• EQV approached with a SPAC ‘match made in heaven’
• MSEP to retain minority stake post-transaction
• Increased company’s average production by over 7x

Morgan Stanley Energy Partners (MSEP) foresaw a path to the public market for Presidio Petroleum’s well before EQV proposed merging the oil and gas operator with a special purpose acquisition company (SPAC).

“I think [a public listing] is something that we have talked about by design,” John Moon, a managing director and head of MSEP, told Mergermarket.

Since Presidio’s strategy is to acquire and optimize mature, producing oil and gas assets across the US but not drill new wells, it made sense to keep its management team, rather than sell its assets. “The going concern value of the business is much higher than the liquidation value of the business,” said Moon.

That thinking ultimately led to a merger with EQV’s SPAC, EQV Ventures Acquisition. The deal was struck at an estimated post-transaction enterprise value (EV) of about USD 660m, assuming no redemptions, and is slated to close in 4Q25. Fort Worth, Texas-based Presidio will acquire EQV’s Texas Panhandle assets, taking the number of wells it has acquired to 4,253, according to an investor presentation.

“[EQV] approached us and said: ‘We’ve got this new vehicle that is very much designed for your type of strategy and executive. We’ve got assets. You’ve got assets. This is a match made in heaven,’” Moon said.

MSEP plans to sell down its Presidio stake to 4.3%, according to the deal presentation. The energy-focused private equity (PE) platform acquired a majority stake in the company in June 2018.

By choosing to keep a stake in post-SPAC Presidio, Moon believes MSEP is both sending a positive signal to the market and staying on board for the company’s next chapter of growth. “This is a continuation vehicle, but one better,” he said. “You can participate and carry on with the upside but [also participate] in the synergies that one would expect as part of the new strategy.”

According to the deal presentation, Presidio will end up with about USD 304m of cash on its balance sheet, including an over USD 85m PIPE investment from new investors, following the de-SPAC.

Acquisitions

Under MSEP’s ownership, Presidio’s average production went from about 3,000 barrels of oil equivalent per day (boe/d) in 2018 to approximately 22,400 boe/d in 2024.

Acquisitions were a key part of the strategy to get there. Presidio has completed three bolt-on acquisitions since MSEP took control of the company, with each deal bigger than the last, Moon said. In 2018, it acquired Midstates Petroleum’s Anadarko’s assets for USD 58m. A year later, it acquired Apache’s Anadarko assets for an undisclosed amount. And in 2020, it purchased substantially all of Templar Energy’s properties in Anadarko through a court-approved bankruptcy auction process. The acquisition of EQV’s Texas Panhandle represents deal number four. Presidio’s assets sit in the western portion of the Anadarko Basin that stretches across Western Oklahoma and the Texas Panhandle.

Presidio has managed to reduce operating costs on acquired wells by almost 50% within one year of closing, according to the deal presentation. “They focus on sustainability and profitability and that is quite different from the mindset of the classic oil and gas wildcatter,” Moon said. “They describe themselves as the last and best owner of producing assets, and I really do believe that’s the case.”

Once it sells down its stake in Presidio, MSEP’s only remaining upstream investment would be Mission Creek Resources, which operates in southwest Arkansas. According to Moon, Woodlands, Texas-based Mission Creek has a similar strategy to Presidio, with an added growth element around lithium exploration.

A US Geological Survey-led study estimates between 5m and 19m tons of lithium reserves beneath southwestern Arkansas, which would meet projected 2030 world demand for lithium in car batteries nine times over. In early 2023, ExxonMobil acquired the rights to 120,000 gross acres of the Smackover lithium formation in southern Arkansas and later that year drilled its first lithium well. Canada-based Standard Lithium is also developing a project in southwestern Arkansas in partnership with Norway’s Equinor.

Asked if MSEP could evaluate new upstream investments when and if it exits Mission Creek Resources, Moon said, “Never say never.”

Cantor Fitzgerald served as financial advisor to Presidio on the SPAC merger and Sidley Austin acted as legal counsel. TD Cowen served as financial advisor and lead capital markets advisor to EQV and as placement agent on the PIPE investment. Kirkland & Ellis acted as legal counsel to EQV.