Private equity firm The Blackstone Group said on Thursday that it would buy Royal Dutch Shell Plc’s 50 percent stake in a joint venture in Haynesville Shale, a shale-gas field in Louisiana, for $1.2 billion in cash.
Blackstone will make the investment through Vine Oil & Gas, a new Dallas-based exploration and production company established by the private equity firm earlier this year, and its Blackstone Energy Partners.
Shell is selling its Haynesville assets from SWEPI LP and Shell Gulf of Mexico Inc., which are operating as exploration and production subsidiaries of Shell in Texas. The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close in the fourth quarter of 2014.
Blackstone will acquire Shell’s 107,000-plus net acres in northern Louisiana at the core of the Haynesville Shale, a natural-gas-filled rock formation, along with the field facilities and infrastructure. The Haynesville Shale, spanning over Louisiana and eastern Texas, was purchased by Encana, a Canadian energy producer, in 2005 but later placed under joint exploration of Encana and Shell since the two companies signed a 50-50 stake agreement in 2007.
Advising on the deal for Blackstone is Kirkland & Ellis, led by corporate partner Andrew Calder. Calder left Simpson Thacher & Bartlett in a high-profile move back in April. With Blackstone’s shale acquisition, Calder chalks up yet another private equity deal for Kirkland, which has gone head-to-head with Simpson Thacher in that space.
Last month, The Am Law Daily reported on Calder advising another longtime Simpson Thacher private equity client, KKR & Co., in its creation of an oil and gas joint venture with Riverstone Holdings.
Judging from the number of recent deals on which Simpson has advised Blackstone, however, the bonds between the two seem to remain strong. In the first two weeks of just this month, Simpson Thacher has advised Blackstone on three deals, including Blackstone’s $588 million buy of Alliance Automotive, its $750 million buy of Park Avenue Tower and its $650 million buy of Service King. Often when Simpson Thacher gets bumped from a deal, it is because the firm has been conflicted out.
Calder declined to comment to The Am Law Daily on Blackstone’s latest deal. Simpson Thacher also declined to comment through a spokesperson.
Blackstone has joined several other private equity firms to ride the boom of the natural gas industry. In March, TPG bought Encana’s gas operation in Jonah fields for $1.8 billion, while Apollo Global Management agreed to pay about $1.8 billion for Encana’s assets in Alberta.
Blackstone avoided investment in gas but focused on refineries and off-shore drilling projects in the last decade even when the unit prices were rising. However, since 2012, the company has been strengthening its foothold in gas. It put $1.2 billion in its partnership with LLOG Exploration, one of the largest oil and natural gas companies in the Gulf of Mexico, to develop LLOG’s assets in the Gulf. Simpson Thacher advised Blackstone on that deal. The company also made another $2 billion equity investment in Cheniere Energy Partners, which builds facilities for natural gas liquefaction, in 2012.
Joining Calder on Kirkland’s deal team for Blackstone are corporate partners William Benitez and Anthony Speier and debt finance partners William Bos and Jay Ptashek.
Kirkland in February advised Blackstone’s $750 million equity investment in Kronos Incorporated, a deliverer of workforce management solutions. Kirkland also acted as legal counsel to the private equity firm earlier this year in its partnership with Black Rhino, an African infrastructure development company, and its acquisition of Ipreo Holdings LLC, a provider of market intelligence and workflow solutions. Terms of neither transaction were disclosed.
Shell relied on its in-house legal team to advise on the Blackstone deal, led by Jon Sellars and Terry Roberson.