Lehman Brothers will acquire the remaining two-thirds of Houston-based energy marketing and services company Eagle Energy Partners that it does not already own, the firm said Wednesday. The transaction will expand Lehman’s energy trading business, particularly on the physical side, where it has had a relatively small presence.
Last year Lehman bought a one-third interest in Eagle Energy (see Daily GPI, March 28, 2006). Upon the completion of that deal Eagle was owned one-third by Lehman, one-third by Chesapeake Energy and one-third by Eagle Energy management. Lehman is picking up its additional two-third stake from Chesapeake and Eagle Energy management.
Eagle Energy manages and optimizes supply, transportation, transmission, load and storage portfolios on behalf of wholesale natural gas and power clients. As with the previous Lehman transaction, terms of the deal were not disclosed.
Lehman said the deal will transform its North American commodities platform by bolstering the firm’s presence in physical and financial gas and power markets. More sophisticated products will be offered, Lehman said. The company also said it will benefit from Eagle’s management team, which has more than 70 years of combined experience in physical and financial gas and power markets.
Chuck Watson, the former chairman and CEO of Dynegy Inc., is the chairman of Eagle Energy. The company was formed by former Dynegy executives in 2003 (see Daily GPI, July 2, 2003). “When we left Dynegy, and as the winding down of energy merchants started, we had a lot of customers talk with us and tell us that they’d love to have more customer choice and liquidity in the physical sales,” Eagle CEO Griff Jones said at the time.
Watson will stay on with Lehman and be the co-head of commodities business with Lehman’s Kaushik Amin, who is Lehman’s global head of liquid markets, a spokeswoman told NGI. She said she did not know whether Jones would be staying on.
With the Lehman acquisition, Eagle Energy’s commodities business will report jointly to Skip McGee, Lehman global head of investment banking; and Roger Nagioff, Lehman global head of fixed income.
“We believe there to be enormous market opportunities in the commodities space in the coming years,” Nagioff said. “Eagle Energy is a natural partner in our efforts to accelerate our activities in this market.”
Eagle Energy markets on behalf of its clients approximately 2 Bcf/d of natural gas and approximately 35,000 MWh/d of electricity. The company manages more than 35 Bcf of gas storage capacity. Eagle Energy does not speculate on commodity prices and attempts to balance its commodity positions to achieve small or zero net positions in the market.
The transaction is expected to close later this year subject to regulatory approvals.
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