[Context: On April 18 and April 25, two new companies affiliated with a PE-backed heavyweight out of the Marcellus shale play received authorization to begin operating in Texas, according to state regulatory filings. Based on the filings, the operator is taking a surprising approach. Further details and related links are below.]


PORTFOLIO COMPANY: GREYLOCK ENERGY

On November 30, Charleston, West Virginia-based Greylock Energy announced the acquisition of all the upstream and midstream assets of Energy Corporation of America with the backing of ArcLight Capital. The deal was substantial but entirely Appalachia basin focused with a strong focus on unconventional shale.

Now Greylock appears to entering Texas with its eye on conventional natural gas opportunities.  Based on its $25,000 financial assurance, the company already has control of between 1-10 wells. That would seem to indicate the company has made an acquisition of assets in the Lone Star State.

It is worth noting that Energy Corporation of America also had a publicly traded royalty trust focused on the Marcellus, called ECA Marcellus Trust. According to its 10-K securities filing in March:

“ECA Marcellus Trust I is a statutory trust formed in March 2010 under the Delaware Statutory Trust Act, pursuant to a Trust Agreement, as amended and restated (the “Trust Agreement”), among Energy Corporation of America (“Legacy ECA”), as Trustor, The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), and Wilmington Trust Company, as Delaware Trustee (the “Delaware Trustee”). The Trust maintains its offices at the office of the Trustee, at 601 Travis Street, 16th Floor, Houston Texas 77002. The telephone number of the Trustee is 1-512-236-6555.

In November 2017, Greylock Energy, LLC, and certain of its wholly owned subsidiaries (“Greylock”) acquired substantially all of the gas production and midstream assets of Legacy ECA, including all of Legacy ECA’s interests in certain natural gas properties that are subject to royalty interests held by the Trust (the “Acquisition”).

In connection with the Acquisition, Greylock assumed all of Legacy ECA’s obligations under the Amended and Restated Trust Agreement among the Trust, Legacy ECA and the Trustee, and other instruments to which Legacy ECA and the Trustee are parties, including (1) the Administrative Services Agreement by and among Legacy ECA, the Trust and the Trustee dated July 7, 2010, and (2) a letter agreement between Legacy ECA and the Trustee regarding certain loans to be made by Legacy ECA to the Trust as necessary to enable the Trust to pay its liabilities as they become due (the “Letter Agreement”). In addition, Legacy ECA, Greylock, and the Trustee entered into a Reaffirmation and Amendment of Mortgage, Assignment of Leases, Security Agreement, Fixture Filing and Financing Statement (the “Reaffirmation Agreement”), pursuant to which, among other things, Greylock (1) reaffirmed the liens and the security interest granted pursuant to the existing mortgage securing the interests in the subject properties, as well as the mortgage and the obligations of Legacy ECA under the mortgage, and (2) assumed the obligations of Legacy ECA under the Letter Agreement.”