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Blackstone Makes $1.5B Bet on Two Permian-Based Explorers Targeting Midland, Delaware

Private equity giant Blackstone is going after the highly sought-after land in the Permian Basin, with $1.5 billion in initial commitments to back two experienced West Texas/New Mexico players.

Newly formed Jetta Permian LP, with $1 billion in financing, is to target assets and leasehold in the Delaware sub-basin of West Texas and southern New Mexico. Guidon Energy, with initial financing of $500 million, is targeting Midland sub-basin targets in West Texas. The Blackstone partnerships join a bandwagon of buyers that have stormed into the Permian in recent weeks, including PDC Energy Inc.'s $1.5 billion deal on Tuesday (see Shale Daily, Aug. 24). The Permian has been the hottest buyer's market in the U.S onshore this year, heating up since July (see Shale Daily, Aug. 19; Aug. 16a; Aug. 16b; Aug. 8;July 13).

Jetta Permian, a partnership between Blackstone Energy Partners LP and an affiliate of Fort Worth-based Jetta Operating Co. Inc., plans to prowl for "creative and unique opportunities of scale" through acquisitions, farm-ins and partnerships or joint ventures with existing operators and landowners.

"With a $1.0 billion equity commitment and with the collective resources of the Blackstone team to support the partnership, coupled with the Jetta team's operating capabilities and track record, this will allow for and enable the strategic and successful acquisition and development of high quality oil and gas assets in the Delaware Basin," Jetta Operating President Greg Bird said. Bird also is CEO of the general partner of Jetta Permian.

Privately held Jetta Operating, founded in 1991, has to date been involved in more than 30 acquisitions and in 2003 made its first Permian foray. Development primarily has been in the Delaware interval, Bone Spring and Wolfcamp reservoirs, where it has to date drilled 150 wells, horizontals and verticals. It also has built out associated midstream gathering systems.

Blackstone Senior Managing Director Angelo Acconcia, who oversees oil and gas investments, said Jetta is respected as a top-tier operator in the Permian, and is "well positioned to become one of the leading Delaware Basin pure-play companies..."

The Blackstone-Guidon partnership launched in April, initially buying 16,000 net acres in Martin County, TX. But Blackstone officials see more deals in the offing, with the "potential to commit significantly more with future acquisitions." Guidon's objective "is to optimally develop its leasehold through manufacturing-styled horizontal well development."

Guidon is led by CEO Jay Still, previously was an executive vice president with Pioneer Natural Resources Co. and the former COO of Laredo Petroleum Inc. Pioneer and Laredo are considered two of the leading operators in the Permian.

"Blackstone's successful and deep track record of investing in energy and in the oil and gas sector specifically, and its extensive industry relationships, in combination with the Guidon team's operational capabilities and experience, will allow us to continue to optimally develop our properties and to be a long-term partner of choice in the Midland Basin," Still said.

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