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Abstract
Surely no financing in 2007 more illustrates the extreme value of relationships in the oil and gas industry than that of Milagro Exploration LLC's financing of its purchase of the Gulf Coast division of Petrohawk Energy Corp. Every aspect of this deal shows that in the oil patch, it is a small world. Once Milagro's team learned of Petrohawk's desire to sell, it went into high gear. Milagro made its bid in October, then raised $825 million in debt and equity and negotiated a seller's note that ended up being the key piece. The acquisition brought Milagro approximately 1,000 wells producing about 100 million cubic feet of gas equivalent per day, net. Sale metrics were $3.10 per thousand cubic feet equivalent based on Milagro's proved reserves, and 58.250 per thousand equivalent per day, based on recent production. Management and the new Milagro investors have high hopes. Today Milagro has 125 employees and six rigs running.