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J-W Energy's Oil, Gas Assets Sold to Equity Firms, Canadian Pension Plan

Two private equity firms and a Canadian pension plan have acquired substantially all of J-W Energy Co.'s upstream and midstream oil and gas assets, plus acreage in the Haynesville Shale and the Rockies, which will be part of a joint venture (JV) between the two firms.

In a statement Monday, the two firms -- Dallas-based Aethon Energy Management LLC and New York-based RedBird Capital Partners LLC -- said they were joining the Ontario Teachers' Pension Plan (OTPP) in acquiring J-W's upstream and midstream assets in northeast Texas and north Louisiana. They added that assets in the Haynesville and Rockies acquired in partnership by Aethon and RedBird will be consolidated with the J-W assets to form a JV called Aethon United.

Last month, in a separate statement, J-W President David Miller said the company's exit from the upstream and midstream would allow it to concentrate on its compression business. J-W has also exited the drilling, valve manufacturing, gas measurement and wireline businesses over the last decade.

"Despite this sale marking the end of J-W's long and successful history in the upstream and midstream businesses, we are confident that the dedicated employees of J-W Operating and J-W Midstream will be instrumental in the future success of this endeavor," Miller said.

Financial terms of the deal were not disclosed. J-W said the deal closed on July 1.

It was unclear how many acres were sold. In their announcement Monday, the firms said the J-W assets being acquired included 84,000 net acres, but the J-W announcement last month said it was 95,000 net acres. Both announcements said the deal included 380 miles of associated gathering and processing infrastructure.

The firms said that with the acquisition, the JV will now operate more than 350,000 net acres with production of 166 MMcfe/d. Aethon United acquired approximately 91,000 net acres in the Haynesville from SM Energy Co. and Noble Energy Inc., and about 181,000 net acres in the Wind River Basin in Wyoming from Encana Corp. in May 2015 (see Shale DailyMay 4, 2015).

"We are excited to partner with OTPP and continue our long-standing partnership with RedBird to acquire J-W's high quality, low risk, unconventional assets, which continues to expand our acreage in the Arkansas-Louisiana-Texas area," said Albert Huddleston, Aethon's founder and managing partner. "The J-W assets help to diversify and expand our existing portfolio, and highlights [our] ability to identify attractive E&P [exploration and production] assets, offering strong risk-adjusted returns in the current market environment and in the future."

Aethon is focused on direct investments in oil and gas assets in the North American onshore, and has managed and operated more than $1.6 billion of assets since its founding in 1990. Meanwhile, OTPP is Canada's largest single-profession pension plan, with $171.4 billion in net assets at the end of 2015.

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