Recent SPAC Boom Largely Leaves Out Oil & Gas Companies

Eagle Ford Shale Mergers, Acquisitions, & Divestitures Special Topics

The rise of SPACs, or special purpose acquisition companies, has been the hottest trend in capital markets during the past year.  However, after years of poor returns and increasing investor emphasis on ESG (environmental, social, and governance) issues, oil & gas companies were largely left out of the recent SPAC mania.

We look at a few oil & gas companies that were early adopters of the SPAC structure, the recent pivot of SPACs towards energy transition companies, and take a look forward to see what the future might hold for the few remaining oil & gas-focused SPACs.

Previous Energy SPAC Transactions

Energy companies were early adopters of the SPAC structure as a means to go public.

Private equity firm Riverstone was one of the first to launch an energy-focused SPAC with Silver Run Acquisition Corp. in 2016.  The SPAC combined with Centennial Resource Production later in the year and renamed itself Centennial Resource Development.  Riverstone followed with Silver Run Acquisition Corp. II in 2017, which acquired Alta Mesa Holdings and Kingfisher Midstream to form Alta Mesa Resources.  However, Alta Mesa filed for bankruptcy in 2019.  Another early energy SPAC suffered the same fate.  KLR Energy Acquisition Corp., which went public shortly after Silver Run in 2016, acquired Rosehill Resources and filed for bankruptcy in 2020.

Fortunately, some have fared better.   TPG Pace Energy Holdings merged with Magnolia Oil & Gas in 2018.  Currently, the Eagle Ford operator’s stock price is well above the initial SPAC IPO price of $10.  Vantage Energy Acquisition Corp., sponsored by energy-focused private equity firm NGP, announced acquisition of QEP’s Bakken assets for $1.725 billion in 2018.  The transaction later fell through, and Vantage liquidated, with shareholders receiving $10.22 per share.  QEP’s Bakken assets were recently acquired by Oasis (from QEP’s new owner Diamondback) for $745 million.

The Pivot Toward Energy Transition

Given the troubled performance of oil & gas SPACs, overall poor returns from the sector, and increasing emphasis on ESG issues, several SPACs that were originally targeting oil & gas companies have pivoted and acquired (or announced acquisitions of) “energy transition” companies.

Apollo touted its expertise “in the upstream, midstream and energy services sectors” in Spartan Energy Acquisition Company’s prospectus, though ultimately acquired electric vehicle manufacturer Fisker.  Switchback Energy Acquisition Corporation, sponsored by NGP (which previously sponsored Vantage), was rumored to be targeting companies in the minerals space, but recently completed its acquisition of ChargePoint, which develops electric vehicle charging stations.  And Alussa Energy Acquisition Corp., headed by James Musselman (former CEO of offshore E&P company Kosmos), has announced its planned acquisition of FREYR, a Norwegian battery manufacturer.

The trend of capital moving away from traditional oil & gas companies and toward energy transition companies does not look like it will abate soon.  Several private equity funds historically focused on oil & gas have sponsored SPACs specifically targeting energy transition companies.

Riverstone has moved away from the Silver Run naming convention and now has three “Decarbonization Plus” entities that are publicly traded, with a fourth that has filed an S-1.  While the entities reserve the right to seek a business combination with a company operating in any sector, I think it’s safe to assume that an acquisition of a company focused on developing hydrocarbons is off the table.

First Reserve, which has historically invested in traditional oil & gas companies, launched their first SPAC, First Reserve Sustainable Growth Corp., in March.  As the name implies, the SPAC’s stated focus area will be “opportunities and companies that focus on solutions, processes, and technologies that facilitate, improve, or complement the ongoing energy transition toward a low- or no-carbon emitting future.”

After NGP’s success with Switchback’s acquisition of ChargePoint, it sponsored Switchback II, which intends to search for target companies “in the broad energy transition or sustainability arena targeting industries that require innovative solutions to decarbonize, in order to meet critical emission reduction objectives.”  That language wasn’t included in the original Switchback prospectus.  Another NGP SPAC, Switchback III, has a similar language in its S-1 but has not yet gone public.

Warburg Pincus sponsored two SPACs that went public in March.  While no specific industry focus was discussed in the prospectuses, the documents did specifically state that “oil and gas companies are not anticipated to be the target.”  This is consistent with Warburg’s recent transition away from investment in the oil & gas sector.

Is SPAC Capital Available for Oil & Gas Companies?

While most recent energy-focused SPACs are seeking business combinations in the energy transition space, there are a few remaining SPACs that may target more traditional oil & gas companies or assets.

East Resources Acquisition Company went public in July 2020, raising $345 million.  It is headed by Terry Pegula, who sold his previous company, Appalachian operator East Resources, Inc., to Shell for $4.7 billion in 2010.  The SPAC’s prospectus states that “there is a unique and timely opportunity to achieve attractive returns by acquiring and exploiting oil and natural gas exploration and production (‘E&P’) assets in proven basins with extensive production history and limited geologic risk.”

In November 2020, Breeze Holdings Acquisition Corp. raised $115 million.  Managed by several former EXCO executives, the SPAC intends “to focus on assets used in exploring, developing, producing, transporting, storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined products in North America.”

Most recently, Flame Acquisition Corp. raised $287.5 million in February 2021.  The SPAC intends to target “a business in the energy industry, primarily targeting the upstream exploration and production (‘E&P’) sector, midstream sector and companies focused on new advancing technologies that are transformative and provide the potential for and means to achieve greater profitability in the broader energy sector,” adding that “many businesses in the E&P industry or broader energy value chain could benefit from access to the public markets but have been unable to do so.”  The company is headed by James Flores, the former CEO of Sable Permian.  Gregory Pipkin, former head of Barclays’ upstream investment banking team, is a member of the board.

It remains to be seen whether these SPACs will endure their oil & gas focus or try to capitalize on the trend towards renewables (like so many other energy-focused SPACs).  However, with multiple SPACs targeting that space and increasing investor skepticism regarding lofty growth projections (as evidenced by the stock price performance of former SPACs Nikola, Hyliion, Romeo Power, and XL Fleet, among others), the acquisition of oil & gas assets at an attractive valuation may be well received by investors.


The increasing popularity of SPACs helped push tremendous amounts of capital toward energy transition companies, with traditional oil & gas companies largely sitting on the sidelines.  However, the tide may be turning, as SPAC IPOs have slowed and some energy transition company valuations have come crashing down from their previous (stratospheric) levels.  While SPACs aren’t the complete solution to the dearth of capital available to oil & gas companies, a well-received transaction by one of the few remaining oil & gas-focused SPACs would certainly be a welcome development.

Mercer Capital cannot help you sponsor a SPAC, though we have assisted many clients with various valuation needs in the upstream oil and gas space for both conventional and unconventional plays in North America, and around the world.  Contact a Mercer Capital professional to discuss your needs in confidence and learn more about how we can help you succeed.

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