Bayou City Energy Management, LLC (“Bayou City”, “BCE” or the “Firm”) announced today that it has launched its first private equity fund to make value-creating investments in the upstream oil and gas sector.
Bayou City targets equity investments ranging from $5 to $50 million in the North American E&P industry. The Firm pursues privately negotiated investments through two complementary strategies: Providing buyout and growth equity capital for small operators with current production, and partnering with leading operators to provide dedicated drilling capital in off-balance sheet structures.
Bayou City is led by Founding Partner William McMullen, formerly of White Deer Energy and Denham Capital, and Partner Mark Stoner, previously Vice President of Finance at Alta Mesa Holdings, L.P. The Partners are supported by Chief Financial Officer Kristin Eby MacKelvey and Senior Associate Andrew Koehler.
Commenting on the launch, Mr. McMullen said: “Our team has quickly worked to high-grade our proprietary pipeline of opportunities, and is very much in execution mode. The results of these efforts are borne out in Bayou City’s first acquisition which closed on June 15, 2015. This initial investment is emblematic of the Bayou City approach to value creation. We have partnered with a seasoned and highly qualified management team in a producing asset that generates meaningful production and cash flow despite prior under-exploitation. We plan to make targeted investments in the field to improve operational efficiencies, replace obsolete equipment with modern oilfield technology, recomplete existing wells into new productive zones and drill relatively low-risk infill development wells.”
Mr. Stoner added: “Small operators have historically been underserved by the institutional capital market. Oilfield operators work hard to boot-strap a concept into production and reserves but are often disproportionately vulnerable to cash flow disruptions during volatile market cycles like the one we are currently experiencing. Bayou City’s strategy is to help small E&P companies fill the funding vacuum and provide the capital and expertise needed to unlock significant value for all stakeholders.”
BCE Advisory Board
In addition to its investment professional staff, the Firm’s strategic efforts are supplemented by an Advisory Board composed of industry leaders. Members of the Advisory Board include Charles Cherington (Co-Founder and Managing Partner of Intervale Capital), Gregory Beard (Head of Natural Resources and Senior Partner at Apollo Global Management), Alan Clemens (Technical Advisor to Quantum Energy Partners and Chairman of Rio Oil & Gas II, LLC), and Thomas Perich (Chairman of Andrews Kurth LLP). BCE expects to add additional members to its Advisory Board in the coming months.
Bayou City was formed with an arm’s length arrangement with Intervale Capital, LLC (“Intervale”), a private equity firm focused exclusively on oilfield services with offices in Houston and Boston. The relationship affords Bayou City access to Intervale’s deep network of industry relationships and portfolio of leading oilfield service companies.
Mr. Cherington said: “We could not be more delighted to collaborate with the Bayou City team. Intervale’s portfolio companies include a broad range of service providers and industry participants who can work alongside Bayou City’s small operators to identify best-in-class environmental, safety and operational practices. Effectively, the arrangement brings ‘in-house’ a comprehensive suite of operational expertise previously inaccessible or financially impractical — a partnership that, in my view, is groundbreaking in the smaller-end of the energy private equity landscape.”
Bayou City Energy is a private equity firm focused on making investments in the North American upstream oil & gas sector, targeting deal sizes of $5 to $50 million. Bayou City targets privately negotiated investments through two complementary strategies: Providing buyout and growth equity capital for small operators with current production, and partnering with leading operators to provide dedicated drilling capital in off-balance sheet structures. The BCE team, combined with the Firm’s highly qualified Advisory Board and strategic relationship with Intervale Capital, provide small to mid-sized operators access to expertise, capital and quality services typically available only to much larger enterprises.