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Warburg Invests in New Gas-Focused E&P

Backed by an equity commitment from Warburg Pincus and experienced former Pioneer Natural Resources executives, Dallas-based Broad Oak Energy Inc. is ramping up efforts to explore and develop tight natural gas leaseholds, initially in southern Texas and northern Louisiana.

The privately held producer on Tuesday announced it had obtained an equity commitment for up to $150 million from Warburg. It plans to use the investment to explore along the Texas Gulf Coast, as well as Louisiana and New Mexico. Over time, it plans to "draw on the previous experience of its management team to target other unconventional opportunities where it believes significant value can be created through infill and repeat drilling."

David Braddock, the company's newly named chairman and CEO, said he was "delighted to be teaming with Warburg Pincus, a leader in the field of private equity investing in the energy sector. With the firm's financial backing and expertise, I am confident that our management team is in the best possible position to create and realize value." Braddock, a 35-year veteran of the oil and gas industry, had served as corporate land manager and senior director of negotiations for Pioneer's business development group. He initiated the formation of Broad Oak in late 2005.

Braddock is joined by John Coss, president, who was vice president of acquisitions at Pioneer and is a former exploration manager for ConocoPhillips. Robert Skinner is vice president of operations, a post he once held at Camden Resources.

"Led by a senior management team with extensive technical experience in all of its targeted areas, Broad Oak Energy has the operational capability and financial foundation to pursue multiple exploration projects and developments simultaneously and to succeed in the competitive environment of onshore oil and gas exploration in the United States," said Warburg managing director Peter Kagan. "And, this investment is entirely consistent with our practice of backing strong management teams to build companies of meaningful scale."

Warburg Pincus has been the lead investor in several successful public and private North American-based energy companies, including Newfield Exploration Co., Spinnaker Exploration Inc. (acquired by Norsk Hydro ASA), Encore Acquisition Co., Bill Barrett Corp., Calgary-based MEG Energy Corp., Antero Resources Corp. (acquired by XTO Energy in 2005), Gryphon Exploration Co. (acquired by Woodside Petroleum Ltd.) and Latigo Petroleum (acquired by Pogo Producing Co. this year). Warburg also was the lead investor in midstream operator Targa Resources and in privately held Competitive Power Ventures Holdings.

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