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Riverstone and EnCap Invest US$225m Each in Mexican Oil and Gas Company

19 September 2014

(PEHub) Riverstone Holdings and EnCap Investments have each committed US$225mto Sierra Oil & Gas, a Mexican exploration and production company. Infraestructura Institucional, a Mexican infrastructure private equity firm, committed US$75m to the company. All three investors have the option to double their existing commitments once initial equity has been deployed.

Press Release

Sierra Oil & Gas S. de R.L. de C.V. (“Sierra”), Mexico’s first independent exploration and production (“E&P”) company, today announces that it has secured equity commitments of US$525 million. Sierra, headquartered in Mexico City, is led by Ivan Sandrea, a highly experienced E&P executive with an extensive track record of leadership in energy organizations including Statoil, BP, OPEC and Energy Intelligence. Mr Sandrea has assembled a team of distinguished professionals from the Mexican and international oil & gas sector, representing over 350 years of experience with direct applicability to Mexico’s opportunity set.

The company plans to participate in exploration, development and production optimization opportunities made possible by Mexico’s recent energy reform. Additionally Sierra may consider opportunities in hydrocarbon transportation, storage and processing.

Under the terms of the transaction, energy-focused private equity firms Riverstone Holdings LLC (“Riverstone”) and EnCap Investments (“EnCap”) have each committed US$225 million in funding and Infraestructura Institucional (“I2”), Mexico’s largest infrastructure private equity firm has committed US$75 million. Additionally, all three investors retain the option to double their existing commitment once the initial equity has been deployed.

Sierra’s CEO, Ivan Sandrea said: “The opening of Mexico’s energy sector represents a transformational opportunity for the country. Mexico has a world class petroleum system, a significant oil and gas industrial base, a new and modern oil and gas framework, professional institutions, professional human capital and is one of the most progressive economies in the world. At Sierra we have been preparing for this opportunity for several years, having assembled a unique team with outstanding commercial, technical and operational experience as well as the financial backing and expertise of some of the world’s top energy investors and of Mexico’s leading infrastructure fund. We are proud to be Mexico’s first independent oil and gas company.”

Jim Hackett, partner at Riverstone, commented: “We are delighted to partner with Sierra’s outstanding management team for what is our first investment in Mexico. We have been very impressed with the progress of the energy reform and look forward to contributing to the growth of a vibrant, private energy sector in the country, as we have done in the US, Canada and elsewhere.”

Jason DeLorenzo, partner at EnCap, added: “Our equity commitment to Sierra reflects the confidence that we have in Ivan and his team, as well as our belief in the potential for significant growth in Mexico’s oil & gas sector.”

Juan Alberto Léautaud, partner at I2, added: “For us in I2, the investment in Sierra represents an important opportunity for Mexico’s institutional capital, particularly the pension funds (Afores) that invest in our Development Capital Certificates (CKDs), to help finance the development of the nascent Mexican private energy sector by participating in the E&P projects unlocked by the energy reform. We are delighted to partner with such a strong management team and distinguished fellow investors in fully realising these opportunities.”