Sep 23, 2021

Sabalo Energy II closes $300m equity from EnCap Investments

Energy
Oil
Gas
USA
Dominic Ellis
2 min
EnCap Investments' equity commitment in Sabalo Energy II reflects confidence in its technical ability to execute across multiple oil and gas basins

Sabalo Energy II has closed a $300 million equity commitment from EnCap Investments.

Sabalo, led by President Barry K. Clark, is an upstream exploration and production company focused on the acquisition and development of large-scale unconventional oil and gas assets.

The company's objective is to build, operate, and generate significant cash flow from a portfolio of upstream assets located in premier US basins.

In its most recent partnership with EnCap, the Sabalo management team acquired over 21,000 net acres in the Midland Basin through a series of transactions and grew production to 14,500 Boe/d through a successful horizontal delineation and development program. 

On July 1, Sabalo closed the sale of its assets to Laredo Petroleum for $715 million cash and stock.

"Our team has a long history of value creation and excels at evaluating, building to scale, and successfully divesting large-scale asset packages in sought after development fairways," added Clark.

"We look forward to continuing our partnership with EnCap and are excited about the opportunity set we see in the industry today. We believe the current macro environment presents an exciting opportunity for experienced management teams with strong financial backing to leverage the technological learnings of the past decade to generate strong stakeholder returns while pursuing a balanced ESG focus."

Brad Thielemann, EnCap Partner, said Sabalo has a demonstrable track record of capturing assets and creating value across various market environments. "This equity commitment is a testament to our confidence in Sabalo's operational and technical ability to execute across multiple oil and gas basins."

Vinson & Elkins served as legal counsel to EnCap and Bracewell served as legal counsel to Sabalo on the formation of the new company.

Sabalo Energy was originally formed in 2014 as an upstream exploration and production company. In its previous iteration, Sabalo Energy primarily owned and operated upstream oil and gas assets in Howard County, Texas.

Harbour Energy has announced its all share merger between Premier Oil and Chrysaor Holdings has been completed, on release of its half-year results.

It reported production of 151 kboepd (H1 2020: 187 kboepd), impacted by planned maintenance programmes deferred from 2020 into 2021 due to COVID-19 and unplanned outages, partially offset by three months contribution from the Premier portfolio. EBITDA totalled $843 million, compared with $920 million in H1 2020.

Linda Z Cook, Chief Executive Officer, said the first half saw us deliver positive free cash flow and execute a significant transaction, whilst retaining a robust balance sheet. 

"The extended maintenance programmes which impacted our production have completed, drilling activity has returned to pre-COVID-19 levels and the merger integration is progressing well, all underpinning strong future cash flow generation," she said.

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