Another blank check company created to acquire an energy business is preparing for its public debut and another esteemed, retired oil and natural gas executive has been tapped to oversee it.
TPG Pace Energy Holdings was formed by private equity (PE) giant Tarrant Capital IP LLC, aka TPG. The Fort Worth, TX-based company filed with the Securities and Exchange Commission (SEC) on Monday to raise up to $600 million in an initial public offering (IPO), with plans to list on the New York Stock Exchange (NYSE) under "TPGEU." No pricing terms have been discussed. Deutsche Bank and Goldman Sachs are the joint bookrunners.
Former Occidental Petroleum Corp. chief Stephen Chazen, who retired last year, is leading the new company, formed as a special purchase acquisition company, or SPAC. These special purpose entities use stock offerings to raise cash before they prowl for acquisitions. In the past, many blank check offerings were overseen by hedge funds.
"TPG has known Mr. Chazen for more than 10 years," the PE said in its SEC filing. "Since his retirement from Occidental, TPG has developed an active dialogue with Mr. Chazen regarding partnering to acquire and operate large scale energy and energy related assets...
"Under Mr. Chazen's leadership, Occidental became the fourth-largest U.S. oil and gas company, based on 2015 year-end market capitalization." TPG noted that during his tenure, Chazen oversaw nearly $40 billion of energy-related acquisitions and more than $20 billion divestitures.
"From the time Mr. Chazen was appointed CFO until the time he retired as CEO, Occidental returned more than $17 billion to Occidental shareholders in the form of dividends between 2000 and his retirement in April 2016, demonstrating his focus on shareholder value creation."
The newly organized company incorporated on Feb. 14 in Delaware.
"We intend to focus our search for a target business in energy or energy-related industries," management said in the filing. "We intend to capitalize on the ability of TPG and our management team to identify, acquire and operate a business in energy or energy related industries that is not operating at its full potential and could benefit from a hands-on lead shareholder who can identify and implement improvements."
In the energy sector, TPG investments have included Alinta Energy, Axip Energy Services, EnLink Midstream, Copano Energy, Jonah Energy, MI Energy and Northern Tier Energy. It also has acquired energy assets from large public corporations that include Encana Corp. and Marathon Oil Corp.
"We believe the relationships of Mr. Chazen and TPG in the energy and energy related industries have the potential to lead to the creation of, and proprietary access to, potential business combinations," the SEC filing stated.
"We anticipate that target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with their network of relationships to articulate our acquisition themes, including the parameters of our search for a target company, and will begin the disciplined process of pursuing and reviewing promising leads."
TPG's launch follows that of two other SPACs led by formerly retired -- and well regarded -- oil and gas executives.
Riverstone Holdings LLC turned to retired Anadarko Petroleum Corp. chief Jim Hackett to lead Silver Run Acquisition Corp. II, an energy-focused SPAC, in a Nasdaq sale that raised $900 million initially and exceeded $1 billion after options were exercised. The offering was more than double in size from the $400 million proposed in the initial SEC filing, breaking the record for the largest blank check offering.
Hackett's company has yet to announce publicly that any acquisitions are underway.
Silver Run 1, launched by Riverstone in February 2016, brought aboard former EOG Resources Inc. chief Mark Papa. Papa's Denver-based exploration and production company, rebranded as Centennial Resource Development Inc., now controls 77,000 net acres in the Permian Basin's Delaware sub-basin. Papa said last month he expects Centennial's output to increase this year by 191%.
Meanwhile, IPOs are gaining steam in the U.S. energy sector, with private equity backing a number of producers and oilfield service (OFS) operators that work in North America.
Select Energy Services, which provides water services to U.S. unconventional producers, is planning a public launch on Friday, with expectations to raise up to $175 million. Plans are to issue 10.6 million shares priced at $15-18/share. In the past year, the Gainesville, TX-based OFS generated an estimated $302.4 million in revenue with net losses of $313.9 million.
Fort Worth-based FTS International, an OFS formerly known as Frac-Tech, also disclosed in an SEC filing that it plans to raise up to $100 million in its offering on the NYSE. Timing and other details were not provided, but the company said increased onshore activity was a lure.
"We believe this increase in demand, coupled with industry contraction and the resulting reduction in hydraulic fracturing capacity since late 2014, will particularly benefit us," FTS said in its filing.