Castlelake and Perpetual Joint Venture to Invest in Oil and Gas

Castlelake, a private investment firm, has entered into a joint venture with Perpetual Production, a Dallas-based oil and natural gas company, to invest in minerals and “overriding royalty interests” in the US mid-continent region.

The venture—called Perpetual Production – MidCon, LLC—will also be interested in opportunistic plays, such as leasehold interests in other regions. Josh Camp, Perpetual’s president and CIO, will lead the joint venture. Camp noted, “Castlelake’s opportunistic investing approach in oil and gas aligns with our outlook and our focus on portfolio optimization through a balanced approach to risk and reward, as well as evolving strategic focus as market dynamics change.”

Castlelake’s approach to these investments is to opportunistically provide capital input to small- to mid-size ventures with quality assets. According to Evan Carruthers, managing partner, Castlelake, “The joint venture enhances Castlelake’s ability to aggregate smaller, off-the-run mineral interest assets that may generate and preserve value in today’s evolving economic environment.” He expects that Perpetual’s “expertise in mineral interests” and Castlelake’s “track record in oil and gas as a reliable, value-added capital partner” will strengthen the joint venture.

The Minneapolis-based Castlelake invests globally in private investments in areas such as alternative assets, nonperforming loans, industries that are going through dislocations, and corporate “special situations.” The firm manages about $10 billion in assets for various institutional investors.

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According to a CNBC news report citing the Energy Information Administration, the US exported more natural gas than it imported in three months during the five-month period of January through May 2017. The US is also likely to emerge a net exporter of natural gas next year. This comes about with rising overseas demand for natural gas from Mexico, and reduced US imports from Canada. And Morgan Stanley expects that natural gas prices will rise this winter, according to the CNBC report.

Tags: Castlelake, Deal, Gas, oil and gas, Perpetual Production

Tata Steel UK has signed a regulated apportionment arrangement (RAA) with the trustee of the £15 billion ($19.5 billion) British Steel Pension Scheme (BSPS) that will separate the pension from Tata Steel UK, in exchange for of £550 million and 33% stake in the company.

“Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business,” said Koushik Chatterjee, Tata Steel’s group executive director.

The Pensions Regulator (TPR) has given its initial approval to the deal, and issued a determination notice and a clearance statement in response to Tata Steel’s application for clearance and approval in respect of the RAA. This kicks off a 28-day period, during which directly affected parties by the RAA may refer the decision to approve the RAA before a tribunal of the UK court system.

At the end of the 28-day period, and in the absence of any referrals, it is expected that TPR will confirm its approval of the RAA, which would take effect after Tata Steel UK makes the £550 million payment to the BSPS, and issues shares in Tata Steel UK, which would lead to a 33% economic equity stake in Tata Steel UK being held by the Trustee.

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“We do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best possible outcome for everyone involved in what is a very difficult situation,” said Lesley Titcomb, chief executive of TPR.

“We have worked closely with the scheme trustees and the Pension Protection Fund to maximize the value received by the scheme.

Tata Steel UK said it has also reached an agreement for the sponsorship of a proposed new pension plan. Sponsorship of the plan is conditional on certain qualifying conditions being met. All members of the BSPS would be invited to transfer to the new scheme subsequent to the completion of the RAA. If the qualifying conditions are met, members will be able to transfer to the new plan.

Tata said the new pension will have lower future annual increases for retirees and deferred members than the BSPS, giving it an improved funding position “which would pose significantly less risk for Tata Steel UK.”

Tags: British Steel Pension, Tata Steel, UK