Private Equity - Another Permian Asset For Sale

Warburg Pincus and the Ontario Teachers’ Pension Plan (OTPP) are exploring a sale of Chisholm Energy, an oil and gas exploration and production company focused on the Permian Basin

Why its Happening?

• National sovereign funds, private investors, investment banks are under pressure to sell the high risk assets
• Companies have been looking to sell the assets that have high break-even costs and high emissions/bbl
• The oil prices and private equity markets were down since last 18 months, but have increase 50% this year
• Private equity market and M&A has become active offering good time to off load assets
• This also offers opportunity to pure resource players, to buy assets where they can create value efficiently
• 'Pure Resource player' specialize in reducing cost and produce with low carbon foot print
• Permian has great potential and great financial reward; however the producers have not managed Methane emissions well given a bad rap to the industry! Methane leakages have trebled in last three years.

Buyout firms are seeking to use the positive market backdrop to offload past investments are helping to fuel the dealmaking boom.