Presidio Investment Holdings is working with Goldman Sachs (GS.N), opens new tab on a first-of-its-kind debt facility worth up to $1 billion to give the U.S. oil and gas producer a war chest to pursue acquisitions as it becomes a publicly listed company, Presidio's executives told Reuters. The energy producer is set to list, opens new tab in the coming weeks via a combination with blank-check firm EQV Ventures Acquisition Corp (FTW.N), opens new tab. Presidio's business model involves improving production from existing oil and gas wells through more efficient operations, rather than prospecting for new drilling locations, to provide steady returns to investors. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. Advertisement · Scroll to continue
The debt facility will allow Fort Worth, Texas-based Presidio to finance buying new assets, with the acquisition debt held by Goldman until it is put into a future asset-backed securitization (ABS). Standard ABS financing allows companies to secure debt by pledging future cashflows from production as collateral, and has become an increasingly common way for oil and gas companies to finance buying low-decline, mature wells. The Goldman facility utilizes a structure known as ABS warehousing which, while commonplace in areas including mortgages and credit cards, has never been used in the oil and gas industry. Advertisement · Scroll to continue
Presidio Chief Financial Officer John Brawley said it will give Presidio a significant advantage over those using standard ABS when bidding for deals, as the company will have immediate access to funds and can close deals much quicker. As the facility is linked to a future ABS issue, the debt costs are also much lower versus a bridge loan. "We're going to show up at first bid with up to $1 billion from a Goldman Sachs credit facility," Brawley said. "It's a very powerful tool to help us execute on our strategy." BUYING OPPORTUNITIES Presidio was founded in January 2017 by Will Ulrich and Chris Hammack. It forecast 2025 net production of 26,000 barrels of oil equivalent per day, according to the August announcement of the deal with EQV. As it nears becoming a public company, and having helped pioneer the use of standard ABS financing in oil and gas, Ulrich said they developed the financing with Goldman to help maintain an edge over their competition.
