Goldman Sachs, Post Oak Pledge $100M To Energy Firm

  • PetroEdge focuses on Eagle Ford region in Texas
  • Post Oak Energy Capital committing $75 million
  • Goldman Sachs unit pledges $25 million

PetroEdge’s management team made its mark as early movers in the Marcellus shale in and around Pennsylvania and have successfully built and sold two oil and gas companies. The current venture in Texas marks the third enterprise launched under the PetroEdge name, hence the Roman numeral III in its name.

“The team has a proven track record in the geologic assessment, drilling and completion of horizontal wells in shale plays,” according to a prepared statement by Post Oak and Goldman Sachs.

PetroEdge plans to acquire and lease additional land in the area while preparing to drill the first horizontal well on its acreage.

Despite an influx of energy firms into the Eagle Ford region of south central Texas, Larry Richard, the president and CEO of PetroEdge, said he sees plenty of opportunity for growth.

Richard said he had worked with EnCap Investments LP on past deals and turned to private equity for capital to grow in Texas.

“It’s a new, emerging play,” he said of the region, which includes Brazos and Burleson counties. “It’s still being delineated. There are only 20 wells in the area and there’s room to acquire more [acreage]. It’s at the very front end of its development.”

Frost Cochran, managing director of Post Oak Energy Capital, told Buyouts his Houston private equity firm committed $75 million as one of the last investments from its 2011 vintage Post Oak Energy Partners LP fund; Goldman Sachs pledged $25 million.

“They’re a very experienced team and had been sponsored by private equity in the past, and they were referred to us by friends in the industry,” Cochran said of PetroEdge. “They had captured a set of assets … and needed the capital to close the deal and get on with the drilling program, and reached out to us.”

The task ahead includes proving the value of the acreage by drilling for oil and gas, partially developing it for production and selling the fields to a strategic buyer in about two to four years, Cochran said.

Big players in the more well-developed areas of the Eagle Ford include Marathon Oil Corp and EOG Resources. Players closer to PetroEdge include Halcon Resources Corp, with some presence by Anadarko Petroleum Corp, Apache Corp and Clayton Williams Energy Inc.