Private equity firm U.S. Drilling Capital Management LLC plans to invest as much as $75 million in SandRidge Energy Inc. to develop natural gas prospects in West Texas, the third such announcement in two weeks.
Under the agreement U.S. Drilling initially would invest $15 million in SandRidge for its exploration and production (E&P) program in the Pinon Field in West Texas. Last year the Pinon Field accounted for more than half of SandRidge's total output of 319 MMcfe/d.
Over the next 12 to 18 months, U.S. Drilling said it could invest as much as $75 million toward SandRidge's efforts in the field. In exchange U.S. Drilling, which was founded in November 2008, would own a portion of the production.
"U.S. Drilling Capital Management looks for unique investment opportunities across the E&P sector," said equity fund cofounder and CFO Bill Cassidy. "We created the fund as an avenue for publicly traded companies to maximize the value of their assets by accelerating the development of their reserves while sharing the risk with a drilling partner. Our goal is to identify expertise in operating companies and participate with them in core areas of competency to develop oil and natural gas resources."
Cassidy previously was head of oil and natural gas investment banking at Barclays Capital Inc. Cofounder Philip A. Epstein previously helped create Superior Renewable Energy LLC, which was sold in 2006 to Babcock & Brown. Jonathan Feldman, who also helped to create U.S. Drilling, in 2001 founded Patriot Exploration LLC, a drilling fund that to date has invested around $100 million in North American E&P ventures.
On Tuesday Kohlberg Kravis Roberts and Co. announced it would invest around $350 million in East Resources Inc. to develop acreage in the Marcellus Shale (see Daily GPI, June 10). Last week Morgan Stanley Private Equity said it would acquire a majority stake in Triana Energy Investments LLC, which plans to acquire and develop properties also in the Marcellus Shale (see Daily GPI, June 3).
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