet with him. You get an audience with the president because of him.”
Over the years, Lawal has earned a slew of high-level appointments. In June 1999, he was appointed by the city of Houston to serve as a commissioner of the Port of Houston Authority Board, helping manage the country’s largest foreign tonnage seaport and the sixth largest port in the world. In that role, he helped establish the port’s Small Business Development Programme to award contracts to Houston-area businesses. In September 2001, Lawal was appointed by Brown to serve on the board of directors for the Houston Airport System Development Corp, where he helps establish partnerships with airport systems throughout the world.
The push for economic empowerment
While oil may be one of Lawal’s passions, it’s not the only one. He was always interested in finance and in his younger days considered acquiring institutions. He got the opportunity in July 2005, when CAMAC acquired a controlling interest in Unity National Bank, the only black-owned federally chartered bank in Texas. Financial terms of the deal, which closed early this year, weren’t disclosed. Lawal intends to use the bank, which has two locations in Texas and $55.77 million in total assets, as an instrument of economic development for African Americans.
Lawal, who serves as Unity’s vice chairman, plans to develop a financial service firm that can provide loans to black entrepreneurs as well as offer a bevy of financial products such as insurance, asset management, investment advisory services, and securities brokerage. “It wasn’t really for profit, because it takes time to make money in banking. I can drill more wells, and hopefully I can hit one to make more money than being in the heavily regulated industry that is banking,” he says.
While oil and gas exploration and production will always be the bedrock of CAMAC’s operations, Lawal and his board members believe financial services will rapidly become an integral part of the organization. “He understands that in the African American community, the economic element is extremely important to everything we do. Politics is important, obviously, but so is economics, says Brown. “So if you have an institution such as a bank that can serve the community, that’s a major contribution.”
Drilling for new opportunities
Every business has its set of challenges and CAMAC’s no exception. Early in the company’s history, money was tight. After all, it can cost up to $20 million to drill an offshore well. If it comes up dry, that’s an expensive write-off. Today, the challenges involve human resources. Lawal says too few African-Americans are interested in engineering, geological sciences, and petroleum economics or career opportunities within the energy sector. To that end, he established a $1 million endowment at Texas Southern University’s Jesse H. Jones School of Business for the Kase and Eileen Lawal Centre for International Business Development.
“The problem is the skills management - those that will manage and grow the business and will look at a programme from an entrepreneurial point of view,” says Lawal. “Those are the people who need to evolve. We need to train those people, they need to be mentioned.”
When Lawal’s father allowed him to come to the United States in the early 70s, it was under three conditions. One, he wasn’t allowed to move to a big city. Not a problem since Lawal had his heart set on suburban Atlanta. Two, he had to study medicine or engineering. He majored in the latter. The final condition was that he would return to Nigeria for good upon graduation. While Lawal hasn’t quite gotten around to that pledge, odds are his father wouldn’t complain.
Culled from Black Enterprise Magazine.