Canonsburg natural gas company launches with $800M commitment
March 23, 2016
Paul Gough
Pittsburgh Business Times
A Canonsburg company started by a former Rice Energy executive and with up to $800 million in private equity backing from Apollo Global Management LLC is jumping into the oil and natural gas business in the Marcellus and Utica shales.
American Petroleum Partners LLC, which was founded in 2014, forged what it called a strategic partnership with Apollo in September 2015. The company is run by CEO Varun Mishra, who worked at EOG Resources and in the Barnett Shale before overseeing the technical team at Rice Energy. It said in a news release Wednesday that Apollo's funds could invest up to $800 million in acquisitions and development in Appalachia.
“We look forward to working with Apollo to build a low-cost, Appalachia-focused independent E&P business, taking advantage of the current market stress and low commodity price environment," said Mishra in a prepared statement. "The current APP team has the expertise and track-record to find and efficiently develop shale resources to create value for our partners including land owners. As a low-cost basin, we believe Appalachia will continue to grow as a source of domestic natural gas supply and provide an attractive environment for well-capitalized new entrants with strong operational expertise."
The announcement of the Apollo investment was first reported in Marcellus News. Spokesmen for both American Petroleum Partners and Apollo both declined further comment about the company Wednesday, and directed the Pittsburgh Business Times to the news release.
While many oil and natural gas exploration companies have been knocked around in the past year and a half due to low prices and oversupply, private equity firms and startups like American Petroleum Partners are taking a closer look and investing big into energy while the prices are low. Another Pittsburgh-region startup, Lola Energy in Wexford, announced late last year a $250 million funding commitment from Denham Capital. Lola is working toward leasing acreage and lining up production of natural gas in Greene County, Pa., south of Pittsburgh.
The privately held Apollo is a worldwide investment manager with $170 billion in investments under management.
"We are excited to partner with Varun and the rest of his team as we seek to build a first-rate oil and gas company capable of low cost development of the prolific Marcellus and Utica shales," said Apollo Partner Rakesh Wilson in a statement. "We believe that APP has the experience to find attractive assets and develop them with the latest, low cost drilling and completion technology."