Business Description: Henderson & Erickson is a leading developer and operator of high-quality, high capacity strategically located Class II licensed salt water disposal well facilities in the Permian Basin. The transaction included seven operating wells, multiple permits and surface leases related to future development projects and various over-riding royalty interests.
Challenge: The owners had additional salt water disposal assets they desired to develop, however, capital was limited. We determined that partnering with a large capital provider specializing in the energy sector could provide the necessary support for future development.
There were five primary complexities to overcome as it related to deal execution: (1) managing the agendas of approximately 110 different owners, (2) structuring a transaction that fairly attributed value to each asset and each owner – each asset was owned separately among individual groups of investors, (3) allowing for future upside value realization opportunities via contingent payments, (4) negotiating reasonable non-competition provisions, and (5) maintaining deal momentum during one of the worst oil and gas industry downturns.
Transaction Solution: The owners engaged Wilcox Swartzwelder & Co. to broadly test the market with both private equity groups and strategic buyers. Over a three year period, WS&Co solicited interest from a number of qualified parties and negotiated favorable terms with On Point Energy Partners (“OP”), which has a partnership with White Deer Energy (“WDE”), a large energy focused private equity group. The Henderson & Erickson team will remain as consultants to OP with the opportunity to invest at their option.
Transaction Demonstrates: Another example of Wilcox Swartzwelder & Co.’s deep energy industry knowledge, creativity, transaction execution expertise and patience.
Wilcox Swartzwelder & Co. provides energy investment banking in Midland / Odessa, Texas.