As we've seen in recent months, private equity continues to fuel development throughout the US Lower 48. Our US upstream analysts look into Kayne Anderson's recent US$1billion-plus commitments across three major deals pointed toward natural gas development in North America.
In a move likely to deploy capital raised for natural gas assets in its new Energy Income Fund, investment firm Kayne Anderson has committed US$106 million and US$250 million in the SCOOP and Eagle Ford plays, respectively. The fund adheres to a model of backing basin expert management teams with opportunities to build basin scale, and was designed with a longer-term payout schedule for investors.
By backing Casillas in the Mid-continent and Phoenix Resources in the Gulf Coast, the fund is adding to the 200,000-net-acre purchase it executed for WPX's Piceance basin assets by backing Terra Energy Partners earlier this year — and potentially plans to add more, citing three to four target investments.
These purchases mirror the framework of the Piceance acquisition, and we anticipate the Casillas and Phoenix teams to ultimately target the gassier sections of their respective plays. In this case, the operators could arguably secure a more favourable purchase price for proved developed producing (PDP) acreage with multi-zone upside.
As the firm continues to build momentum by investing equity in North American natural gas exploration, it seems set to exemplify the mantra 'Evaluate it correctly, buy it right, operate it well.'
You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including the latest setbacks for gas pipelines in the Northeast; ExxonMobil's first production announcement from its Point Thomson field; more service sector woes; and our latest Lower 48 supply update and rig-count dashboard.
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