Development Capital Resources LLC (DCR) formed a multibillion-dollar Permian Basin joint venture (JV) set to deploy capital in the bountiful Wolfcamp shale play.
On June 19, DCR said it had agreed to invest up to $165 million in the JV for the drilling and development of the Permian’s Wolfcamp formation. As part of the agreement with an unnamed private operator, the company will participate in the JV as a working interest owner.
Backed by Ares Management Corp., DCR focuses on participating in nonoperated JVs throughout the North American E&P industry. At the time of its formation in 2017, President and CEO Ronnie Scott said DCR, which has offices in Houston and Midland, Texas, had a “substantial amount of capital available” for investments that included but weren’t limited to drilling JVs, nonoperated working interests and royalty participation.
Demand for drilling JVs—also known as Drillcos—has been growing thanks to the recent lack of more traditional sources of capital for publicly traded operators. Most recently, Houston-based Glendale Energy Ventures LLC landed an initial $500 million in capital commitments to fund nonop acquisitions across the U.S.
In a statement on June 19, Scott said: “As the structure of energy joint ventures continues to evolve, DCR has worked to remain flexible in finding ways to assist operators to improve and develop their assets.”
DCR’s latest transaction is its fourth nonop partnership since forming, noted the company’s COO Matt Loreman.
According to the company website, DCR is also currently managing another JV in the Permian Basin as well as partnerships in Oklahoma’s Stack Play and the San Joaquin Basin in California. Partnering operators include Endeavor Energy Resources and California Resources Corp.
“In each case, we have been able to structure a creative solution tailored to the needs of the operator,” Loreman said in a June 19 statement.
The four transactions representing more than $1.3 billion in capital, according to the company press release.
DCR claims to be commodity and basin agnostic. Additionally, the company said its team has experience with conventional and unconventional assets in almost every major producing region of North America.
Scott, who has over 30 years of experience in the oil and gas industry, previously led private-equity backed True Oil Co. as its CEO and president. He also has served as president and COO of Henry Petroleum and its successor companies. Scott began his career with Exxon Corp. holding various supervisory and managerial assignments.
As for Loreman, he previously served as managing director in Evercore’s Oil & Gas Advisory group in Houston. Prior to Evercore, he worked in the natural resources investment banking group of J.P. Morgan.
Loreman said although the energy investment space remains challenging, the company will focus on continuing to grow its portfolio of nonoperated partnerships by finding “investment solutions that work for [operators] and for DCR.”
DCR’s latest partnership covers the drilling and completion of identified drilling locations targeting the Wolfcamp formation in the Permian Basin. The company said the drilling has already begun and the program is anticipated to continue through 2020.
Late last year, the U.S. Geological Survey (USGS) revealed a new study of the Permian Basin’s Wolfcamp and overlying Bone Spring Formation that identified them as the “largest continuous oil and gas resource ever assessed.”
In total, the USGS estimates the Wolfcamp Bone Spring formations in the Delaware Basin portion of the Permian contain an estimated 46.3 billion barrels of oil plus 281 trillion cubic feet of gas and 20 billion barrels of NGL.
Latham & Watkins represented DRC in the transaction led by partner Stephen Szalkowski. Meanwhile, the private operator in DCR’s JV was advised by Kirkland & Ellis LLP. The Kirkland team was led by partner David Castro.
Emily Patsy can be reached at email@example.com.
2022-05-13 - Black Bay is a private equity firm based in New Orleans focusing on investments in the North American energy sector requiring up to $30 million of equity capital.
2022-04-21 - Led by industry veteran Doug Dormer, Cardinal Midstream Partners is focused on natural gas gathering and processing and congruent carbon capture and sequestration acquisition and development opportunities across North America.
2022-05-09 - The $300 million commitment announced May 3 is the fourth EnCap Flatrock growth equity commitment to Rangeland Energy companies, bringing the total to $900 million since Rangeland’s formation.
2022-04-15 - Molecules need to reach markets for owners or operators to make money.
2022-04-19 - Midstream companies can “green up” by installing the necessary equipment to produce power from waste heat while using the recently enacted federal tax credit to reduce the associated capital costs.