Aethon Energy, Ontario Teachers’ team up on energy platform

  • Aethon, Ontario Teachers in first joint investment
  • Dallas firm also backed by RedBird Capital Partners
  • Aethon United made up of J-W Energy units, nearby assets



Aethon Energy Management teamed up with Ontario Teachers’ Pension Plan for the first time for a new stand-alone platform investment outside the firm’s fund structure.

The Dallas firm hasn’t started raising its third fund yet, but it wanted to buy J-W Energy’s upstream and midstream oil-and-gas assets in northeast Texas and north Louisiana region.

Aethon Energy’s $240 million Aethon II fund and co-investment capital were fully committed when it closed last fall.

So, the the firm worked with Ontario Teachers’ to create a new stand-alone platform, Aethon United, a partnership including the J-W Energy assets of the Haynesville shale of Texas and Louisiana, plus other assets in that area and elsewhere.

Ontario Teachers’ came in as a co-investor for the first time with Aethon Energy. RedBird Capital Partners, a past investor in Aethon projects, also invested.

“All of these assets in the Haynesville are sitting in the same place,” Albert Huddleston, founder and managing partner of Aethon Energy, said in a phone call. “I’ll never have different ownership of assets sitting next to each other, so we put it all together. It’s a Three Musketeer approach: all for one, one for all.”

All told, Aethon United includes the J-W Energy assets, plus acreage acquired from SM Energy and Noble Energy, as well acres in the Wind River Basin of Wyoming previously acquired from Encana.

Despite the low-energy-price environment, the economics of Aethon United are viable, Huddleston said. Other deals may follow.

“If we see additional high-quality assets, we’re not going to ignore those,” Huddleston said.  “If it’s necessary, we’ll bring in third-party capital to take advantage of any potential deals. We’re selective.”

Jane Rowe, senior vice president of Teachers’ Private Capital, said in a statement that the Aethon United assets “are a strong fit with our private equity energy portfolio and represent a compelling investment opportunity with an established base of long-life proven reserves and attractive growth opportunities.”

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A rig contracted by Apache Corp drills a horizontal well in a search for oil and natural gas in the Wolfcamp shale located in the Permian Basin in West Texas on October 29, 2013. Photo courtesy Reuters/Terry Wade