Davis Petroleum Makes $150 Million Recapitalization Deal

Houston-based Davis Petroleum has reached an agreement with a private equity group to recapitalize the company.

The agreement will provide Davis with ample capital resources to continue its oil exploration and production (E&P) business.

Under the terms of the agreement, the private equity group led by Evercore Capital Partners (ECP) and management of the company will purchase all of the equity of Davis Petroleum, Davis Offshore, and Davis Pipeline, which comprise Davis Petroleum Corp., for approximately $150 million. The private equity group includes Red Mountain Capital Partners and Sankaty Advisors, an affiliate of Bain Capital.

After the transaction is completed, the three Davis companies will continue to operate with the same corporate names and management teams. John T. Dillon, Evercore Vice Chairman and former Chief Executive Officer and Chairman of International Paper, will join Davis' board. James R. Montague, former head of International Paper's oil and gas business, will become non-Executive Chairman of Davis.

To facilitate the transaction, Davis has filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, along with a prepackaged plan of reorganization providing for the company's emergence from Chapter 11. While a sale of the company outside of Chapter 11 requires 100% shareholder approval, only two-thirds shareholder approval is needed in a Chapter 11. The plan of reorganization has received the support of the required number of Davis shareholders. The Company has requested a March 9 hearing to confirm the plan.

"We are pleased to have Evercore, Red Mountain, and Sankaty as our partners going forward," said Gregg Davis, President and C.E.O. of Davis. "The new capital will allow our premier teams of oil and gas professionals to expand our reserves across areas of operation, and Evercore's involvement will enable us to strengthen our position as one of the most innovative oil and gas E&P companies in the U.S."

"Davis Petroleum has a storied history and a proven management team that, with the right capital structure in place, will enable the Company to continue its success in the exploration, discovery and development of its onshore properties as well as bring into production its recent offshore finds in the Gulf of Mexico," said Austin Beutner, Co-Chief Executive Officer of Evercore. "ECP has made a number of successful energy investments, particularly in the oil and gas E&P sector. We look forward to applying our expertise and insight to help Gregg and his team build on Davis Petroleum's success and capitalize on the exciting growth opportunities before it."

"This transaction structure is the best alternative available to Davis Petroleum," said Davis. "Upon completion of the recapitalization process in just a few weeks, all creditors will be paid in full, we will have a strong balance sheet, and ample liquidity to complete development of our Gulf of Mexico projects and continue growth in our onshore regions of operation." He noted that as a part of the agreement, ECP has committed to infuse additional capital into the company going forward.

Davis emphasized that the company's employees, suppliers, drilling partners, and customers should not notice any difference in operation during the recapitalization process, which is expected to be completed in just a few weeks.

The Company filed its voluntary Chapter 11 petitions and plan of reorganization in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.


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