?Corpus Christi, Texas-based Royal Offshore LLC has closed a $350-million equity commitment from New York-based private-equity firm Avista Capital Partners, Houston-based private-equity provider EnCap Investments LP and the Royal Group to fund an E&P venture in the Gulf of Mexico.


Royal Offshore is led by chief executive Scott Smith and Bill Gregorcyk and controls interests in more than 55 shallow and mid-water Gulf of Mexico leases.


Houston-based energy investment-banking firm Parkman Whaling LLC advised Royal Offshore in its formation.


Smith says, “Royal Offshore has been operating in the Gulf Coast region for over 30 years and in the Gulf of Mexico for over 10 years. We believe we have assembled an attractive portfolio of properties in the Gulf of Mexico in terms of exploration potential and scale. We are extremely excited to partner with Avista and EnCap, two of the most reputable and experienced energy private-equity providers, as we explore and develop our Gulf of Mexico properties.”


The Royal Group is contributing over 55 leases in the Gulf of Mexico plus all seismic data and prospects to the venture. Avista and EnCap will each be contributing $122.5 million, with the Royal Group and management together contributing the remaining $105 million.
Avista co-managing partner Steven Webster says, “We are pleased to have the opportunity to partner with the Royal Offshore management team, who have a long and successful track record of developing oil and natural gas both onshore and offshore in the Gulf Coast region and the Gulf of Mexico. We continue to believe that the offshore Gulf of Mexico represents an attractive opportunity given the ongoing asset transition in the area and that the short reserve lives can generate high returns and quick payouts.”


EnCap partner Gary Petersen says, “Scott and Bill are proven operators and have assembled an experienced management team that is well equipped to handle the challenges of operating in the Gulf of Mexico. They have an impressive track record of creating shareholder value, and we are extremely pleased to support them in this new venture.”


Stephen R. Patchin, president and chief executive of Royal Holding Co. Inc., the parent company of all Royal entities, says, “The Royal group is pleased to enter into a partnership with Avista and EnCap who we consider to be the premier providers of equity capital to the independent oil and gas industry. Their additional equity will allow our exploration program to dramatically accelerate our reserve growth.” SP