The Energy industry is dynamic and volatile – entrepreneurs require ingenuity and dedication to prosper and survive. The same is true for Energy finance.
Today, many investment banks are highly diversified across various industries in an effort to minimize volatility of revenue. This sector diversification, combined with increasing conflicts, regulation and reorganization, often reduces a bank’s ability to act quickly or provide ‘outside the box’ services to clients.

Our purpose at KLR Group, LLC is to fill the void we see in the market. We are:

  • FOCUSED

    We believe in specialization – Energy is all we do. We pride ourselves on providing data-driven, thoughtful advice based on fundamental analysis and a deep understanding of our clients’ business.

  • LOYAL

    The ONLY way we survive is through relationships – we must be attentive enough to understand, anticipate and meet our clients’ expectations and needs…in every market.

  • BOLD

    We’re never too proud or afraid to give you a candid opinion, suggest an idea or (respectfully) disagree.

  • FRESH

    We believe providing our clients with renewed perspective is essential to the decision-making process. And we never approach a new client with a recycled process – everything is bespoke to tailor-fit your needs.

Recent Transactions

Case Studies

Prior KLR Transactions
  • CASE STUDY: Energy SPAC -> The Energy Cycle
    • Role: Sponsor
    • Length of engagement: 14 Months
    • Approximate size: $438,000,000
    WHO:

    Tema Oil & Gas Company (“Tema”) – a privately-owned E&P company, established in 1999 but with roots going back to the founding of AMOCO in 1920, was an early mover into the Delaware Basin, establishing a core position of 4,771 net acres in Loving & Reeves Counties, Texas and Lea County, NM.

    KLR Energy (“KLRE”) was a Special Purpose Acquisition Company (“SPAC”) led by Gary Hanna, a 35-year industry veteran who previously built and sold EPL Oil & Gas (NYSE:EPL) for an 8.5x equity return within 5 years. KLRE was the first in what would become a wave of energy-focused SPACs to file an S-1.

    HURDLES:

    Management needed capital to fully develop world-class asset base

    Complex ownership structure

    Owners wanted to maximize tax benefits

    WANTS:

    Near-term liquidity to initiate and grow resource development

    Cheaper capital for future acquisitions and development

    Increased incentives for shareholders and employees

    PROCESS:

    KLRE evaluated potential acquisition candidates, looking for the right combination of a quality asset base, experienced management, and ownership that was willing to sell but wanting to retain equity participation in the future growth of the company.

    CHOSE:

    KLRE and Tema combined to form Rosehill Resources [NASDAQ: ROSE], with Tema contributing its Texas and New Mexico assets and KLRE contributing the capital raised through its Initial Public Offering and subsequent preferred stock offering. Tema and its parent company, Rosemore, retained a significant equity interest in Rosehill. The transaction provided the go-forward entity, Rosehill, with access to the capital markets through its publicly traded equity, liquidity for future development, and rewarded Tema’s ownership for its years of value creation with a combination of cash and equity in Rosehill.

  • CASE STUDY: ‘STRETCH’ SENIOR DEBT
    • Role: Exclusive Advisor
    • Length of engagement: 4 Months
    • ApProximate size: $100,000,000 - $500,000,000
    • USE OF PROCEEDS: Development and Acquisitions
    WHO:

    Publicly-traded company

    HURDLES:

    No cash to execute on proposed acquisition

    Growth in working capital deficit

    WANTS:

    Capital to acquire and develop assets of non-operating partner

    Increasing capital availability in proportion with growth of production and cash flows

    To avoid equity dilution

    PROCESS:

    KLR marketed the opportunity to ‘stretch’ senior lenders willing to provide leverage against existing assets as well as assets to be acquired from non-operating partner

    CHOSE:

    Lending facility with large financial institution including sizeable commitment based on asset valuation

    Variable interest rate determined by amount of debt outstanding relative to asset value

  • CASE STUDY: A&D -> LIMITED PROCESS
    • Role: Advisor
    • Length of engagement: 10 Months
    • Approximate size: $25,000,000 - $50,000,000
    WHO:

    Private equity-backed company

    HURDLES:

    Limited universe of players with interest and expertise in asset base

    WANTS:

    Full divestiture at best price

    PROCESS:

    KLR marketed the assets to a pre-approved list of industry players to determine the most attractive bid

    CHOSE:

    Sale to private equity-backed E&P introduced by KLR

  • CASE STUDY: A&D -> BROAD PROCESS
    • Role: Exclusive Advisor
    • Length of engagement: 15 Months
    • ApProximate size: $50,000,000 - $100,000,000
    WHO:

    Private company

    HURDLES:

    Emerging area with limited activity supporting cash flow projections

    Few comparable deals to support long-term value

    WANTS:

    Divest at least 25% as a non-operated interest, or

    Sell full package – 100% operated WI

    PROCESS:

    KLR marketed the assets to a broad list of industry players and financial groups

    CHOSE:

    Sale to large public company introduced by KLR

  • CASE STUDY: SOMETHING NEW -> THE ACQUISITION NEWCO
    • Role: Exclusive Advisor
    • Length of engagement: 14 Months
    • Approximate size: $100,000,000 - $500,000,000
    • USE OF PROCEEDS: Development and Acquisitions
    WHO:

    Private operator with assets in the U.S.

