As the price of oil slips, energy stocks struggle, and the labour market tightens, two American private equity firms have invested in a new player in Alberta’s oil patch.
Warburg Pincus LLC and Kayne Anderson Capital Advisors LP have thrown an undisclosed amount of money into West Valley Energy Corp., a start-up led by a team of oil and gas veterans in Calgary. The new outfit plans to chase after “quasi-conventional” and “quasi-tight oil” plays in the southern half of Alberta.
“It is tough slugging right now in the business, obviously, both for private and public companies,” Amar Pandila, West Valley’s chief executive, said in an interview. That, however, is not enough for him to shy away from putting drills in the ground.
“It is always a wonderful time to start a company because it would be a horrible time to try to sell on right now.”
West Valley hasn’t collected any assets yet, but Mr. Pandila said they are interested in land stretching from the Devonian all the way up to the Cretaceous formations. The company is privately held, and the new investors are now its majority shareholders.
West Valley’s executives and directors have experience launching and selling energy companies, as well as working at senior positions at established firms. Their resumes include EOG Resources Inc., Encana Corp., Cenovus Energy Inc., OPTI Canada Inc., Harvest Operations Inc., and law firm Burnet Duckworth & Palmer LLP. Further, a number of the top managers and board members have worked together before.
Shaun James, who joined Mr. Pandila to pencil out the idea for West Valley, will serve as chief operating officer, and Travis Beatty will crunch the numbers as chief financial officer. Other notables include Mike Graham, who in February left his post as executive vice president and head of Encana’s Canadian division. West Valley put together the majority of its team before it went searching for deep-pocketed investors.
New York’s Warburg Pincus has invested in six other Canadian energy companies -- Black Swan Energy, Canbriam Energy, Endurance Energy, Osum Oil Sands, Velvet Energy, and MEG Energy Corp., which is public. The firm has more than $35-billion in assets under management, and has invested $6-billion in energy companies over the past 20 years. Warburg Pincus snagged two of West Valley’s eight board seats.
Kayne, with headquarters in Los Angeles, has $15-billion in assets under is belt, and has $3.1-billion in committed capital earmarked for exploration and production oil and gas companies. It now has one seat on West Valley’s board.
Warburg Pincus, Kayne, and West Valley disclosed their investment deal in a statement Tuesday.