LLOG Exploration Co. LLC has formed a long-term partnership with private equity giant Blackstone to accelerate the Covington, LA-based producer's deepwater operations in the Gulf of Mexico (GOM).
The partners, which have committed to invest more than $1.2 billion in the alliance, plan to leverage the operational and financial resources of LLOG and private equity funds managed by Blackstone.
"This is the first time that we have joined forces with an equity partner on a company-wide basis, and we cannot imagine a more suitable partner to mark this significant inflection point for LLOG," said LLOG CEO Scott Gutterman. "I believe that with our deep technical and operations team, experience and assets in the GOM combined with Blackstone's team, extensive capital resources, oil and gas expertise and industry resources, we will be able to take our business, activity levels and assets to the next level."
Among their targets are four of LLOG's recent deepwater discoveries, as well as its extensive prospect inventory, which includes 110 offshore leases. In addition, the partners plan to expand LLOG's asset base in the GOM through federal lease sales, farm-ins, as well as merger and acquisition activity.
LLOG is one of the top privately owned explorers in the United States and is one of the largest private operators in the GOM. It operates more than 95% of its reserves and 86% of its prospects. In the past two years it has made four consecutive discoveries, including two deepwater GOM discoveries this year.
Over the past decade LLOG has been a high bidder on many leases in the GOM and has had some success. In August LLOG and its partners announced a discovery at the Son of Bluto 2 well in Mississippi Canyon (MC) Block 431. At the same time the partners announced that they hit oil-bearing zones at Marmalard in MC 300. The wells were LLOG's first exploration wells since the GOM drilling moratorium was lifted. Last year LLOG subsidiaries signed agreements to transport more GOM natural gas production from the Who Dat field on Enterprise Products Partners LP's Independence Trail pipeline (see Daily GPI, March 30, 2011).
Who Dat, which ramped up last year, is excluded from this partnership. The field has estimated reserves of 200-300 million boe and is producing through the first privately owned floating production system.
Blackstone has more than $205 billion in assets under management and is investing from two private equity funds that aggregate more than $19.3 billion of committed capital.
"We evaluate many potential investments in the energy sector but choose only a small number each year to pursue that we believe represent a combination of the most exceptional management teams with unique and large-scale opportunities to create value; LLOG is a great example of this," said Blackstone Energy Partners CEO David Foley.
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