Harbinger Group Inc. (NYSE: HRG) (“ HGI” or the “ Company”) announced today that its wholly-owned subsidiary, HGI Energy Holdings, LLC, successfully closed, effective February 14, 2013, on its previously announced joint venture with EXCO Resources, Inc. (“EXCO”; NYSE: XCO) to create a private oil and gas partnership (the “ Partnership”).
Pursuant to the transaction, the Partnership purchased and will operate EXCO’s conventional oil and natural gas assets in West Texas, including and above the Canyon Sand formation, as well as in the Danville, Waskom, Holly and Vernon fields in East Texas and North Louisiana. A definitive agreement to enter into the Partnership was announced on November 5, 2012.
“This joint venture with EXCO fits well within our strategy of identifying and acquiring businesses with untapped value that we can support and grow by providing access to long-term capital and partnering with high-quality, proven management teams,” said Philip A. Falcone, HGI Chairman and Chief Executive Officer. “With this transaction, we are further diversifying HGI by establishing a new Energy operating business that will complement our existing, highly-successful Consumer Products and Insurance & Financial Services businesses. We will continue to look for strategic opportunities to increase our footprint in the important Energy sector by acquiring companies with long-term growth potential.”
“The Partnership is expected to provide stable dividends to HGI from long-life, low geological-risk conventional oil and gas assets that generate steady production and reliable cash flows, while at the same time retaining ample cash flow to invest in its reserve base, maintain production and position itself for further growth,” said HGI President Omar Asali. “Additionally, as a result of the July 1, 2012 effective date of the transaction, we have already received an economic benefit of approximately $24.2 million. We appreciate the efforts of the EXCO team in facilitating an orderly transaction and are excited about working with such an established and well-known operator.”