Mexico's Only Oil Champs Backed by Riverstone, BlackRock Money

(Bloomberg) -- Sierra Oil & Gas, poised to become Mexico’s first private crude producer in seven decades, has never drilled a well.

What it does have going for itself is money -- from New York financiers, a co-owner of the Houston Astros and a Mexican firm being bought by BlackRock Inc.

With Sierra, the only winning bidder in the first oilfield auction since the country scrapped a state monopoly, Mexico gets exactly what it was looking for: an infusion of foreign capital to help reverse a 10-year decline in crude output.

“They have nice funding, and their team has great experience,” said Eduardo Canales, an energy lawyer in Houston at Akin Gump Strauss Hauer & Feld. “They’ll be the ones to build relationships with the government and generally manage the project.”

Sierra, while incorporated domestically, has $450 million from two U.S. private-equity firms, Riverstone Holdings and EnCap Investments. It also has $75 million from a Mexican company that’s being acquired by BlackRock, the New York-based fund manager. Its Venezuelan chief executive officer is a former oil analyst at Merrill Lynch & Co.

Riverstone’s founders are two former Goldman Sachs Group Inc. investment bankers, and EnCap is co-led by Gary Petersen, who has minority stakes in the Astros baseball team and the National Football League’s Houston Texans.

All Alone

Sierra won the oil blocks -- just off the Gulf of Mexico coast -- in a joint bid with London-based Premier Oil Plc and Houston-based Talos Energy. For the most sought-after block, the group offered the government a production cut of as much as 88 percent, narrowly beating out the offer from Norway’s Statoil ASA.


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