MIDLAND, Texas–(BUSINESS WIRE)–Charger Shale Oil Company, LLC (“Charger”), an oil and gas partnership headquartered in Midland, Texas, and funds managed by Oaktree Capital Management, L.P. (“Oaktree”) today announced their recently formed joint venture focused in the Permian Basin. Oaktree has pledged $600 million in an initial equity commitment with an additional $300 million runway commitment.
Prior to funding, Charger secured more than 40,000 acres in the Delaware Basin using capital sourced from management and key strategic investors. Charger has since closed on the initial acreage and has development plans to expand to over 85,000 acres. At full development, the partnership is targeting over 100 horizontal well locations across multiple horizons.
Charger is led by several key executives previously employed by Tall City Exploration (“TCE”). TCE acquired and developed more than 34,500 core acres (and another 48,000 prospective acres) utilizing $245 million of capital. TCE sold these assets for $1.2 billion in two transactions in 2014 and 2015. TCE’s use of advanced geological, petrophysical and engineering techniques to mitigate the risk of exploring beyond the traditional core boundary of the Wolfcamp play in the Midland Basin made this increase in value possible.
Joseph Magoto, former President of TCE and current CEO and President of Charger, was deeply involved in the development and sale of TCE assets. Under Mr. Magoto’s guidance, Charger intends to utilize the expertise of many former TCE executives, including: Darryl James, VP Geology; Doug Scott, Chief Petrophysicist; and John Stewart, Geology Computer Specialist. Other members of the executive staff include Chuck Lundeen, VP Land and Legal (former Head Landman at Devon Energy); Craig Young, VP Drilling/Operations (former Head of Drilling in the Permian Basin and Eagle Ford for EOG); Bob Bintliff, Chief Accounting Officer; Jeffrey Wilson, VP Engineering (former Managing Senior VP of Ryder Scott; and Tom Barr (former Reserve Engineer at Cawley Gillespie).
“Leveraging the experiences of the team from Tall City Exploration and our other notable staff members has helped jump start our company, allowing us to immediately acquire significant acreage and commence drilling this month. We plan to run two rigs one month after the company’s official funding,” said Mr. Magoto. “Oaktree’s funding represents an exciting step forward in our goal to build an enterprise in excess of 100,000 acres and to drill sufficient horizontal wells to ‘prove-up’ some 1,500 locations.”
Charger utilized the investment banking services of Jefferies in this transaction. “Jefferies did an excellent job of exposing our management team to a wide range of capital sources and ultimately provided the optimal partner in Oaktree,” said Mr. Magoto.
Charger is an oil and gas partnership with headquarters in Midland, Texas and satellite offices in Houston, Texas. Charger’s primary focus is to accumulate acreage in key prospective areas with multiple bench targets in unconventional resource plays of the Permian Basin. Charger adds value to this acreage by drilling sufficient horizontal wells to demonstrate commercial viability of all the acreage with an inventory of proved-undeveloped locations ready for a larger E&P company to cost efficiently develop further.
Oaktree is a leader among global investment managers specializing in alternative investments, with $98 billion in assets under management as of June 30, 2016. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide. For additional information, please visit Oaktree’s website at www.oaktreecapital.com.