• Sector: Energy
  • Geography: United States
  • Stage: Mature
  • Investment Year: 2016
  • Website Link

Terra Energy Partners

In 2016, Warburg Pincus partnered with Kayne Anderson to back Terra Energy Partners (“Terra”), a start-up E&P company focused on low risk, low decline natural gas assets with operational and development upside in established onshore basins. That same year, Terra acquired the Piceance Basin assets of WPX Energy, a premier brownfield position generating significant free cash flow. Warburg Pincus was instrumental in this competitive auction process, helping Terra secure fully-underwritten financing against a difficult macro backdrop. This ultimately differentiated the company and helped Terra negotiate an attractive purchase price that ascribed no value to the sizeable inventory of economic drilling locations. In the years following the acquisition, Terra has managed to hold production flat while driving per-unit lease operating expenses and drilling and completion costs down by approximately 30% and 10%, respectively. Strong, consistent performance coupled with a robust hedge book has enabled the company to generate significant cash flow and return capital to shareholders despite weak natural gas prices. Warburg Pincus has been critical in Terra’s development since its founding, adding significant value through the complicated carve-out process, capital markets activity, asset evaluations and negotiations, and ongoing monitoring and evolution of the operating plan.

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