Texas Energy Explorer Covey Park Said to Be Exploring a Sale

  • Denham-backed Covey Park may fetch almost $1 billion
  • Covey is working with Goldman Sachs to contact potental buyers

Covey Park Energy LLC, an oil and gas company backed by Denham Capital, is working with Goldman Sachs Group Inc. to explore a sale, people with knowledge of the matter said.

The Dallas-based company could be valued at almost $1 billion, said the people, who asked not to be identified because the matter is private. It plans to begin reaching out to potential buyers in the coming weeks, the people said.

The mergers and acquisitions market for natural gas-focused entities such as Covey Park has stayed fairly active despite a broader slump in energy deals. That is because gas prices -- while depressed -- have been relatively stable in comparison to oil prices. This makes it easier for buyers and sellers to negotiate. Encana Corp. sold $850 million of gas properties in Louisiana last month, while Chesapeake Energy Corp. is seeking buyers for a big chunk of land in the gas-producing Utica Shale basin, people familiar with the situation said this week.

A spokesman for Goldman Sachs declined to comment. John Jacobi, co-chief executive officer of Covey Park, didn’t respond to a request for comment.

Covey Park is among dozens of private equity-backed energy explorers that sprouted up during the shale boom. It is run by two veteran dealmakers that raised $300 million from Denham Capital in 2013, according to its website: Alan Levande, a former Goldman Sachs banker and co-founder of Tenaska Capital Management, an energy-focused buyout firm, and Jacobi, who helped start a small explorer sold in the late 1990s to Exco Resources Inc., where he stayed on in a business development role in charge of acquisitions.

Covey Park bought about 89,000 net acres of gas-producing land in East Texas in 2014 from Encana and Navasota Resources Ltd., according to a press release on its website.

Covey Park secured a $400 million credit line arranged by Bank of America Corp. last year, according to data compiled by Bloomberg.

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