Fulcrum Energy Capital Funds announces the closing of an acquisition by their newly formed portfolio company, Pachira Oil & Gas II.
The acquisition consists primarily of operated oil and gas assets including over 60 wells and 9,000 net acres of leasehold, which was previously owned by O’BENCO IV, LP. The assets were purchased at an attractive valuation through a §363 sale as part of O’BENCO’s Chapter 11 bankruptcy proceeding in Bankruptcy Court for the Eastern District of Texas.
Fulcrum anticipates the acquisition will generate immediate double-digit, unleveraged cash-on-cash returns through existing asset level free cash flow and expects to realize substantial upside available through capital-light operations optimization including cost reduction initiatives. This transaction, combined with the distressed valuation at which the assets were purchased, make the O’BENCO assets an ideal acquisition target that is consistent with Fulcrum’s value-oriented investment strategy.
Fulcrum’s President Brad Morse said, “Our firm has a successful history in investing in dislocated situations such as the O’BENCO IV LP acquisition, which is analogous the strategy employed in the firm’s acquisition of Nighthawk PLC’s assets through a bankruptcy process which occurred in July of last year. The industry conditions that helped create the opportunity Fulcrum has set out to capitalize on have persisted and become more entrenched.”
