The Stephens Group’s relationships with Stephens Production and Systematics/Alltel endure to this day. Together, they represent only a handful of the dozens of partnerships we maintain, either directly or through our affiliates, in industries as diverse as energy, materials, industrials, consumer goods, media, health care, financial, technology and telecommunications. Nevertheless, we believe the plain facts of these examples speak fully and eloquently to our values, our character and the way we do business. They exemplify our practice of sharing our partner’s vision and working alongside our partners to build long-term value.
In 1953, the Stephens Family acquires Oklahoma Producing Company which serves as the foundation for a new natural gas and oil exploration company, Stephens Production. Today Stephens Production Company and affiliated companies, Calypso Exploration, LLC and Redland Energy Services LLC, continue to develop vast Arkoma properties as well as other oil and gas prospects in Arkansas, California, Colorado, Louisiana, Michigan, North Dakota, Oklahoma, Wyoming and the Gulf of Mexico.
When W.R. “Witt” Stephens, Sr. purchased Fort Smith Gas Corporation in 1945 and the Arkansas Oklahoma Gas Corporation in 1954, the foundation was set for Stephens Production Company. These companies provided natural gas service to parts of western Arkansas and eastern Oklahoma and also actively explored for and developed natural gas in the Arkoma Basin on the border of Arkansas and Oklahoma. Most of the early natural gas development in the region was “shallow” gas production. By the 1950’s rotary drilling techniques permitted the development of much deeper gas production. Stephens Production Company was eventually reformed as a partnership between Witt Sr. and his brother Jack Stephens, to own, operate, and further develop its then considerable natural gas interests. The utility interests were combined under the AOG name with exploration and production of natural gas and the real estate interests under the Stephens Production Company name.
In 1954, Witt Stephens acquired the services of S.R. Walker, as President of Stephens Production Company, and his son, William R. Walker who would eventually run both Stephens Production and AOG after his father’s retirement. In 1975, the third generation of the Walker family, William S. Walker, came on board. He became the company President in 1993 where he has served since. Stephens also passed the partnership to a new generation when W.R. “Witt” Stephens, Jr. took over his father’s leadership role in the early ‘90s.
Stephens Production Company and its predecessor have been active in Arkoma Basin gas development and production from its inception. Stephens Production Company has also been active in commercial and industrial real estate development and currently has substantial real estate holdings, primarily in Sebastian County in Arkansas and Sequoyah County in Oklahoma. The Company grew significantly through drilling programs and acquisitions. A significant acquisition was the utility, gas production, smelting, and real estate interests of the Orr Family in Oklahoma and Arkansas. The Gragg Field acquisition in 2002 was also a major milestone in the company’s growth.
The Stephens family has used the expertise developed over this long-term partnership to pursue many other opportunities throughout the oil and gas industry. Today investments include Atlantic Oil Corporation, Continuum Energy, LLC, Energy Transfer Partners, LP, Energy Transfer Equity, LP, JOG Capital Inc., Kodiak Gas Services, LLC, North American Energy Partners, Inc., Pinnergy, Ltd., and Spitzer Industries, Inc. The Stephens Group, LLC continues to be a leading growth partner for owners and entrepreneurs across the energy landscape.
In 1968, the Stephens family helped launch Systematics, a new data processing software company. Today, as part of Fidelity Information Systems, the company is one of the nation’s leading providers of information processing management services and advanced application software for the financial services, healthcare & telecommunications industries.
Systematics’ founder, Walter Smiley, was born in a small town in southwestern Arkansas and graduated from the University of Arkansas with an MBA. Working first at IBM and later at an Arkansas bank, he learned of the high software costs and other difficulties many individual banks faced in trying to make effective use of new data processing hardware. Big banks could afford the investment and small banks farmed it out, but medium sized banks were getting caught in the squeeze.
Walter recognized the opportunity and decided to see if he could raise capital to start his own company.
In 1968, Walter met with Jon Jacoby to discuss the financing of his new venture. The Stephens family agreed to invest $400,000 in Walter and Systematics in return for 80% of the new company’s equity.
From the very beginning, the Stephens family’s role in Systematics differed sharply from the norm of most early stage investors. “In the data processing business,” Walter commented, “it’s real easy to get yourself in a position where you’ve got to sell for tomorrow for the sake of today. The Stephens people were just the opposite. They always encouraged us to prepare for the long term, to do it right.”
With the confidence instilled by a steady, long-term equity partner, Walter diligently began expanding the business. Initially, Systematics contracted to run banks’ data-processing departments, but after careful evaluation, and with encouragement from his partners, expanded into licensing its software to banks. The company continued growing over the next 12 years and eventually went public — however the Stephens family never cashed out.
In 1990, Systematics was sold to Alltel Corporation and became Alltel Information Services (Alltel Information Services was recently sold to Fidelity Information Systems.) The Stephens family remained an investor, acquiring Alltel stock in the transaction. The Stephens family was the largest non-institutional shareholder of Alltel until it was taken private in 2007.
Jon Jacoby, Vice Chairman and Senior Managing Director of The Stephens Group, who served on Systematics board from the beginning, commented, “We’re basically long-term investors. The best investments are the ones you never have to sell.”
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