HM Capital Plans Expansion For Oil Business

Target: TriDimension Energy

Price: Undisclosed

Sponsor: HM Capital Partners LLC

Seller: Management

Financial Adviser: Seller: Amegy Bank

Legal Adviser: Sponsor: Vinson & Elkins LLP

HM Capital Partners LLC is expecting to go on a deal-making spree with TriDimension Energy, an oil and gas exploration company the firm recently acquired from its founders.

HM Capital invested $50 million in equity to acquire a controlling stake in the Dallas-based company from James Ryan, CEO, and Allen Mann, president, who together founded the company in 2006. The two have also agreed to co-invest alongside HM Capital. The firm wouldn’t disclose the overall size of the deal.

The expansion strategy is already off to a quick start. Since buying the company on April 24, the Dallas-based buyout shop completed one add-on acquisition and is in talks with three more potential add-on targets. The firm expects to complete about 12 acquisitions over the course of the next two years, Jason Downie, a partner, told Buyouts. The firm also expects to commit $50 million more in growth equity toward the company.

TriDimension Energy specializes in finding oil in existing fields and redeveloping historic fields by restoring wells and drilling new wells. Often, these fields were formerly controlled by major oil companies that have since moved on to bigger game, leaving landowners with small, proven sources of oil but without the resources to extract it. The company has field operations in Louisiana and Mississippi. TriDimension Energy has an interest in 86 producing wells in 36 fields, yielding more than 1,400 gross barrels per day.

Tim Merrell, a former senior vice president at Houston-based Amegy Bank who had worked with HM Capital in the past, introduced the firm to the company in December. The company grew rapidly in 24 months with funding from the founders and a small number of investors. But it still needed a substantial equity infusion to continue its expansion. Since HM Capital’s acquisition of the company, TriDimension Energy has recruited Merrell, and he is now the company’s general manager of business development.

HM Capital financed the deal with a reserve base loan, which acts like a revolver for which the oil reserves act as collateral. Downie declined to discuss specifics of the financing.

This is the fifth energy-related platform company for HM Capital—formerly Hicks, Muse, Tate & Furst Inc.—and its most oil-weighted investment yet. Its previous energy investments have been more closely related to the natural gas sector.—B.V.