GE Energy Financial Services, a unit of GE, said Monday it is expanding its oil and gas reserves investing business by offering loans for development drilling.
In its first transaction, the GE unit loaned an undisclosed amount to Columbus, OH-based Knox Energy Inc. to drill natural gas wells in central Ohio.
"While we have offered reserves-based equity for more than a decade, this transaction with Knox Energy represents growth into a new area," said John Schaeffer, who heads the Oil and Gas unit at GE Energy Financial Services. "This new product offers producers the ability to more efficiently develop their assets in the current lower gas price environment."
Knox plans to use the proceeds from the debt financing to refinance its debt and provide capital to drill more shallow wells in a mature producing region.
"This type of innovative financing allows us to expand our tight sands development drilling and to make future acquisitions," said Knox President Mark Jordan.
Knox, which was founded by Jordan in 1998, specializes in gas production, primarily in Ohio. The company also provides operational and technical services on a contract basis for exploration, pipeline construction, land contract services and natural gas marketing. Since its inception Knox has drilled close to 300 wells, including 44 wells in 2009, and it now operates 480 wells.
The GE Energy Financial Services' Oil and Gas unit is active in all major onshore basins and the shallow waters of the Gulf of Mexico. Twenty-two partnership investments own interests in more than 3,500 wells that produce an estimated 26,000 boe/d.
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