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PPP Loans Flow to Energy Companies Backed by Deep-Pocketed Private Equity

September 21, 2020

Congress designed the Paycheck Protection Program (PPP) to help small businesses remain afloat and ensure they continued to pay their employees, rent, mortgage interest and utilities, during the coronavirus pandemic. The program came under fire early on when some small businesses, particularly minority-owned businesses, were unable to get loans while larger companies with access to alternate funding sources received PPP loans.

In establishing the $669 billion government program, Treasury Secretary Steven Mnuchin said the program isn’t meant to help companies that have access to other sources of capital. Nonetheless, companies backed by private equity firms, home to some of the world’s wealthiest financiers, received taxpayer-backed PPP loans.

Small Business Administration (SBA) officials have urged the private equity industry – which has approximately $1.5 trillion in available cash – to assist their portfolio companies weather the pandemic.

Even though the government broadly excluded private equity firms from the PPP program, many private equity-backed companies found ways to navigate around those restrictions. Thousands of private equity-backed companies got PPP loans equal to around $13 billion, according to an analysis by Pitchbook.

Of those, the data show that at least 72 fossil fuel-connected companies backed by private equity firms received loans in amounts ranging from $350,000 to $10 million, from producers to oil field services to equipment companies. Combined, these private equity-backed fossil fuel companies were granted between $110 million and $240 million in taxpayer loans through PPP.

More recently, private equity firms KKR, Blackstone, Apollo, Carlyle, TPG, and Ares told Bloomberg that the portfolio companies they back have not used SBA funds.

Spur Energy
KKR executives claim to have urged their portfolio companies who apply for and received PPP loans to return them to the government.

But one of KKR’s newest energy partnerships has yet to do so. Formed last year with KKR’s financial backing, Spur Energy is focused on acquiring and developing oil and gas assets across the United States. In April 2020, Spur Energy was granted a PPP loan of $2 million to $5 million. This government loan came after Spur Energy and KKR acquired new assets in the Permian Northwest Shelf and the New Mexico Shelf in 2019.

Spur Energy’s financial sponsor is a leading global investment firm. KKR has $222 billion in assets under management and according to Pitchbook, $42.2 billion available to invest. In the second quarter of 2020, it raised $16 billion, a record quarter figure for the firm and made over $698 million in profit in the first 6 months of the year – seemingly plenty of money to help its portfolio companies weather the pandemic’s market uncertainty.

Laramie Energy
Another example involves a natural gas fracking company, Laramie Energy, which received $1 to $2 million loan to retain 27 jobs. It is also backed by private equity, having raised capital exceeding $500 million from five funds: Avista Capital, aPriori Capital, Par Pacific Holdings, Energy Spectrum, and Wells Fargo Energy Capital. Wells Fargo’s Energy Group is one of the largest capital providers in the energy space, with approximately $42 billion committed to public and private companies. In April 2020, Energy Spectrum closed its eighth venture capital fund, amounting to $969 million, which the firm is currently investing. Despite second quarter EBITDA losses, Par Pacific Holdings, which owns 46 percent of Laramie Energy, increased its liquidity by 49 percent or nearly $70 million during the quarter.

Laramie is the third largest producer of gas in Colorado’s Piceance Basin, but faced financial losses before the pandemic. After suspending local drilling, Laramie lost nearly $90 million in 2019, compared to equity earnings of about $10 million in 2018. Laramie’s total Adjusted EBITDAX decreased by 27 percent from 2018 to 2019. Oil and gas analysts attribute the nosedive to falling natural gas prices as early as 2016 and the passage of the 2019 Colorado Senate Bill 181, which prioritizes the protection of public health and safety, the environment, and wildlife over the development of extractive natural resources.

Casillas Petroleum
Another oil and gas production company, Casillas Petroleum received a PPP loan between $350,000 and $1 million in April 2020. Casillas’ private equity sponsor, Kayne Anderson Capital, manages over $27 billion of assets. According to Pitchbook, Kayne Anderson has over $7 billion available to invest. The last Kayne Anderson Energy Fund raised $2 billion in 2016. Kayne Anderson has raised at least $1 billion for its eighth energy fund, according to federal filings, and continues to seek commitments.

The list below shows private equity-backed oil and gas companies that were awarded PPP loans, based on data from the SBA and Pitchbook.

