Hedge fund Angelo Gordon & Co. LP aims to raise as much as $1.5 billion to buy the debt of distressed oil and gas companies, according to a person familiar with the matter and an investor presentation viewed by Reuters.
The U.S. shale boom, financed by access to cheap capital, is drying up as weak oil and gas prices and investors' reluctance to refinance debt has companies cutting production and some seeking protection from creditors. U.S. output is expected to fall as much as 2 million bbl/d this year.
The Angelo Gordon fund will be called AG Energy Credit Opportunities Fund IV LP and will seek to acquire distressed debt in the oil exploration and production, pipeline and services sectors, according to a presentation seen by Reuters.
Todd Dittmann, head of energy at the $38 billion company, will manage the fund, which will pursue senior secured loans and discounted reserve-based loans, the presentation showed.
Dittmann and an Angelo Gordon spokeswoman declined to comment.
If Angelo Gordon completes the fundraising, it would be the firm's second this year to target the debt of struggling companies. In February, it completed a $1.8 billion fundraising that had its initial closing in July 2019.
Though specific terms of the transaction were not disclosed, Empire Pipeline said in a statement on June 25 it acquired the Gibson termianl from affiliates of Royal Dutch Shell.
The agreement calls for Hilcorp to pay $4 billion to BP over an unspecified time, with the remaining $1.6 billion based on future earnings from the Alaskan properties.
Activist investor Elliott Management offered to buy oil and gas producer QEP Resources in an all-cash deal valued at $2.07 billion, saying that the company is "deeply undervalued."