New York, New York, November 20, 2013. Blackstone (NYSE:BX), alongside its affiliates’ corporate partner and operator GeoSouthern Energy Corporation (“GeoSouthern”), today announced the sale of the principal subsidiary of GeoSouthern for a total transaction value of $6.0 billion to Devon Energy Corporation (NYSE: DVN). In connection with the sale to Devon, the stake in the enterprise of a private equity fund managed by Blackstone, Blackstone Capital Partners V, will be valued at approximately $1.54 billion. The sale to Devon is subject to customary terms and conditions for transactions of this type.
The acquired assets include current production of 53,000 barrels of oil equivalent (BOE) per day and 82,000 net acres with 1,200 undrilled locations. The risked recoverable resource is estimated at 400 million barrels of oil equivalent, the majority of which is proven reserves. The transaction is, to date, the largest domestic oil and gas transaction of 2013.
In January 2011, Blackstone Capital Partners V and affiliates of GeoSouthern formed a joint venture partnership to significantly accelerate the expansion, drilling and development of its position in the Eagle Ford shale in South Central Texas. Since the formation of the partnership, GeoSouthern has made tremendous progress in developing its position in the eastern window of the Eagle Ford shale, an area that has since become known as the core of the play. The acquired Eagle Ford acreage is located in DeWitt and Lavaca counties in Texas and is largely contiguous, with most of the position now held by production. The acreage position is located in the best part of the play, as evidenced by the highest average initial production rates in the entire play and average estimated ultimate recoveries in DeWitt County exceeding 800,000 BOE per well.
Since 2011, GeoSouthern has become one of the most active drillers and oil producers in the basin and has achieved significant milestones. The Company has increased its employee base tenfold, increased horizontal drilling rigs from 5 active rigs to 18, and net production from approximately 5,000 BOE per day to over 50,000 BOE per day. By virtue of the work the GeoSouthern team pioneered in the Eagle Ford and the milestones the joint venture partnership has achieved, production is enabled to continue to grow at an anticipated compound annual growth rate of 25 percent over the next several years, reaching a peak production rate of approximately 140,000 BOE per day.
Angelo Acconcia, a Managing Director with Blackstone Energy Partners, commented, “GeoSouthern was one of the pioneers of the Eagle Ford, having identified DeWitt county early on as one of the most attractive areas of the play. The company has done a world class job of not only putting together a significant, core acreage position, but of accelerating the drilling, development and production of this strategic position and has realized some of the most attractive well results across the Eagle Ford. We are pleased to have been a part of the GeoSouthern story.”
Added David Foley, Chief Executive Officer of Blackstone Energy Partners, “We are pleased to have had the opportunity to provide the equity capital GeoSouthern needed at an early stage in its development and honored to have worked in partnership alongside their exceptional management team to build GeoSouthern to become one of the top ten largest privately owned oil producers in the United States. The vision and determination of entrepreneurs in the energy industry, combined with growth equity capital, have provided tremendous job growth, made energy more affordable for everyone and put America on a path to energy independence.”
Jefferies & Co. and Anderson & King served as financial advisors to GeoSouthern and Blackstone and Simpson Thacher & Bartlett LLP. served as legal counsel.
Blackstone is one of the largest alternative asset managers in the world, with more than $248 billion in assets under management and is a leading global private equity firm and energy private equity franchise. Blackstone is currently investing out of Blackstone Capital Partners VI (“BCP VI”), a $16.2 billion diversified general purpose private equity fund and Blackstone Energy Partners (“BEP”), a $2.5 billion energy focused private equity fund. Blackstone’s private equity investments in the energy sector are now funded jointly by BEP and BCP VI, which together represent over $5 billion of equity capital allocated to energy.
Over the last decade, Blackstone has built a leading energy sector private equity investing franchise with an extensive, successful track record of investing in partnership with exceptional management teams seeking to capitalize on their growth opportunities and realize the full potential of their assets. Blackstone has committed and invested more than $7.5 billion of equity in 25 energy transactions, throughout the energy value-chain on a global basis: upstream, midstream, services & equipment, downstream and power. Oil and gas companies represent a significant share of Blackstone’s capital commitments to the energy sector and remain a key focus area for new investments.
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