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May 23, 2022

Private equity firms explore $2.5bn divestment of Terra Energy Partners

Backed by Kayne Anderson and Warburg Pincus, Terra holds 370,000 net acres that produce approximately 530MMcf/d.

Private equity firms Kayne Anderson Capital Advisors, and Warburg Pincus are considering selling Terra Energy Partners for approximately $2.5bn, including debt, reported Reuters, citing people familiar with the matter.

The buyout companies, with the help of an undisclosed investment bank, have initiated a tender process earlier this month to sell their majority stake in the oil and natural gas exploration and production company.

There is no certainty over the deal’s price or when the agreement would be signed, according to the sources.

Formed in 2015, US-based Terra is engaged in gas production in the Piceance Basin, in Colorado. It holds 370,000 net acres that produce approximately 530 million cubic feet of gas per day (MMcf/d).

Terra is focused on the acquisition and development of large producing oil and gas assets in North America.

In 2016, Terra acquired WPX Energy for nearly $910m. As part of the deal, Terra secured an increased equity commitment from Kayne Private, and an equity commitment from affiliates of new the investor Warburg Pincus. 

This increased Terra’s equity commitment to $800m, with Kayne and Warburg Pincus as equal partners.

In April 2022, Warburg Pincus was looking to sell its portfolio company RimRock Oil & Gas to capitalise on surging commodity prices, reported Reuters, citing three people familiar with the matter.

In a similar move earlier this year, Caerus Oil and Gas, which is owned by Anschutz Investment, Oaktree Capital Management, and Old Ironsides Energy, was considering the sale of the business, according to Reuters.

The private equity-owned natural gas producer expects a potential sale to value it at more than $2.5bn, including debt.

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