E11 founders are REIT managers, private oil and gas investors, and ex-Chesapeake officers.
Fort Worth-based Energy 11 LP has filed an S-1 to privately offer at least 5.3 million units at $19 each and up to 95 million additional units at $20 each, raising up to $2 billion to acquire working and other interests in onshore-U.S. oil and gas properties recommended by Aubrey McClendon’s American Energy Partners LP.
The minimum purchase is $5,000. At least 5.3 million units must be sold by Sept. 30, 2016, or the offering will be withdrawn, according to the S-1. Commission and marketing fees for the first 5.3 million units will be $1.14 per; for additional units, $1.20 per. The broker-dealer is New York-based David Lerner Associates Inc. Partnership organizers’ fees will be $1.5 million for the minimum offering and $8 million for the balance. (Editor’s note: Revised on 7-20-14 to state “Sept. 30, 2016″ rather than “Sept. 30.”)
The general partner will be managed by
–Glade Knight, chairman and founder of Apple Hospitality REIT Inc.;
–David McKenney, chief financial officer and senior advisor to Apple;
–Anthony Francis (Chip) Keating III, a principal in oil, gas and real-estate investor Rock Creek Capital, co-chief operating officer;
–Michael Mallick, founder of Fort Worth-based real-estate and energy investor Mallick Group Inc., co-chief operating officer; and
–landman Clifford Merritt, a former Chesapeake vice president, who will be president.
Keating, 34, is the son of former Oklahoma Gov. Francis Anthony (Frank) Keating II. He was Chesapeake’s in-house realtor until 2010 in more than $850 million of deals for land for corporate headquarters, field offices and drillsites in urban areas as well as for investment properties.
Merritt, Keating and Mallick have interests in McClendon’s American Energy Ohio Holdings LLC and American Energy Woodford Holdings LLC. In addition, Keating and Mallick have interests in American Energy-Permian Basin LLC and American Energy-Marcellus LLC.
McClendon’s E11 Management LLC, a unit of his American Energy Partners LP, will recommend and operate the properties Energy 11 LP buys.*
According to the S-1, McClendon’s AEP has grown in about 15 months to some 400 employees, including 125 in engineering, drilling and operations; 38 in geoscience and petrophysics; and 78 in land. Senior officers, in addition to McClendon, are
–Jeff Fisher, chief operating officer and formerly Chesapeake’s executive vice president, production;
–Scott Mueller, chief financial officer and formerly a partner in private-equity firm Hall Capital Partners;
–Jeff Mobley, senior vice president, major acquisitions, and a CFA who was Chesapeake’s senior vice president, investor relations and research;
–Curt Launer, senior vice president, capital formation, and formerly an equity analyst for Deutsche Bank Securities; and
–Jim Linville, director, acquisitions engineering, and formerly the Rockies business-unit manager, operations engineering, for Devon Energy Corp.
Energy 11 LP is the second McClendon has been enlisted to manage. In December, REIT organizers unaffiliated with oil and gas investments, formed American Energy Capital Partners GP LLC to raise up to $2 billion to invest in properties recommended by AEP. (See McClendon Partners With REIT Managers To Form New E&P Operator.)
–Nissa Darbonne, Author, The American Shales; Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at firstname.lastname@example.org.
* From the S-1: We will pay the Manager a monthly general and administrative expense compensation amount (“Monthly G&A Expense Amount”) at an annual rate that will be 1.75% of the net proceeds from the sale of common units, less commissions, marketing fee and offering and organization expense, plus the amount of outstanding indebtedness, which we refer to as the reimbursement base, for the first six months following the initial closing. Thereafter, the Monthly G&A Expense Amount will be at an annual rate of 3.5% of the reimbursement base and will reduce to an annual rate of 2% of the reimbursement base over time. In addition, pursuant to the Partnership Agreement, concurrently with the initial closing of the sale of common units pursuant to this offering, we will issue to an affiliate of the Manager (“Incentive Holdings”), 100,000 class B units that will entitle Incentive Holdings to participate in Partnership distributions after investors in the common units have received cash distributions equal to the preferred distribution, any arrearages in the preferred distribution and $20.00 per unit.