Warburg Pincus-owned Endurance latest casualty of energy slump

Canadian natural gas producer Endurance Energy, backed by Warburg Pincus, obtained protection under the Canadian government’s Companies’ Creditors Arrangement Act.

Calgary-based Endurance was granted CCAA relief at the end of May. FTI Consulting Canada was appointed monitor.

According to a pre-filing report, depressed gas prices recently cut into Endurance’s operating income, preventing the company from meeting its liabilities. Facing a liquidity crisis, Endurance requested court approval for a $15 million loan provided by Warburg Pincus to fund ongoing operations.

Endurance also engaged BMO Nesbitt Burns to advise it on a proposed sale process, the document said.

Founded in 2008, Endurance was acquired by Warburg Pincus in a recapitalization deal in February 2012.

Focused on acquiring and developing shallow natural gas assets in the Western Canadian Sedimentary Basin, the company was expected to receive further investments of as much as $155 million to support growth.

Warburg Pincus increased its commitment to Endurance in mid-2013 to assist “a large asset acquisition,” according to the firm’s website. This likely refers to the company’s reported buy of Encana Corp’s Jean Marie property in northeastern British Columbia.

Warburg Pincus held about 85 percent of Endurance’s equity at the time of the CCAA filing.

Warburg Pincus did not respond to a request for comment.

Endurance joins a growing list of domestic oil and gas companies rocked by a prolonged slump in commodity prices. They include Toronto-based Pacific Exploration & Production, which earlier this year struck a deal to restructure with Catalyst Capital Group.

Cyclical downturns in the energy industry are not new to Warburg Pincus, which reports making more than $10 billion in related investments worldwide since the late 1980s. For it and other PE firms active in the industry, the current dislocation poses challenges — but it also creates compelling value opportunities.

In February, Warburg Pincus agreed to invest as much as $500 million in Calgary’s RimRock Oil & Gas.

Founded in late 2015 by former executives of Talisman Energy (now Repsol Oil & Gas Canada), RimRock aims to capitalize on opportunities in the current price environment. It will focus on acquiring and developing large-scale assets across North America.

Warburg Pincus may now be on the lookout for similar deals.

The firm this week announced the hire of Jim Prentice as an industry adviser in its energy group. A former Alberta premier and federal cabinet minister, Prentice is tasked with helping Warburg Pincus source and evaluate new investments in Canada.

Canada’s oil and gas industry has recently attracted record PE investment. The peak year was 2015, when about C$6.4 billion was invested, according to Thomson Reuters. Deal-making in 2016 is so far tracking behind last year’s activity, with C$1.8 billion invested to date.

Action Item: Check out Endurance’s filing here: http://bit.ly/266ni8z

Photo: A jogger runs through the snow at Nose Hill Park during an early year snow fall in Calgary, Alberta, September 8, 2014. REUTERS/Todd Korol