Source: Hart Energy
The right frontman can make or break a band: imagine The Rolling Stones without Mick, Queen without Mercury or The Doors sans Morrison.
Oil and gas blank-check companies have apparently caught on to the wisdom of dropping a singular, magnetic name to draw in a crowd.
Silver Run Acquisition Corp. II (NASDAQ: SRUNU) is the latest blank-check or special-purpose acquisition company (SPAC) to cultivate a CEO who rocks the oil and gas world.
At center stage of Silver Run II’s SPAC is James T. Hackett, the well-respected former board chairman and CEO of Anadarko Petroleum Corp. (NYSE: APC), as CEO. Hackett also previously served as president and COO of Devon Energy Corp. (NYSE: DVN).
On March 24, Silver Run II’s IPO put the company’s value at more than $1 billion with commitments from banks and affiliates of Riverstone Holdings LLC—making it one of Wall Street’s largest SPAC’s.
Hackett is a partner at Riverstone, which is backing Silver Run II. The company’s IPO priced at $10 per share and closed at $10.36 on March 24. It started off 2017 with $225,000 in assets.
On its heels, Kayne Anderson Acquisition Corp. said March 27 it priced its SPAC units at $10 each, setting up a potential IPO of at least $350 million.
Like other blank-check companies, Silver Run raised the money without divulging what it might purchase, other than broadly saying it will target energy deals. Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Goldman, Sachs & Co. acted as underwriters of the Silver Run II IPO.
Silver Run II and similar ventures owe much of their success to the company’s predecessor: Silver Run Acquisition Corp. That company had its own superstar ringer at the helm: Mark G. Papa.
Papa, like Hackett, is a seasoned oil and gas pro and a Riverstone partner. Papa served as CEO of EOG Resources Inc. (NYSE: EOG) for 15 years. In February 2016, Silver Run Acquisition’s IPO raised $450 million with Papa as CEO.
Within a year, the company acquired Centennial Resource Production LLC (NYSE: CDEV) in the Southern Delaware and other acreage. The company’s market cap grew past $3 billion, igniting further interest in the model.
Papa’s success helped lead to KLR Energy Acquisition Corp.’s (NASDAQ: KLRE, KLREU, KLREW) launch with CEO Gary C. Hanna and CFO Tiffany J. (“T.J.”) Thom.
In March 2016, KLR Energy closed its IPO of 8 million units at $10 per unit, generating $80 million in gross proceeds with Thom running the company. Both executives previously rebuilt EPL Oil & Gas Inc. following a 2009 bankruptcy.
Hanna and Thom grew EPL from a $270 million E&P through its $2.3 billion sale to Energy XXI Ltd. (NASDAQ: EXXI) in 2014 for an 8.5x equity return.
In December, KLR’s SPAC announced that it would combine with Tema Oil and Gas Co., a private E&P with assets in the Delaware Basin core in Loving County, Texas.
The company, with a value of roughly $445 million, will change its name to Rosehill Resources Inc. upon closing the deal. Rosehill will hold 4,771 net acres in the Delaware Basin with 200 gross undrilled locations as of June 2016, the company said.
Hanna’s primary focus has been in the Midcontinent and U.S. Gulf of Mexico regions. Thom has also served as senior reservoir engineer for ExxonMobil Corp. (NYSE: XOM).
Kayne Anderson Acquisition Corp.’s may have a more midstream bent.
The company is led by Robert V. Sinnott, co-chairman of Kayne Anderson Capital Advisors LP, and CEO Robert S. Purgason.
Purgason has more than 35 years of experience in the energy industry, most recently serving as senior vice president for Access Midstream at Williams Cos. Inc. (NYSE: WMB).
Kayne Anderson said in regulatory filings that it intends to focus on deals in the energy industry and may pursue a target business in upstream, midstream or “any other sector within the energy industry.”
“Because we have not yet approached any specific target business, we cannot provide specific risks of any business combination,” the company said.
Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Credit Suisse are acting as joint book-running managers for the Kayne Anderson offering.
Darren Barbee can be reached at dbarbee@hartenergy.com.
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