Leor Energy

Overview

Leor (LEE-or) Energy is a Houston-based natural gas exploration company focused primarily on unconventional gas in North America. In November 2007, Leor sold its Deep Bossier natural gas and land interests (including its 50% stake in the prolific Amoruso Field) to a subsidiary of EnCana Corporation for $2.55 billion. This acquisition marked the culmination of Leor’s highly successful exploration program in the Deep Bossier in which it saw, in just over 24 months, production from the Amoruso Field grow from zero to more than 240 million gross cubic feet per day. [EnCana Corporation Investor Relations, Monday, November 5, 2007 [http://encana.com/investors/newsreleases/P1194231494365.html] ]

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History

Thomas Kaplan and Guma Aguiar founded Leor in 2003 as the focus of their strategy to invest in grassroots exploration. They developed this strategy based on their conviction that secular energy market trends unequivocally pointed to supply/demand disequilibrium with demand far outpacing supply.

In 2003 Leor entered into a joint venture arrangement with Legends Exploration to pursue unconventional North American oil and gas plays including the Deep Bossier in Robertson County, Texas. Over the ensuing two years, Leor entered into leases covering approximately 38,000 gross acres in Robertson County. In July 2005 Leor and a U.S. subsidiary of EnCana Corporation entered into an agreement to explore and develop Leor’s Amoruso Prospect in Robertson County, Texas pursuant to an arrangement that provides EnCana an opportunity to earn a working interest in Leor’s land by drilling and completing a certain number of wells at EnCana’s cost.

Subsequent to the closing of the EnCana JV, Leor embarked on a capital-raising program to fund future operations. In November 2005, Leor closed a $30.0 million senior secured note financing with a multi-strategy hedge fund. In January 2006, Leor closed a $45.0 million private placement of equity securities with Goldman Sachs & Co. These two financings, along with existing cash and revenue from operations, gave Leor ample capital to fund its development and drive shareholder value.

In July 2006, Leor sold approximately convert|3360|acre|km2|0 net in its holdings in the Amoruso Prospect to its joint-venture partner, EnCana, for $242.9 million. The transaction resulted in Leor and EnCana each having a 50% stake in the prospect going forward. After the transaction Leor held a convert|23725|acre|km2|0|sing=on net position in the prospect. Leor used part of the proceeds to redeem its $30.0 million Senior Secured Note. In December 2006, Leor entered into a $150.0 million three-year senior secured, revolving credit facility with JPMorgan Chase Bank as lead agent. In March 2007, Leor and JPMorgan amended the credit facility adding BNP Paribas as a lender. While to date there has been no draw-down of the facility, Leor currently has the ability to draw $50.0 million of the $150.0 million revolving credit facility. The new credit facility includes provisions that allow Leor, subject to certain restrictions and lender approval over its term, to increase the revolving credit commitment borrowing base.

In January 2007, Leor closed a $150.0 million private placement of equity securities with Merrill Lynch PCG, a proprietary investment group within Merrill Lynch & Co., Inc. Proceeds from the JPMorgan credit facility and the Merrill Lynch equity investment will be used to fund the company’s working interest share of its drilling activities in the Deep Bossier and possibly for strategic transactions.

In May 2007, Leor increased its footprint in the Deep Bossier by making an equity investment in Navasota Resources Ltd., LLP for over $100.0 million. Navasota holds a two-thirds working interest in approximately 15,000 gross acres of Deep Bossier acreage in Robertson County, Texas. Navasota's acreage is adjacent to Leor's Amoruso Prospect. [Oil & Gas Journal, June 5, 2007 [http://www.leorenergy.com/6-05-07_oil_gas.pdf] ]

In November 2007, Leor sold its Deep Bossier natural gas and land interests (including its 50% stake in the prolific Amoruso Field) to a subsidiary of EnCana Corporation for $2.55 billion. In the span of two years, Leor initiated a successful exploration and production program in Amoruso Field which yielded more than 30 wells, gross production of over 240 mmcf/d, and an extensive inventory of highly prospective well locations in the prolific Deep Bossier trend which is quickly emerging as one of the leading resource plays in North America. In recognition of Mr. Aguiar’s management and leadership in connection with Leor’s sale to EnCana Corporation, he was recognized by Oil and Gas Investor magazine as its 2007 Executive of the Year. [Oil and Gas Investor, January 22, 2008 [http://www.oilandgasinvestor.com/pdf/OGI_2007_ExcellenceAwards.pdf] ]

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Founders

Thomas S. Kaplan and Guma L. Aguiar co-founded the company jointly in 2003. Kaplan, Aguiar's uncle, took the role of Chairman, a position he had previously held at Apex Silver Mines Inc. before resigning in 2003. Aguiar serves as the CEO and Vice Chairman of Leor and manages most of the day-to day activities of the business.

References

[http://www.leorenergy.com Leor Energy Website]

External links

MarketWatch from DowJonesEnCana to acquire Leor Energy's interests in highly prolific Deep Bossier gas fields for US$2.55 billion - November 2007
* http://www.marketwatch.com/news/story/encana-acquire-partner-leor-energys/story.aspx?guid=%7B657D5511%2D6503%2D4FE6%2D8114%2D8C9D3C8F79A9%7D&dist=TQP_Mod_pressN

Oil & Gas Financial JournalLeor Energy invests in Navasota Energy - June 2007
* http://www.leorenergy.com/6-05-07_oil_gas.pdf

Oil & Gas Financial JournalOGFJ100P company update – April 2007
* http://www.ogfj.com/display_article/290458/82/ARTCL/none/none/OGFJ100P-company-update/

Denver Business JournalEast Texas gas play a winner for Leor Energy – April 5, 2007
* http://www.bizjournals.com/denver/othercities/houston/stories/2007/04/02/daily41.html

MarketWatch from DowJonesLeor Energy’s East Texas Field Now Among Biggest Discoveries in a Decade
* http://www.marketwatch.com/news/story/leor-energys-east-texas-field/story.aspx?guid=%7B728B7E41-E6F7-41F0-8446-FDB6F11F4FA3%7D&sid=1102165&symb=

APGoldman Sachs Merrill Lynch buys Leor Energy stake – January 26, 2007
* http://jp.advfn.com/news_Merrill-Lynch-buys-Leor-Energy-stake_19121280.html

FinanzNachrichtenMerrill Lynch buys Leor Energy stake – January 25, 2007
* http://www.finanznachrichten.de/nachrichten-2007-01/artikel-7643988.asp