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Merchant Funding
PetroGrowth Advisors is pleased to announce the formation of PetroGrowth Merchant Funding ("PGMF") as a way to answer the needs of today's energy industry. The consolidation of all aspects of the energy industry has created some unique challenges and/or opportunities in the industry. While capital is still available, its focus is on large transactions. PGMF seeks to fill the void for small companies by providing flexible capital programs for their creation, growth or survival.
PGMF can fill the void created by the changing energy capital market. PGMF seeks out the following situations to provide capital.
- Co-invest in acquisitions
- Start-up funding for service or manufacturing companies
- Project financing for E&P or equipment acquisition programs
- Bridge financing for an acquisition
- Acquisition of secured loans
Each of the above needs requires unique financing structures. PGMF offers flexible financing forms including:
- Debt
- Equity
- Participations
- Hybrids of these various structures
PGMF's Investment Strategy is quite simple. It seeks to:
- Minimize risk through structure and collateral
- Emphasize niches that produce competitive advantages and exit alternatives
- Ensure principals have proper motivation
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Oilfield Service Company
Start-Up | Common Equity Project Capital | Profitable, Growing |
Wellhead Compression Company
Start-Up and Growth Capital
| Common Equity | Profitable, Growing |
| Note Purchase | Debt | Refinanced Successfully |
Pressure-Pumping Company
Co-Investment | Common Equity | Exit Realized, 4x Return on Investment |
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The dramatic changes evidenced in today's energy world - both operationally and financially - have created the need for PGMF.
Consider how the following capital sources have changed in the past ten years:
Debt Financing Many oilfield lenders are no longer in business or have merged with other banks. The result is that what few lenders still exist are now focused on larger transactions.
Industry Players For E&P companies or oilfield service companies, consolidation is the story. In each oilfield service sector, there are now only three or four viable players. Most of the small players have closed or been bought by the larger companies. For E&P companies, the acquisitions are larger (since the larger E&P companies don't want to sell small packages) and the availability of capital is tight. This results in small E&P companies needing to pursue larger deals while being capital constrained.
Equity Financing Similar to debt providers, the few equity sources that still exist are seeking larger investments. Further, the resulting equity market is tight and limited to select companies. The local individuals that would take a deal or invest in a "small" transaction are now gone.
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