Sanchez, Blackstone May Team Up to Buy Anadarko's South Texas Assets
October 27 2016 - 3:10PM
Dow Jones News
Sanchez Energy Corp. is in talks to partner with Blackstone
Group LP on a deal for Anadarko Petroleum Corp.'s South Texas
oil-and-gas assets, according to people familiar with the
matter.
While the exact contours of the deal aren't yet clear,
Blackstone and the private-equity firm's credit arm, GSO Capital
Partners, would likely fund or participate in the purchase, the
people said. The deal is expected to value the Anadarko assets at
between $3 billion and $3.5 billion, they added.
A deal could be announced in the next few weeks, the people
said.
As always, the talks could fall apart. In recent weeks, Sanchez
had also been in talks with Apollo Global Management LLC and
energy-focused private-equity firm EIG Global Energy Partners to
participate in the bid, some of the people said. While Blackstone
and GSO are currently Sanchez's preferred partners, other backers
could supplant them if the alliance were to break down, one of the
people said.
The deal would be a big bite for Sanchez, which has a market
capitalization of $472 million and $1.7 billion in long-term
debt.
It also would secure the company's position in the Eagle Ford
drilling region—specifically an area some 100 miles southwest of
San Antonio the company calls the Catarina. Sanchez has focused on
drilling this patch of land since 2014, when it agreed to pay Royal
Dutch Shell PLC $639 million in cash for its existing position
there. At the time, the deal more than doubled Sanchez's
production.
Since then, a slump in oil and gas prices has curbed Sanchez's
capacity for big deals. Unprofitable the past two years, Sanchez's
heavy debt load limits its ability to pay for assets or sell
securities to finance acquisitions.
For Blackstone, the deal would add to a recent pickup in oil and
gas bets. The firm has invested $2.7 billion in 10 such deals this
year, focusing on financing capital-starved energy producers and
bringing adjacent parcels of land under the control of a single
owner, Blackstone Chief Executive Stephen Schwarzman said on a call
with analysts Thursday to discuss the firm's third-quarter
results.
Anadarko said in July it planned to sell as much as $3.5 billion
in assets this year, using proceeds to pay down debt. It said it
would also consider using proceeds to invest in its best assets if
commodity prices improve.
Intrepid Partners, Citigroup Inc. and J.P. Morgan Chase &
Co. are working with Sanchez on the deal, according to people
familiar with the matter.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com and Dana
Mattioli at dana.mattioli@wsj.com
(END) Dow Jones Newswires
October 27, 2016 15:55 ET (19:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Citigroup (NYSE:C)
Historical Stock Chart
From Aug 2024 to Sep 2024
Citigroup (NYSE:C)
Historical Stock Chart
From Sep 2023 to Sep 2024