Blackstone Said to Weigh $5 Billion-Plus Sale of Beacon Offshore
(Bloomberg) — Blackstone Inc. is in the early stages of evaluating a sale of Beacon Offshore Energy, the drilling company it has owned in the Gulf of Mexico for nearly a decade, that could yield more than $5 billion, according to people familiar with the matter.
The alternative asset manager is in talks with investment banks about launching the Houston-based company in the first quarter, said the sources, who asked not to be named because the talks are private.
Beacon is expected to attract interest from major producers operating in the Gulf of Mexico, sources said. Major operators here include Chevron Corp., BP Plc and Shell Plc.
They added that no final decision has been made and Blackstone may back out of selling.
A representative for Blackstone declined to comment. A representative for Beacon had no immediate comment.
Consolidation of U.S. oil exploration companies in recent years has focused on shale operators amid low crude oil prices and dwindling inventories at top onshore drilling spots. This slowdown in shale oil has helped fuel a drilling renaissance in the Gulf, with Beacon laying claim to some of the most productive wells in the US, using new technology to pump hard-to-reach crude.
Harbor Energy Plc agreed in December to buy Gulf explorer LLOG Exploration Co. for $3.2 billion.
Beacon is among Blackstone’s legacy fossil fuel assets after Blackstone abandoned much of its oil and gas portfolio in recent years, including last year’s sale of Olympus Energy. Blackstone founded Beacon in early 2016 with the goal of building an offshore rig focused on the deepwater Gulf. The company today holds interests in 68 deepwater leases on approximately 400,000 gross acres, according to a statement made this month.
Beacon’s largest wells, which began production in the second half of last year, are part of the Shenandoah prospect that Occidental Petroleum Corp.’s Anadarko discovered in 2009 but left behind for faster, easier onshore production at the start of the shale boom.
The Shenandoah discovery lies in a part of the Earth’s crust that is very difficult to drill; the industry had to find new ways to extract crude oil. More than a decade ago, BP, Chevron and Shell began developing next-generation oilfield equipment that would reach miles of water and rocks.
–With help from Kevin Crowley and Mitchell Ferman.
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