Presidio, a US energy company, plans to use a Goldman Sachs debt facility worth $1 billion to finance deals.

Presidio Investment Holdings and Goldman Sachs are working on a debt?facility of up to $1 billion, which will give the U.S. Oil and Gas Producer a war chest to pursue acquisitions when it becomes a public listed company.

Energy producer EQV Ventures Acquisition Corp. will list the company in a few weeks through a merger with blank-check firm EQV Ventures Acquisition Corp. Presidio's model is to improve production by improving operations at existing oil and gas fields, instead of prospecting new drilling sites, in order to offer steady returns to investors.

The debt facility allows Presidio, based in Fort Worth, Texas, to finance the purchase of new assets. Goldman will hold the acquisition debt until it can be put into an asset-backed securitization.

Standard ABS financing is a way to secure debt for companies by using future cashflows as collateral. It has become a common way oil and gas companies finance the purchase of mature wells with low decline rates.

Goldman's facility uses a structure called ABS warehousing, which is common in other industries, such as mortgages and credit card, but has never been used by the oil and gas sector.

John Brawley, Presidio's Chief Financial Officer, said that it would give Presidio an advantage over other companies using ABS standard when they bid for deals. The company will be able to close deals faster and have immediate access to funds. The debt costs of the facility are lower than a bridge loan because it is tied to a future ABS.

Brawley stated that "we're going show up with a credit facility from Goldman Sachs of up to $1 billion at the first bid." It's a powerful tool that will help us implement our strategy.

BUYING OPPORTUNITIES

Will Ulrich, Chris Hammack and others founded Presidio in January 2017. According to the announcement made in August of the deal, it forecast a 2025 net production level of?26,000 barrels equivalent per day.

Ulrich, who is preparing to become a publicly traded company and has pioneered the use of ABS standard financing in the oil and gas industry, said that they developed this financing with Goldman as a way to maintain an advantage over their competitors.

Ulrich said that it was crucial to maintain and increase over time Presidio's shareholder payouts, which were initially set at $1.35 per share.

Presidio has previously stated that it has identified acquisition opportunities near-term worth up to $15 billion?that it could pursue after it completes its EQV merger.

Ulrich refused to disclose which assets the company plans to bid for. The company said that it would be willing to buy assets worth up to $3 billion. The price would include some analyst's estimates for Ovintiv Oklahoma land, which the company plans to sell this year following its purchase of NuVista.

Ulrich stated that Presidio, while currently focusing on the Mid-Continent Shale Basin, which covers Oklahoma in its entirety, could also target other formations, including the southern part of the Midland basin or parts of the Eagle Ford Formation in Texas.

(source: Reuters)