Vesta Energy Corp., a privately-held exploration and production (E&P) company focused on light oil targets in a shallow area of Alberta's Duvernay Shale, has secured C$295 million (US$217.9 million) in financing from a group of private equity firms.
In a statement Wednesday, the Calgary-based company said the group of investors is being co-led by Riverstone Holdings LLC and JOG Capital, and includes other funds managed by JOG and Vesta's own management team. In conjunction with the investment agreement, Vesta will offer up to C$10 million (US$7.35 million) in shares to its existing shareholders at C$4.50 (US$3.31) per share.
CEO Curtis Cook said the investment will help Vesta accelerate its development of the Joffre area of the Duvernay, where it holds a contiguous position of more than 200,000 net acres. The company currently has 23 wells online and is producing about 3,500 boe/d, including 80% light oil.
According to Cook, Riverstone's assistance will help promote the Joffre area of the Duvernay "to the broader North American investment community. Riverstone brings a strong financial acumen as well as a deep understanding of the development of shale resource plays..." Cook said that understanding comes in large part from Mark Papa -- a Riverstone partner and the CEO of Centennial Resource Development Inc., and the former CEO of EOG Resources Inc.
Olivia Wassenaar, managing director at Riverstone, and Denzil West will also join the board of directors at Vesta. The company expects to close on the deal on May 26. BMO Capital Markets and Goldman Sachs Canada served as financial advisors for the deal.
Riverstone, which is focused on buyout and growth capital opportunities in exploration and production, midstream, oilfield services, power, and renewables sectors of the energy industry, has raised more than $35 billion to fund more than 130 investments worldwide since 2000. Meanwhile, JOG has become a leading private equity provider to Canadian junior E&P companies since it was formed in 2002. JOG has six oil and natural gas funds with aggregate capital commitments totaling more than C$1.2 billion (US$882.1 million).
Last fall, banks active in the energy industry told attendees of a conference sponsored by the Canadian Society for Unconventional Resources that the Duvernay, Canada's youngest shale play, was emerging as an "extremely competitive" play. They added that it was on par with other onshore targets in North America.
The Duvernay underlies 100,000 square kilometers (38,610 square miles) of Alberta along the eastern side of the Rocky Mountains from Grande Prairie in the north to Red Deer in the south, at a depth of 2,000 meters (6,562 feet) or more. The Alberta Geological Survey estimates the formation holds in situ 443 Tcf of natural gas, 11.3 billion bbl of liquid byproducts and 61.7 billion bbl of oil.