Blackstone in $1.2bn Gulf of Mexico deal

The oil and gas strategic partnership struck with LLOG is said to be the largest such private equity financing executed in the region.

The Blackstone Group has formed a strategic partnership with one of the largest oil and gas companies operating in the Gulf of Mexico.

The New York-headquartered firm has teamed up with LLOG Exploration Company, a US oil and gas company, to invest over $1.2 billion to grow the company’s operations in the Gulf of Mexico. The deal represents the largest private equity financing executed in the region, Blackstone said in a statement.

“I believe that with our deep technical and operations team, experience and assets in the Gulf of Mexico combined with Blackstone’s team, extensive capital resources, oil and gas expertise and industry resources, we will be able to take our business, activity levels and assets to the next level,” Scott Gutterman, LLOG’s chief executive, said in the statement.

“We evaluate many potential investments in the energy sector but choose only a small number each year to pursue that we believe represent a combination of the most exceptional management teams and large-scale opportunities to create value; LLOG is a great example of this,” David Foley, chief executive of Blackstone Energy Partners, said in the statement.

LLOG’s operational and financial resources together with capital provided from the Blackstone funds will be used to further develop LLOG’s four recent deepwater discoveries. It is unclear how much of the $1.2 billion will be provided by Blackstone.

Blackstone could not be reached at press time.

Blackstone's current energy investments are funded by its $2.5 billion Energy Partners Fund, a 2011 vintage, which targets investments in the energy sector, as well as its $16.19 billion Blackstone Capital Partners IV, a 2008 vintage with a global remit. The two vehicles have so far allocated $5 billion of equity to energy deals, having built a portfolio that includes Alta Energy, GeoSouthern Energy Corporation, Kosmos Energy, OSUM Oil Sands and Royal Resources.

Numerous firms target North American energy deals. Some recent examples include Apollo Global Management's $7.15 billion deal in May with Riverstone Holdings and other investors to acquire EP Energy, a North American oil and gas producer, and Natural Gas Partners' formation of a new oil and gas exploration and production company to acquire assets in the Gulf of Mexico.