Pioneer Spirit - Upon graduating from law school, Anthony Speier knew he wanted to practice sophisticated corporate M&A work. “I moved to Houston, where much of the work is in energy deals. I took a liking to it.”
Trails Blazed - Speier began working with private equity group Kohlberg Kravis Roberts & Co. several years ago to help find ways to finance oil and gas companies by taking a direct property interest. “We developed an interesting joint venture structure where the private equity group would essentially deploy most of the capital to drill wells. Once it reaches an agreed return, most of the assets are turned back to the companies.” Along with allowing a path to get to the drill wells, it also allows for long-term maintenance. “As the prices have fallen since 2015, a lot of companies have looked at what is, to them, a novel structure. This allowed private parties to finance oil and gas, which they hadn’t really considered before.”
Future Explorations - Many private equity and venture funds have a great deal of capital earmarked for the energy sector. “But they haven’t been able to deploy it. We need to see more stability in the price of the commodity, and then there will be more deals.” While prices are low, a more typical joint venture structure may make sense. “But our clients are starting to see some opportunities as they are starting to see some better assets.” If prices improve, capital will be deployed rapidly. But if prices stay low or drop, some will probably delay their investments.
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