LEOR ENERGY CLOSES SIGNIFICANT EQUITY TRANSACTION
Transaction to accelerate the development of the Amoruso Field
HOUSTON — (May 9, 2006) — Leor Exploration & Production LLC, the parent company of Leor Energy L.P., announced today that it has closed a $45 million private placement of equity securities with Goldman Sachs Principal Strategies Group, a unit of Goldman Sachs & Co. (NYSE: GS). Prior to closing the equity private placement with Goldman Sachs, Leor sold $30 million of senior secured promissory notes to Amaranth Partners LLC, a private investment fund manager.
Leor expects to use the bulk of the proceeds from the equity transaction to accelerate ongoing development of the Amoruso Field,* the company's flagship natural gas exploration and development asset in east Texas. Leor, which owns a 70 percent working interest in the approximately 45,000-acre field, is jointly developing the field with EnCana Oil & Gas (USA) Inc., a subsidiary of EnCana Corp. (NYSE: ECA), the operator of the project. Leor expects to have six rigs running and 16 wells producing in the basin by the end of the year.
The company’s activities in the Amoruso Field target the Deep Bossier sands and other potential gas-bearing formations. The field is located in Robertson County, Texas, and is contiguous to and shares geological properties with the Savell Field, a major natural gas reservoir currently producing more than 200 million cubic feet per day, according to public data from ConocoPhillips. The Savell Field was discovered by Burlington Resources, which was recently acquired by ConocoPhillips.
"Leor is delighted to have Goldman Sachs as an equity participant. Goldman Sachs' investment provides not only additional capital, but also additional strategic depth and flexibility with which to execute our business plan," said Leor CEO Guma L. Aguiar. "Over the next few months, we'll continue to work to confirm what we believe is a massive reservoir of tight, unconventional natural gas on our acreage. Our alliance with Goldman Sachs nicely complements our relationship with EnCana, one of the premier names in natural gas exploration and production worldwide."
In conjunction with the investment, Gaurav Bhandari, a managing director of Goldman Sachs Principal Strategies Group, has joined Leor's board.
"Gaurav's investment expertise and financial acumen provide an additional dimension to the Leor management team," said Thomas S. Kaplan, Leor's Chairman. "We view Goldman Sachs' decision to include a senior representative on Leor's board as a strong vote of confidence in our growth strategy. It also closely aligns us strategically with one of the finest financial institutions in the world." Kaplan, who co-founded Leor with Aguiar, is the former chairman and CEO of Apex Silver Mines Ltd.
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About Leor Energy
Leor Energy L.P. is engaged in the acquisition, development, exploitation and marketing of oil and gas properties. Based in Houston, Leor is one of the fastest-growing privately-held exploration and production companies in the United States. In 2003, Leor Energy entered into a joint venture arrangement with Legends Exploration to pursue unconventional North American oil and gas plays including the Deep Bossier in Robertson County. Over the ensuing two years, Leor entered into leases covering approximately 38,000 gross acres in Robertson County. In July 2005, Leor entered into a joint venture arrangement with a U.S. subsidiary of EnCana Corporation that provided EnCana an opportunity to earn a working interest in Leor’s acreage by drilling and completing a certain number of wells to certain minimum depths
* Application filed to designate Leor's Robertson County field as "Amoruso Field."
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