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 private equity funds managed by Blackstone, Blackstone
Energy Partners and 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, the two private equity funds of Blackstone 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.”
About Blackstone
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 $16.7 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 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. Led by David Foley, the Chief Executive
Officer of Blackstone Energy Partners, this dedicated team of
professionals 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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