Chalker Energy Partners II and Rusk Energy Ltd., a subsidiary of Chalker, sold substantially all of their oil and gas properties to NFR Energy LLC, the companies said Tuesday.
NFR is a recently formed joint venture launched by First Reserve Corp. and Nabors Industries to invest in oil and gas exploitation opportunities throughout North America (see Daily GPI, Sept. 25, 2006). The acquisition by NFR includes both producing and undeveloped natural gas properties and consists of more than 24,000 acres of leasehold in the Cotton Valley Trend of East Texas, 85 producing wells yielding approximately 23 MMcfe/d and proved reserves of nearly 300 Bcfe. Terms were not disclosed.
“The project was headed by proven entrepreneurs with a strong operating history. The Chalker team contributed the expertise in engineering, operations, land and day-to-day management needed to build a scalable set of assets in the mature East Texas basin in a very short period of time,” said Chalker CEO Doug Krenek. “We were able to boost production threefold, keep costs low and generate the inventory needed to ensure an outstanding return for the management team and our investors.”
Houston-based Chalker Energy Partners II is a privately held portfolio company of Quantum Energy Partners.
“Chalker II did an outstanding job on the execution side of this business,” said investor Alan Smith, managing director of Quantum Energy Partners. “Quantum is very pleased to have successfully partnered with Chalker again. This team is a testament to staying focused, executing well and finishing strong.”
Private equity firms have been realizing lucrative returns investing in the energy sector due to rising energy prices, but this deal stands out, said Brandon Freeman, president of Freeman Group, which contributed assets and capital to Rusk Energy. “Within an 18-month period of relatively flat natural gas prices, we were able to assemble a great team, acquire and develop our acreage position, and package one of the most significant private energy deals of 2007 — earning over a 350% net return on our equity investment.”
Simmons & Company and Griffis & Associates acted as co-advisors to Chalker for the transaction.
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