Assets moved to joint venture with Pine Brook for exploration
US boost for Comet

Upstream Online
August 1, 2008

Australian company Comet Ridge has been given a boost in efforts to develop its assets in the US Pacific Northwest after forming a joint venture with New York private-equity outfit Pine Brook Road, which pledged $100 million in capital spending for the enterprise.

Pine Brook will hold a majority stake in the Comet Ridge Resources joint venture, according to Craig Jarchow, a managing director at the New York company, with the Australian outfit putting its US operations into the enterprise that will develop oil shale in Colorado and carry out high-risk natural gas exploration in the Pacific Northwest.

Rapidly increasing costs in the US oilfield sector have hit many smaller companies' ability to acquire goods and services to explore for new reserves, and Comet Ridge is focusing on its Australian coalbed methane assets rather than its little-explored acreage in the Pacific Northwest.

The Mt Pleasant, Western Australia-based company's US assets include the Florence field in Colorado, the country's second-oldest oilfield, and 425,000 acres (1700 square kilometres) at Grays Harbor County in Washington state, where exploration has been dormant since the 1980s.

Its St Helen's CBM unit also has a stake in a project in Washington state's Chehalis basin.

However, the new deal means Pine Brook will provide much needed capital for the Australian player's US prospects.

Pine Brook will give a funding boost to the venture with $7 million in cash and $2 million assets it recently acquired from another oil producer, while the Australian company will contribute about $7 million in US assets.

Pine Brook, founded by former Warburg Pincus vice chairman Howard Newman, will also shoulder all costs until it reaches an 80% stake in the venture. In exchange for its US assets, the Australian player will gain a 43.75% stake in the venture and have an option to acquire more, while never holding less than 5%.

The assets and funding boost means the venture will now look to develop the century-old Florence field, which has produced more 15 million barrels of oil.

Regulators have approved the drilling of five wells, but the new venture plans to first acquire more data on the prospect.

The joint venture expands Pine Brook's portfolio of energy companies that seek to develop "out-of-favour" areas in the US oil patch and ageing fields that still hold untapped volumes.

Its portfolio also includes Houston-based Common Resources, shallow-water explorer Phoenix Exploration, Stonegate Production and Asia Pacific Exploration.