Royal Offshore has closed on a $350 million equity commitment from Avista Capital Partners, EnCap Investments and the Royal Group for the exploration and development of oil and natural gas resources in the Gulf of Mexico. Royal Offshore, led by Scott Smith and Bill Gregorcyk, controls interests in over 55 shallow and mid-water Gulf of Mexico leases which the company intends to aggressively develop over the next several years.
Royal Offshore has been operating in the Gulf Coast region for over 30 years and in the Gulf of Mexico for over 10 years," said J. Scott Smith, Chief Executive Officer of Royal Offshore, LLC. "We believe we have assembled an attractive portfolio of properties in the Gulf of Mexico in terms of exploration potential and scale. We are extremely excited to partner with Avista and EnCap, two of the most reputable and experienced energy private equity providers, as we explore and develop our Gulf of Mexico properties."
The Royal Group is contributing over 55 leases in the Gulf of Mexico plus all seismic data and prospects to the venture. Avista and EnCap will each be contributing $122.5 million, with the Royal Group and management together contributing the remaining $105 million.
Steven Webster, Co-Managing Partner of Avista, said, "We are pleased to have the opportunity to partner with the Royal Offshore management team, who have a long and successful track record of developing oil and natural gas both onshore and offshore in the Gulf Coast region and the Gulf of Mexico. We continue to believe that the offshore Gulf of Mexico represents an attractive opportunity given the ongoing asset transition in the area and that the short reserve lives can generate high returns and quick payouts. Royal controls an attractive inventory of properties."
Gary Petersen, Partner of EnCap, added, "Scott and Bill are proven operators and have assembled an experienced management team that is well equipped to handle the challenges of operating in the Gulf of Mexico. They have an impressive track record of creating shareholder value, and we are extremely pleased to support them in this new venture."
Stephen R. Patchin, President and CEO of Royal Holding Company, Inc., the parent company of all Royal entities, said, "The Royal Group is pleased to enter into a partnership with Avista and EnCap who we consider to be the premier providers of equity capital to the independent oil and gas industry. Their additional equity will allow our exploration program to dramatically accelerate our reserve growth."
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