Blackstone unleashes cash hoard in Texas land grab

NEW YORK (Bloomberg) -- Blackstone Group is partnering with two oil and gas companies as it targets assets in the sought-after Permian basin.

Jetta Permian, formed with Jetta Operating Company Inc., plans to acquire leaseholds in the Permian’s Delaware basin in West Texas and southern New Mexico, New York-based Blackstone said in a statement Thursday. The partnership has $1 billion of capital committed.

Blackstone has also designated $500 million in a partnership with Guidon Energy to acquire assets in the Permian’s Midland basin "with the potential to commit significantly more with future acquisitions." Guidon purchased about 16,000 net acres in Martin County, Texas, in April.

The partnerships underscore the industry’s interest in one of the few regions where drilling remains profitable at current prices. The Permian has dominated acreage deals among independent drillers this year. PDC Energy bought into the Permian with a $1.5-billion acquisition announced this week. Meanwhile Parsley Energy and Concho Resources also added holdings in the play this month.

Crude prices have rebounded to above $47/bbl since dropping near $26 in February. Private equity firms have stepped into the market to pick up assets that have lost value since oil plunged from above $100/bbl in the middle of 2014.

Blackstone’s energy private equity business, led by David Foley, raised $7 billion across two funds in the past four years. The most recent vehicle, which finished gathering $4.5 billion last year, had only spent about 5% of its money as of June 30, according to Blackstone’s second-quarter earnings statement.