Two private companies are teaming up with private equity firms, including one that flipped its Delaware assets to Diamondback Energy Inc. (NASDAQ: FANG) less than a year after entering the basin.
Luxe Energy LLC said Oct. 11 it will reteam with Natural Gas Partners (NGP), which has committed $524 million to the management team. In September, Luxe sold its Delaware acreage to Diamondback for $560 million. Luxe’s acreage sold at one of the highest publically disclosed prices yet for Delaware acreage.
Eagle Ford operator Venado Oil and Gas LLC also said it has partnered with global investment firm KKR to consolidate proven assets in South Texas.
Private-equity firms have largely poured money into the Permian Basin in 2016, including $1.5 billion of commitments by Blackstone in August. However, bankrolling management teams in other plays shows the continued confidence the oil patch shows confidence in U.S. shale, even as prices remain relatively low.
Luxe kept its plans vague, saying it will acquire unconventional oil properties in oil- and liquids-rich basins throughout the U.S. and use innovative technologies to drive operational excellence. A. Lance Langford, Luxe’s CEO and president, told Hart Energy earlier this year the company had been investigating five basins for more than a year.
Langford and co-founder Jeff Larson formed the Austin, Texas-based company after working together for more than 25 years at Burlington Resources and later at Statoil ASA (NYSE: STO).
“After a highly successful partnership in the Delaware Basin, we are excited to again be working with NGP on building a world-class oil and gas company focused on creating significant value for our investors,” Langford said. “We believe there are tremendous opportunities in today’s market to acquire, develop and realize value in multiple, unconventional resources.”
Scott Gieselman, managing director of NGP, said he was thrilled to continue working with an energetic, disciplined and skilled team.
Venado
Venado Oil and Gas, also based in Austin, Texas, entered a partnership with KKR’s Energy Income and Growth Fund I, the companies said Sept. 29. Financial details weren’t disclosed.
Venado has largely seen recent success in Lee and Jim Hogg counties, Texas.
Since 2014, when the oil price downturn caused many companies to slow drilling, the company’s daily oil volumes have fallen by roughly 42%, according to July oil production records published by the Texas Railroad Commission.
In September, Venado launched an equity offering of more than $1 billion. By Oct. 3, the company had sold about $3 million from the offering, U.S. Securities and Exchange Commission documents show.
Scott Garrick, CEO of Venado, said KKR and the company see an opportunity to build a large-scale business in the Eagle Ford.
“Venado’s management and KKR have been active in the Eagle Ford since the early phase of development, and we share the same vision of the next phase of its evolution,” Garrick said.
Venado’s founding partners were formerly senior management at Pioneer Natural Resources Co. (NYSE: PXD) and San Isidro Development. In December 2010, San Isidro Development completed a $200 million divestiture of its Eagle Ford Shale assets to Chesapeake Energy Corp. (NYSE: CHK). Venado was established a month later, in 2011.
KKR has made more than 10 investments in the Eagle Ford to date. KKR’s energy arm manages a portfolio of oil and gas assets in numerous unconventional and conventional resource areas across the U.S., including developments in the Eagle Ford, Bakken, Barnett, Denver-Julesburg, Haynesville, Marcellus, Permian and Utica.
Darren Barbee can be reached at dbarbee@hartenergy.com.
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