Copano Energy LLC last week sold a $300 million equity stake to an affiliate of private investment firm TPG Capital to fund growth in the Eagle Ford Shale and other projects in Texas and Oklahoma.
"TPG shares our vision for the growth of our business," said Copano CEO Bruce Northcutt. "We are confident that, with TPG's support of our Eagle Ford Shale expansion plans and other capital initiatives, this transaction will further our objective to increase the scale and stability of our cash flow."
The publicly traded midstream services company is selling Series A preferred units priced at $29.05/unit, a 10% premium to the 30-day volume-weighted average price of Copano's common units as of July 19. If converted to common stock, TPG would own nearly 17% of the Houston-based firm and would be its largest shareholder.
In connection with the equity sale, Copano expanded its board of directors to eight from seven members and appointed TPG partner Michael G. MacDougall as a director. MacDougall, who leads TPG's global energy and natural resources investing efforts, will stand for election at Copano's 2011 annual meeting of unitholders.
TGP has worked "closely" with Copano's senior management team in the past year "to understand the company's attractive growth opportunities, including the expansion of Copano's existing capacity to serve producers in the Eagle Ford Shale," said MacDougall.
TGP, together with Kohlberg Kravis Roberts & Co., own Energy Future Holdings Inc., the former TXU utility giant they acquired in October 2007 for $32 billion in the largest leveraged buyout ever (see NGI, Sept. 10, 2007).
Copano was founded in 1992 by John Eckel Jr., who grew the company into a pipeline giant with 6,400 miles of pipe and seven processing plants. Eckel, 58, died last November.
Earlier this month SM Energy Co. struck a long-term agreement with Eagle Ford Gathering LLC, a joint venture of Kinder Morgan Energy Partners LP (KMP) and Copano, to process production from the South Texas shale play (see NGI, July 12). KMP and Copano established the gathering company earlier this year; Copano is the operator (see NGI, May 17).
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