A unit of private equity firm TPG Capital LP said Monday that it will sink up to $400 million into the development of oil and gas properties in West Texas operated by Hunt Oil Co. in a deal guided by Kirkland & Ellis LLP and Baker Botts LLP.
The companies said in a statement that the cash from TPG's credit and special situations arm, TSSP, would fund development of 18,000 net acres in the Midland Basin over a three-year period.
"This partnership will provide strategic capital to efficiently develop a premier asset position in a world-class basin," Hunt Oil senior vice president Travis Armayor said in a statement Monday. "We look forward to working with a well-respected capital provider such as TSSP to deliver solid results from these assets."
After largely staying on the sidelines for much of 2015, private equity firms with an eye on the oil and gas sector have begun wielding their sizable checkbooks in 2016. The investment by TSSP, which has $19 billion in assets under management, in Hunt Oil's operations is the latest example of private equity firms partnering with both public and private oil and gas companies through investments in joint ventures and farmout agreements, as opposed to large, splashy buyouts or takeovers.
Experts say it's a way for firms to capitalize on a potential recovery in stubbornly low oil prices while maintaining a healthy amount of caution.
"Hunt Oil has a proven track record in safe, profitable and successful operations from its founding in East Texas to its assets around the world," TSSP partner Matt Dillard said in a statement Monday. "We are very excited to partner with their strong team to provide strategic capital in a key, low-cost basin. We expect this agreement to generate significant value for both parties and look forward to deploying capital in the region over the coming years."
TSSP is represented by a Kirkland & Ellis LLP team that included corporate partners Anthony Speier and David Castro and associates Christopher Heasley, Nick Wenker, Ryan Martin and Lindsey Jaquillard, debt finance partners William Bos and Lucas Spivey, tax partner Chad McCormick and associate Joe Tobias, environmental transactions partner Paul Tanaka and associate Stefanie Gitler, restructuring partner Ryan Bennett and litigation partner Anna Rotman.
Hunt Oil is represented by a Baker Botts LLP team that included corporate partner Mike Bengtson, tax partner James Chenoweth and global projects associates Erin Hopkins and John Craven. Jefferies LLC acted as sole financial adviser.