Ares Management Buys Eagle Ford's BlackBrush Oil & Gas

BlackBrush EFS Acreage
BlackBrush EFS Acreage

Private equity investor Ares Management LP announced in June of 2014 that it will purchase BlackBrush Oil & Gas, an independent Eagle Ford exploration and development company, for an undisclosed amount. The deal includes 160,000 net acres across Dimmit, Frio, Karnes, La Salle, Maverick and McMullen counties.

BlackBrush CEO Scott Martin will continue to lead the 75-employee San Antonio-based company. Co -founder Phil Mezey will also remain involved as an advisor.

Partnering with the Ares private equity team provides us the capital to continue developing and growing our large asset base.
— Scott Martin

Currently, BlackBrush operates over 300 oil and gas wells in South Texas. Estimates on the company's website indicate 50-wells will be drilled over the next year targeting the Eagle Ford, Buda, Austin Chalk, San Miguel, Olmos and Pearsall Shale. With this transaction, more activity may occur inside of the company's drilling target window.

The transaction is expected to close in the the third quarter of 2014.

Another Recent Eagle Ford Transaction Has Ties to BlackBrush Leadership

In June of 2014, Dallas-based Southcross Energy announced it was acquiring San Antonio-based pipeline company TexStar Midstream Services, LP. for $450 million. TexStar was also led by BlackBrush's Martin and Mezey.

The deal includes 3,700 miles of pipeline, four processing plants and three fractionation facilities in the Eagle Ford Shale area. After the transaction closes, a newly formed company, Southcross Holdings LP (“Holdings”) will own 100% of the general partner of Southcross and equity interests in Southcross as well as former TexStar assets.


Comstock - KKR Eagle Ford Partnership Agreed at $25,000/acre

Comstock Resources Eagle Ford Map
Comstock Resources Eagle Ford Map

Comstock and KKR (Kohlberg, Kravis, Roberts & Co) have signed a participation agreement in the Eagle Ford. KKR will have the right to participate for 1/3 of Comstock's interest in 28,000 net acres across Atascosa, Frio, Karnes, La Salle, McMullen, and Wilson counties. In exchange, KKR will pay the equivalent of $25,000 per acre through a drilling carry for each acre acquired. Comstock plans for development with spacing of 80-acres per well.

KKR has committed to the drilling carry equivalent of $25,000 per acre for the next 100 wells in Comstock's planned development. The private equity partner will have the ability to participate in additional Comstock wells under the same terms.

Check my math, but if KKR participates across all of Comstock's acreage:

28,000 net acres x 33% x $25,000/acre = ~$233 million

While there is potential for as much as a $233 million dollar investment, the announcement indicates KKR has the "right" to participate. I assume that means they are not "obligated" to participate. If you consider the next 100 wells,

100 wells x 80-acres/well x 33% x $25,000/acre = $66 million

It sounds like KKR has committed to spending $66 million and will have an option on participating on additional acreage that could increase the company's commitment up to $230+ million.

Check my math and let me know your thoughts on the deal in the comments below.

Exxon - Rosneft Trade Artic Oil for Eagle Ford Interest?

ExxonMobil agrees to enter a partnership with the Russian oil & gas giant Rosneft in the Artic and Black Sea in exchange for a development carry and the potential to participate in Exxon's tight oil assets in Texas. Is it the Eagle Ford? Exxon has been tight lipped when it comes to the Eagle Ford and this might be the first indication that the company has a material position in the play. XTO was leasing in South Texas when the company was acquired by Exxon in 2010. XTO had built a significant producing position through the acquisition of Dominino Resource's South Texas properties not long before it was acquired itself. The assets were largely producing and acreage was held by production. That luxury is likely the reason we have not seen Exxon add as many rigs in South Texas as other operators. I'll update this post as more details emerge.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.

In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.

The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.