Blackstone Energy Partners LP, a unit of New York private equity giant Blackstone (NYSE: BX), recently formed Jetta Permian LP, a partnership with Fort Worth, Texas-based Jetta Operating Co. Inc., a privately-held company owned by oil & gas expert operator Greg Bird. Jetta Permian will target assets and leasehold in the Delaware Basin located in West Texas and southern New Mexico with $1 billion of capital committed from Blackstone and Jetta’s partners.
“A commitment of this scale, and flexibility combined with Jetta’s deep technical expertise and a long-term focus on best-in-class operations and results enables and differentiates Jetta Permian to pursue creative and unique opportunities of scale within the Delaware basin,” the companies said in a statement. Jetta’s strategy includes pursuing asset and leasehold acquisition opportunities, farm-in transactions and partnerships or joint ventures with existing operators and landowners.
“We are excited to partner with Greg and the Jetta team to launch this new platform in the Delaware Basin. It is a great example of our focus on aligning ourselves with best-in-class teams, and providing them with significant long-term, patient and flexible capital to effectuate a focused and unique business plan,” said Blackstone senior managing director Angelo Acconcia, who oversees the firm’s investments in the oil and gas sector.
“We have known the Jetta team for a number of years, and have come to respect them as top-tier operators with a unique local presence in the Delaware Basin. We believe that Jetta Permian is well positioned to become one of the leading Delaware Basin pure-play companies and a partner of choice for those that are looking for someone to provide additional capital and operational resources to optimally develop their assets and / or leasehold,” Acconcia added.
“With a $1.0 billion equity commitment and with the collective resources of the Blackstone team to support the partnership, coupled with the Jetta team’s operating capabilities and track record, this will allow for and enable the strategic and successful acquisition and development of high quality oil and gas assets in the Delaware Basin,” said Greg Bird, CEO and president of the general partner of Jetta Permian. “We look forward to the challenges ahead and to applying our technical passion, experience, and diligence into creating a pure play Delaware Basin platform.”
Jetta Operating Co. is a privately held oil and gas company founded in 1991, which has been involved in over 30 acquisitions. Jetta has been an active participant in the recent growth of the Delaware Basin, developing the Delaware interval, Bone Spring and Wolfcamp reservoirs. Since acquiring its first leasehold in the Basin in 2003, Jetta has drilled approximately 150 wells, both horizontal and vertical, in the Delaware, along with the build-out of associated midstream gathering systems.
Blackstone Energy also recently formed Guidon Energy, an oil and gas partnership headquartered in Dallas, Texas, creating a platform company in the Midland Basin, which purchased 22,000 gross acres (16,000 net acres) in the core of Martin County, Texas, in April 2016.
Blackstone and veteran oil & gas operator Jay Still, who previously held senior executive positions with both Pioneer Natural Resources and Laredo Petroleum, formed Guidon in the first quarter of 2016 with the intent of building a significant, independent shale development company focused on the Midland Basin. Blackstone said it committed approximately $500 million of capital to Guidon with the potential to commit significantly more with future acquisitions.
“Blackstone’s successful and deep track record of investing in energy and in the oil and gas sector specifically, and its extensive industry relationships, in combination with the Guidon team’s operational capabilities and experience, will allow us to continue to optimally develop our properties and to be a long-term partner of choice in the Midland Basin,” said Still. “We are very pleased to have acquired a significant, strategic, and top-tier position in the core of the Midland Basin, a premier North American liquids-rich play, which was signed in the second quarter of this year and has subsequently closed.”
“We look forward to building upon our partnership with Guidon Energy through this acquisition and to continue to grow through future partnerships, joint ventures and acquisitions,” said Blackstone’s Acconcia.
“The partnerships underscore the industry’s interest in one of the few regions where drilling remains profitable at current prices. The Permian has dominated acreage deals among independent drillers this year. PDC Energy bought into the Permian with a $1.5 billion acquisition announced last week. Meanwhile Parsley Energy and Concho Resources also added holdings in the play this month,” said the Star Telegram.
The moves came as private equity firms Kayne Anderson Capital and Ridgemont Equity Partners are said to be exploring a sale of Dallas, Texas-based Silver Hill Energy Partners LLC, which has built a sizable and contiguous operated position in the core of the Delaware Basin in West Texas, through a series of strategic acquisitions and an aggressive leasing program. Silver Hill controls over 42,000 net acres in Loving and Winkler counties..
Blackstone is one of the world’s leading investment firms, with over $350 billion in assets under management. Blackstone Energy Partners has invested over $9 billion of equity globally across a broad range of sectors within the energy industry.
The West Texas Permian Basin – Midland vs Delaware Basins
The Permian Basin is a sedimentary basin largely contained in the western part of Texas and the southeastern part of New Mexico. It reaches from south of Lubbock, to south of Midland and Odessa, extending westward into the southeastern part of the adjacent state of New Mexico.
It is so named because it has one of the world’s thickest deposits of rocks from the Permian geologic period. The Permian Basin extends beneath an area approximately 250 miles (400 km) wide and 300 miles (480 km) long. The towns of Midland and Odessa serve as the headquarters for oil production activities in the basin.
The greater Permian Basin comprises several component basins: of these, Midland Basin is the largest, and Delaware Basin is the second largest.
The Delaware Basin is the largest of the two major lobes of the Permian Basin within the foreland of the Ouchita-Marathon thrust belt separated by the Central Basin Platform. The basin contains sediment from the Pennsylvanian, Wolfcampian, Leonardian, and early Guadalupian times. The eastward dipping Delaware basin is subdivided into several formations and contains approximately 25,000 feet (7,600 m) of laminated siltstone and sandstone. Aside from clastic sediment, the Delaware basin also contains carbonate deposits originating from the Guadalupian times when the Hovey Channel allowed access from the sea into the basin.
The westward dipping Midland Basin is subdivided into several formations and is composed of laminated siltstone and sandstone. The Midland Basin was filled via a large subaqeuous delta that deposited clastic sediment into the basin. Aside from clastic sediment, the Midland basin also contains carbonate deposits originating from the Guadalupian times when the Hovey Channel allowed access from the sea into the basin. (Ward, et. al., R.F. (1986). Upper Permian (Guadalupian) facies and their association with hydrocarbons-Permian basin, west Texas and New Mexico. AAPG Bulletin.)