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Warburg Takes $500M Bet on U.S. Onshore E&P Startup

Independence Resources Management (IRM), a start-up exploration and production company (E&P) whose initial focus is the Anadarko Basin, is getting a $500 million infusion from private equity giant Warburg Pincus.

The line-of-equity investment from Warburg would allow the Houston E&P to target onshore oil and natural gas "acquisition and play extension opportunities" in the Midcontinent and Rocky Mountains. The initial focus is to be the Anadarko, with a plan to target other "plays with large amounts of hydrocarbons in place and low recovery factors, where advanced drilling and completion techniques can create compelling risk-adjusted returns."

CEO Mike Van Horn most recently was a top executive with Newfield Exploration Co., serving as vice president of geoscience and most recently as senior vice president of exploration.

"We are excited to have the support of Warburg Pincus, especially in the present commodity price environment, as we pursue the significant opportunity set we are seeing in our regions of interest," Van Horn said. "This investment will enable us to acquire a meaningful footprint in targeted plays and optimally delineate and develop that hydrocarbon resource over time."

Warburg was one of the initial investors in Newfield (see Daily GPI, Jan. 2, 2001). The IRM management team includes executives of companies that were financed by the private equity firm, as well as former executives of big U.S. producers. As well, the founding management team includes executives who previously worked at legacy Enron Corp. natural gas trading operations, IRM said. In 2002, predecessor UBS Warburg Energy took over Enron's North American gas and power trading operations (see Daily GPI, Feb. 11, 2001).

IRM COO John Nicholas formerly was general manager for the Appalachia division at Southwestern Energy Co. Chief Corporate Officer Rod Steward previously served as Sheridan Production Partners' manager of exploitation, capital planning and analysis; Sheridan initially was funded by Warburg (see Daily GPI, Aug. 9, 2007). Charles Minero, who is chief geosciences officer of IRM, previously was a senior staff geologist for Shell Oil Co.

"Mike and the IRM leadership team have deep geoscience, reservoir and operational expertise and are ideally suited both to acquire and develop existing assets and to pursue new exploration concepts," said Warburg Managing Director James Levy. "The opportunity to grow a start-up E&P company behind a great management team fits squarely within our investment thesis and our track record of success."

Warburg Pincus Private Equity XI LP and Warburg Pincus Energy LP are providing the equity. Warburg currently is funding Navitas Midstream Partners LLC, a Houston area processing company (see Shale Daily, June 5, 2014). As well, Warburg has invested $600 million in Zenith Energy, a Houston-based international liquids and bulk terminaling operator that started up last year. Warburg also is the biggest investor in Dallas-based Venari Resources LLC, a Gulf of Mexico deepwater explorer (see Daily GPI, May 24, 2012).

Notable U.S. energy investments that Warburg previously made include Antero Resources Corp., Bill Barrett Corp., Laredo Petroleum Inc. and Targa Resources Partners LP. Warburg has raised 14 private equity funds, including a $4 billion energy fund that closed last October.

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