Joint Venture: York Capital forms drillco JV with Bayswater for DJ Basin

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[Context: Bayswater signs drillco arrangement with York Capital affiliate York Tactical Energy Fund to drill up to 63 DJ Basin horizontals. York Tactical is managed by Millenial Energy Partners. Further details, advisors and related links are below.]


BAYSWATER  | YORK CAPITAL

Bayswater Resources Fund III and York Tactical Energy Fund Form Joint Venture; JV to Invest in DJ Basin Development Program

HOUSTON–December 09, 2019–(BUSINESS WIRE)–Bayswater Resources and Bayswater Natural Resources Fund III (collectively, “Bayswater”) and the York Tactical Energy Fund, through its structured development capital strategy, YTEF Drilling Capital, LLC (collectively, “YTEF”), announced today that they have formed a strategic joint venture. Under the terms of the agreement, YTEF has committed to fund an undivided portion of up to 63 horizontal oil and gas wells located on six well pads for the development of Bayswater’s flagship Weld County, Colorado acreage position located in the volatile oil window of the DJ Basin.

“The Joint Development Agreement with YTEF allows us to efficiently maximize our capital deployment and continue to aggressively develop our core Wattenberg holdings. The deal provides a synergistic alignment of interests and we are excited about the partnership and look forward to working with the YTEF team.”

The investment will fund the drilling and completion of the joint wells targeting the oil-rich Niobrara A, B, C and Codell stacked-pay intervals in accordance with a mutually agreed development plan. In exchange for funding a portion of the capital expenditures required to develop the joint wells, YTEF will receive an assignment of working interests entitling YTEF to receive a portion of the revenues from such wells. The joint wells are anticipated to be drilled and completed through the fourth quarter of 2020. YTEF anticipates that it will fund up to $125 million of capital expenditures relating to its participation in the joint wells.

Drew Scoggins, Managing Partner of Millennial Energy Partners (“MEP” or “Millennial”), the asset manager of YTEF, stated, “The partnership with Bayswater represents YTEF’s inaugural investment in the DJ Basin, which we believe offers some of the most compelling and repeatable drilling opportunities in the U.S. Bayswater has an impressive track record of drilling and investing in Colorado. Additionally, as strong believers in environmental and stakeholder stewardship, we were impressed by Bayswater’s proven commitment to prudent and safe operations.”

Steve Struna, President and CEO of Bayswater, noted, “The Joint Development Agreement with YTEF allows us to efficiently maximize our capital deployment and continue to aggressively develop our core Wattenberg holdings. The deal provides a synergistic alignment of interests and we are excited about the partnership and look forward to working with the YTEF team.”

Matthew Bonanno, Partner and co-head of North American Credit at York Capital Management, added, “In today’s energy market we recognize the opportunity to provide highly-customized financing solutions as operators look for alternative sources of capital to develop their assets, and we believe the Bayswater JV represents a win-win for both parties. This investment in the DJ Basin combines YTEF’s capital markets structuring and technical strength and adds to our existing portfolio of energy investments. We are excited about our partnership with Bayswater and look forward to working with their team to develop this world class asset.”

Willkie Farr & Gallagher LLP served as legal advisor to YTEF on the transaction. Brownstein Hyatt Farber Schreck served as Colorado regulatory counsel to YTEF.

About Bayswater

Founded in 2004, Bayswater is a Denver based Oil and Natural Gas development company with projects principally in Colorado, Texas, and Wyoming. Bayswater is privately held and has been a principal in a series of institutional energy funds since 2010. Bayswater is a responsible energy developer and continuously strives to conduct its business without accident, without harm to people, and without damage to the environment.

About YTEF

YTEF is a private investment fund led by investment professionals at York Capital Management in partnership with MEP. YTEF was formed in December 2018 to pursue private middle-market opportunities in the global energy sector through a variety of investment strategies.

About York Capital Management

York Capital Management is a global private investment firm that was established in 1991. The firm manages approximately $18 billion in assets across public and private investment strategies, including its private equity platform, the York Special Opportunities Fund. York Capital employs approximately 60 investment professionals and 200 employees globally, primarily in New York, London and Hong Kong.

About Millennial Energy Partners

MEP is an energy asset management firm led by Drew Scoggins, William H. Goodwin, David Loveday and Clay Brett that manages a portfolio of operated, non-operated and financial assets in the oil and gas upstream and midstream sectors on behalf of York. MEP was founded in 2012 and has financed the development of and taken direct ownership in assets in major basins throughout the continental United States, Gulf of Mexico and North Sea. MEP is based in Houston and has 13 employees.