Charger Shale Oil Company and Oaktree Announce $900 Million Permian Basin Joint Venture
Charger Shale Oil Company, LLC (“Charger”), an oil and gas partnership
headquartered in Midland, Texas, and funds managed by Oaktree Capital
Management, L.P. (“Oaktree”) today announced their recently formed joint
venture focused in the Permian Basin. Oaktree has pledged $600 million
in an initial equity commitment with an additional $300 million runway
commitment.
Prior to funding, Charger secured more than 40,000 acres in the Delaware
Basin using capital sourced from management and key strategic investors.
Charger has since closed on the initial acreage and has development
plans to expand to over 85,000 acres. At full development, the
partnership is targeting over 100 horizontal well locations across
multiple horizons.
Charger is led by several key executives previously employed by Tall
City Exploration (“TCE”). TCE acquired and developed more than 34,500
core acres (and another 48,000 prospective acres) utilizing $245 million
of capital. TCE sold these assets for $1.2 billion in two transactions
in 2014 and 2015. TCE’s use of advanced geological, petrophysical and
engineering techniques to mitigate the risk of exploring beyond the
traditional core boundary of the Wolfcamp play in the Midland Basin made
this increase in value possible.
Joseph Magoto, former President of TCE and current CEO and President of
Charger, was deeply involved in the development and sale of TCE assets.
Under Mr. Magoto’s guidance, Charger intends to utilize the expertise of
many former TCE executives, including: Darryl James, VP Geology; Doug
Scott, Chief Petrophysicist; and John Stewart, Geology Computer
Specialist. Other members of the executive staff include Chuck Lundeen,
VP Land and Legal (former Head Landman at Devon Energy); Craig Young, VP
Drilling/Operations (former Head of Drilling in the Permian Basin and
Eagle Ford for EOG); Bob Bintliff, Chief Accounting Officer; Jeffrey
Wilson, VP Engineering (former Managing Senior VP of Ryder Scott; and
Tom Barr (former Reserve Engineer at Cawley Gillespie).
“Leveraging the experiences of the team from Tall City Exploration and
our other notable staff members has helped jump start our company,
allowing us to immediately acquire significant acreage and commence
drilling this month. We plan to run two rigs one month after the
company’s official funding,” said Mr. Magoto. “Oaktree’s funding
represents an exciting step forward in our goal to build an enterprise
in excess of 100,000 acres and to drill sufficient horizontal wells to
‘prove-up’ some 1,500 locations.”
Charger utilized the investment banking services of Jefferies in this
transaction. “Jefferies did an excellent job of exposing our management
team to a wide range of capital sources and ultimately provided the
optimal partner in Oaktree,” said Mr. Magoto.
About Charger
Charger is an oil and gas partnership with headquarters in Midland,
Texas and satellite offices in Houston, Texas. Charger’s primary focus
is to accumulate acreage in key prospective areas with multiple bench
targets in unconventional resource plays of the Permian Basin. Charger
adds value to this acreage by drilling sufficient horizontal wells to
demonstrate commercial viability of all the acreage with an inventory of
proved-undeveloped locations ready for a larger E&P company to cost
efficiently develop further.
About Oaktree
Oaktree is a leader among global investment managers specializing in
alternative investments, with $98 billion in assets under management as
of June 30, 2016. The firm emphasizes an opportunistic, value-oriented
and risk-controlled approach to investments in distressed debt,
corporate debt (including high yield debt and senior loans), control
investing, convertible securities, real estate and listed equities.
Headquartered in Los Angeles, the firm has over 900 employees and
offices in 18 cities worldwide. For additional information, please visit
Oaktree’s website at www.oaktreecapital.com.
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