Osprey Petroleum Partners LP, a new exploration and production company based in Houston that is about a year old, has closed its first financing that was not provided by its parent company, Orient Petroleum. The $28.4-million mezzanine financing was arranged by Weisser, Johnson & Co., the Houston and New York capital intermediary and advisor. The package, which is in the form of a privately arranged senior credit facility with an overriding royalty interest, will enable Osprey to fund its share of a 50-50 joint venture with Unocal for exploration offshore Texas in shallow waters. "Mezzanine-type financing seems to be particularly strong now and private equity seems less so," says Scott Johnson, partner in Weisser Johnson in Houston. "Times are really good, but investors are worried that they are buying at the top. It is also hard to get a match because companies don't want to raise money at low valuations. For another thing, most companies have strong cash flow right now. They do not need private funding and are not desperate for money, so they can be choosy [as to the type of funding they pursue]." Johnson says that some of the smaller-cap companies still do need financing on a project basis, but "the big boys have more money than they know what to do with." Osprey used the funds to acquire properties in the shallow waters offshore Texas that were formerly operated by Forcenergy, which has merged with Forest Oil Corp. It also acquired a large set of 3-D seismic data from PGS and is using that data to develop exploratory prospects. At press time, one rig was drilling the first of four wells, but Osprey has some 30 prospects worked up on the properties.
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