    HURDLES:

    At the time, no structure in the market existed that would meet the desires of our client – we needed to create something new

    Needed to secure over 40 separate acquisitions via negotiation of price, structure and timing, while also working to obtain financing

    WANTS:

    To avoid equity dilution, incurring additional debt or exposing client to risks beyond the ordinary course of business

    Capital to acquire and develop assets of non-operating partners

    Control of (or at very least, equal voting rights in) the new partnership with investor(s)

    Co-investor that would piggyback off of diligence of lead investor to fund client’s option to participate alongside any deal

    PROCESS:

    KLR ran a broad process seeking an investor who would fund client’s capital needs in return for ownership in a new, non-recourse joint venture company formed for that purpose (“NEWCO”)

    KLR was hired by client to manage NEWCO post-close – KLR’s duties included creation of internal processes, budgets and forecasts, as well as negotiation of acquisitions and new revolving credit facility

    CHOSE:

    NEWCO where investor contributed cash and client contributed assets equivalent to 15% of investor contribution

    NEWCO and KLR executed over 40 separate acquisitions and ran a multi-rig program during KLR’s tenure

    KLR owns equity in NEWCO as compensation for its services

  • CASE STUDY: MANAGEMENT BUYOUT + HYBRID FINANCING
    • Role: Exclusive Advisor
    • Length of engagement: 3 Months
    • Approximate size: $50,000,000 - $100,000,000
    • USE OF PROCEEDS: Refinancing, Development and Acquisitions
    WHO:

    Private operator with assets in the U.S.

    HURDLES:

    Private equity partner looking to monetize after 4 years of investment

    Existing senior debt facility insufficient to execute on management buyout

    Concentrated collateral in a few highly valuable assets

    WANTS:

    Capital to purchase equity partner’s interest and refinance existing senior debt facility

    Additional capital for future development and acquisitions

    PROCESS:

    KLR contacted over 60 potential financial partners capable of providing capital beyond first-lien debt, including ‘stretch’ senior lenders, mezzanine and private equity capital providers

    CHOSE:

    Senior debt and preferred equity instrument with one institutional investor

    Hybrid debt and equity structure most cost-effective way to obtain the amount of capital desired by client

  • CASE STUDY: SENIOR DEBT -> KEEPING IT SIMPLE
    • Role: Exclusive Advisor
    • Length of engagement: 10 Weeks
    • Approximate size: $100,000,000 - $500,000,000
    • USE OF PROCEEDS: Acquisitions and Development
    WHO:

    Private operator

    General partner of several limited partnerships formed to own non-operated working interests in operator’s assets: company active in the oil & gas business since the 1920s

    HURDLES:

    Limited liquidity at both entities for large-scale acquisitions

    Limited partners provided drilling capital but not acquisition capital

    WANTS:

    Low-cost capital to fund acquisitions and development

    Increasing capital availability in proportion with growth of production and cash flows

    Simple capital structure that would not complicate existing partnership between two clients

    PROCESS:

    KLR contacted various lenders and solicited proposals for traditional reserves-based loans as well as more flexible senior capital that would offer additional liquidity at a higher cost; as a result, clients were provided a wider array of options

    CHOSE:

    The same financial institution was chosen for both clients, providing traditional reserves-based loans at competitive terms

  • CASE STUDY: M&A -> TO GROW OR TO SELL?
    • Role: Exclusive Advisor
    • Length of engagement: 14 Months
    • Approximate size: $100,000,000 - $500,000,00
    WHO:

    Private company active in the oil & gas business since the 1920s

    HURDLES:

    Limited liquidity – core assets generated substantial cash flow that was used to fund multiple business lines

    Limited experience as horizontal operator

    Time and effort required to organize internal data for public process

    WANTS:

    Clear path to maximize value of assets near-term, through either
    1) financing development, 2) an outright sale, 3) a joint venture with an established horizontal operator or 4) a combination of these

    Flexibility of structure to meet unique needs, e.g. minimizing tax impact, providing near-term liquidity, taking care of employees

    PROCESS:

    KLR and client worked during 9 months prior to launch to prepare internal land, geology, engineering and accounting materials

    KLR and client agreed to a strategy through which KLR would run a parallel process to evaluate financing AND M&A alternatives

    We received indications of interest across the capital spectrum, including M&A offers, ‘pure’ private equity investment, mezzanine funds, joint venture structures, drilling deals, partnerships with Asian strategics and direct investment from pension funds

    CHOSE:

    Merger with public company; provided benefits including 1) an established operator with leverage and commitment to client assets and employees, 2) near-term liquidity with cash, 3) long-term upside through significant equity ownership and 4) elimination of need for development financing or formation of a horizontal operating team