Andrew Calder, 34, a corporate partner in Simpson Thacher & Bartlett’s Houston office.
GeoSouthern Energy, a Brenham, Texas–based oil and gas company that counts private equity firm The Blackstone Group as a key investor.
GeoSouthern has agreed to sell its Eagle Ford shale assets to Oklahoma City–based Devon Energy for $6 billion in cash, the companies announced Wednesday.
The agreement calls for GeoSouthern to divest itself of 82,000 net acres of drilling leases in southern Texas’ Eagle Ford shale formation. The assets changing hands currently produce 53,000 barrels of oil a day and also include at least 1,200 untapped drilling locations. The companies said the assets are expected to yield even more oil over the next several years, with daily production levels eventually reaching 140,000 barrels of oil.
The deal is expected to close in the first quarter of 2014. Skadden, Arps, Slate, Meagher & Flom is advising Devon on the purchase.
THE BIG PICTURE
The deal represents the largest sale of exploration and production assets so far this year, according to Bloomberg. Meanwhile, The New York Times reports that it is also the largest in recent years for Oklahoma City–based Devon, which paid $7 billion to pick up assets from British oil giant BP in 2010. Last month, Devon formed a midstream pipeline partnership with Crosstex Energy in a deal worth $4.8 billion.
In a separate announcement, Blackstone noted that it is exiting its stake in GeoSouthern—which the private equity firm says is worth roughly $1.54 billion—through the deal with Devon. Blackstone acquired the stake by launching a joint venture with GeoSouthern at the beginning of 2011 and last year the two raised $1 billion from commercial banks that has gone toward developing the southern Texas assets.
In a move that gave him the chance to expand his work with the firm’s energy practice, Simpson Thacher shifted Calder from New York to Houston after launching that office in April 2011. A few months after heading to Texas, he was officially promoted to partner. Since then, he has taken on an increasing load of oil and gas transactional work in deals that often involve private equity clients such as Blackstone and KKR.
Calder’s recent energy-related assignments include advising KKR on last year’s $250 million oil and gas development partnership with Chesapeake Energy Corporation, and representing Blackstone on a $1.2 billion partnership it formed last November with LLOG Exploration Company in order to develop oil and gas assets in the Gulf of Mexico. In August, Calder also led the way on a joint venture between Blackstone and Alta Resources on the sale of Canadian shale assets to Chevron for an undisclosed amount.
(As a born-and-bred Scotsman, Calder stands out among his the Houston-based lawyers doing energy-related transactional work. “The main thing I’m told is that when I’m on a conference call, no one ever mistakes my voice,” Calder says.)
Simpson Thacher has long been the go-to outside counsel for Blackstone, whose general counsel, John Finley, is a former member of Simpson’s executive committee. It is that relationship, Calder says, that paved the way for his team to take the lead for GeoSouthern on the asset sale. When GeoSouthern began to consider making a deal, Calder says, Blackstone submitted the Simpson Thacher team as its choice to serve as the outside legal advisers. But because GeoSouthern had to ensure its counsel would represent the entirety of the assets’ owners, the firm was put into competition with other large firms for the role.
“The company’s big concern was we would be too close to Blackstone,” Calder says. “So they ran an interview process for all of the firms and we had to undertake to them that we would represent the company and all of its shareholders, not just Blackstone.”
In the end, GeoSouthern was comfortable that Simpson Thacher was the right choice to handle the assignment, and the firm started work on the sale roughly a year before the deal was announced.
Calder says the sale was less an auction than a selective sale process, as GeoSouthern—working with financial adviser Jefferies & Company— identified and approached a few potential acquirors over the course of the year before eventually settling on Devon as the buyer.
When Devon emerged as the likely deal partner, Calder says, “There were a number of stops and starts to the deal” before negotiations really started picking up a matter of weeks before signing. From there, Calder’s team worked with Devon’s attorneys at Skadden to move quickly to get the agreement in order.
“Once we actually got to a place where we had identified the counterparty, and were at a value that everyone was comfortable with, it was a very quick process,” he says. “We were really asked to move heaven and earth to get everything done as soon as possible.”