PPP Loan SizeCompany NameHQ LocationActive Investors
$5-10 millionAxis Energy ServicesLongview, TXB-29 Investments, Lime Rock Partners
 Brigade Energy ServicesDenver, COTurnbridge Capital
 CharpsClearbrook, MNHines Global Income Trust, Main Street Capital
 Cimarron EnergyHouston, TXFS Energy and Power Fund, Turnbridge Capital
 Cox OperatingDallas, TXEIG Global Energy Partners
 Drilling Tools InternationalHouston, TXHicks Equity Partners
 Flowco Production SolutionsHouston, TXGEC
 Gordon TechnologiesScott, LAPelican Energy Partners
 kV PowerAndrews, TXRock Hill Capital
 MorningStar PartnersFort Worth, TXBluescape Group
$2-5 millionAdvanced Oilfield ServicesPlatteville, COMVC Capital
 Apex Clean EnergyCharlottesville, VAJ.P. Morgan, NYSERDA, Prudential Private Capital, Tyr Energy, U.S. Bancorp
 ARB MidstreamDenver, COBV Natural Resources, EIG Global Energy Partners
 ASAP IndustriesHouma, LABoyne Capital Partners
 Bronco Utah OperationsEmery, UTPPMT Capital Advisors
 Estis CompressionKilgore, TXCohesive Capital Partners, GEC, Genesis Park
 KW InternationalHouston, TXOFS Energy Fund
 Mach ResourcesOklahoma City, OKAra Partners Group
 Paragon IndustriesSapulpa, OKLee Equity Partners
 Pipe ProsCorpus Christi, TXSwift River Investments, Turnbridge Capital
 Red Cedar GatheringDurango, COKN Gas Gathering Co., Southern Ute Indian Tribe Growth Fund
 SCS Technologies (Texas)Big Spring, TXBlack Bay Energy Capital
 Sierra HamiltonHouston, TXCapitala Group, Corinthian Capital Group, Orix Private Equity Solutions
 Silvertip Completion ServicesMidland, TXLime Rock Partners
 Spur Energy PartnersHouston, TXKohlberg Kravis Roberts, The Energy & Minerals Group
$1-2 millionArena EnergyThe Woodlands, TXLime Rock Partners
 Baseline Energy ServicesFort Worth, TXAlturus Strategic Capital Partners, Donovan Ventures
 Bullseye TestingMidland, TXHastings Equity Partners
 C&G Energy ServicesEnglewood, CO3P Equity Partners, Silver Sail Capital
 ComRent InternationalBroomfield, COAlpInvest Partners, Global Environment Fund
 CP Energy ServicesWeatherford, OKProspect Capital
 CPL SystemsLafayette, LA 
 Energy Fishing and Rental ServicesHouston, TXHarren Equity Partners
 Evolution MarketsWhite Plains, NYCCP Equity Partners
 Integrity WirelineAbilene, TXSowell & Company
 Laramie Energy IIDenver, COaPriori Capital Partners, Avista Capital Partners, EnCap Investments, Energy Spectrum Capital, Energy Trust Partners, Par Pacific Holdings, Wells Fargo Energy Capital
 Lario Oil & Gas CompanyWichita, KSConcentric Equity Partners
 MicroSeismicHouston, TXChevron Technology Ventures, Madrone Capital Partners, RockPort Capital Partners, TA Associates Management
 Moser Energy SystemsEvansville, WYHilltop Opportunity Partners, WestFront Capital Group
 Nadel and GussmanTulsa, OKPost Oak Energy Capital
 NewKota Services and RentalsMinot, NDBanyan Investment Partners, Diamond State Ventures, Jefferson Capital Partners, Woodlawn Partners
 Park Energy ServicesOklahoma City, OKRock Hill Capital
 Professional Rental ToolsHouston, TXIronwood Capital, LongueVue Capital
 Terra Oilfield ServicesSpring, TXOFS Energy Fund
 Wapiti EnergyHouston, TXEquity Group Investments
$350,000-1 millionAdaptive EnergyAnn Arbor, MISleeping Bear Capital
 AgilyxTigard, ORChrysalix Venture Capital, Crossroads Liquidating Trust, Drew Bernard, Foam Recycling Coalition, Kleiner Perkins, Pivotal Investments, Point Financial, Reference Capital Management, Saffron Hill Ventures, Starveups, Total Carbon Neutrality Ventures, TriplePoint Venture Growth, Virgin (London), Waste Management
 AMP AmericasChicago, ILEIV Capital, GreatPoint Foundry, New Frontier Holdings
 Black Mountain Oil & Gas IIFort Worth, TXNGP
 BlueCrest EnergyFort Worth, TXHallwood Group, One Stone Energy Partners
 Bluewing MidstreamHouston, TXEnergy Spectrum Capital
 Bold Production ServicesHouston, TXOFS Energy Fund
 Casillas PetroleumTulsa, OKKayne Anderson Capital Advisors, Ridgemont Equity Partners
 Eagle BatteryMuncie, INCardinal Equity Partners
 Fairfield Chemical CarriersWilton, CTFairfield-Maxwell
 Frac Tank RentalsOdessa, TXLone Star Investment Advisors, Venquest Capital Partners
 Frostwood EnergyHouston, TXSFC Energy Partners
 Horizon Mud CompanyMidland, TXPatriot Capital
 House Of BatteriesFountain Valley, CACVF Capital Partners, Elan Growth Partners
 Hybrid Tool SolutionsFort Worth, TXHastings Equity Partners
 Inline ServicesTomball, TXThe Catalyst Group (Houston)
 Krewe EnergyCovington, LACoral Reef Capital, HPS Investment Partners, Sage Road Capital
 Mustang Gas CompressionKilgore, TXCaterpillar Financial Services, CIC Partners
 OneCor ServicesWilliston, NDHillstar Capital, Ranch Creek Partners, True West Capital Partners
 RAM EnergyTulsa, OKMLV & Co, PennantPark Investment
 Redfish RentalsHouma, LAH.I.G. Capital
 Rush-Overland ManufacturingOdessa, TXTenex Capital Management
 Santa Fe MidstreamPlano, TXEnergy Spectrum Capital
 SchrammWest Chester, PAGenNx360 Capital Partners
 Silver Creek Oil & GasIrving, TXB-29 Investments, Crestview Partners, Old Ironsides Energy
 Staghorn PetroleumTulsa, OKEnCap Investments


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