 |
MEZ & Co. focuses its investment
strategy on stable assets used to produce, gather, process, transport,
store, refine or distribute crude oil, natural gas and related
products. The Firm also will invest in ventures which derive specialty
products from refined petroleum or processed natural gas, as well
as proven sources of renewable energy. MEZ & Co. does not invest
in energy exploration, trading or retail. The Firm seeks investments which generate
long-term real cash flows from operations to generate investment
returns. The Firm will not participate in ventures established
for no other purpose than financial engineering.
These two examples of MEZ & Co. investments illustrate the unique
benefits to the Firm’s approach, both for its energy partners
and its passive financial co-investors.
Cortez Pipeline Company
November 1992 to Present
 Completed
in 1984 at a cost of more than $1 billion, the 500-mile Cortez
carbon dioxide pipeline (and supporting infrastructure) transports
carbon dioxide from natural reserves located in southwestern Colorado,
to the West Texas oil fields of the Permian Basin where it is used
in enhanced oil recovery projects. Carbon Dioxide is the most effective
recovery medium used by the majors to lengthen the productive lives
of some of the most important oil fields in West Texas. The region’s
estimated recoverable reserves exceed 100 billion barrels. After
several expansions, the Cortez Pipeline currently transports over
1,250,000 thousand standard cubic feet (MSCF) per day of carbon dioxide, with a projected long remaining useful
life.
MEZ & Co. first acquired its 13% interest in Cortez Pipeline Company
in 1992 and has maintained its ownership for nearly 20 years. The
remaining interests are held 50% by Kinder Morgan Energy Partners
(acquired from Shell Oil Company) and 37% by ExxonMobil Corporation.
In 2000, MEZ & Co. assumed complete ownership of its interest
by providing exit liquidity to its original financial co-investors.
Subject to prevailing market conditions, MEZ & Co. has periodically
enhanced its return on equity by leveraging its interest with structurally
subordinated debt.
An executive of MEZ & Co. serves as Vice-Chairman of the Cortez
Pipeline Partnership Committee. Despite its minority position,
MEZ & Co. has unique management rights, including but not limited to, consenting to changes to the pipeline tariff, increasing capital
expenditures, and issuances of debt.
Back to Top
Penreco
February 2001 to January 2008
 In
2001, MEZ & Co. acquired from Pennzoil-Quaker State a 50 percent
interest in Penreco, a leading manufacturer of high value-added
specialty oils and solvents processed from hydrocarbon feedstock.
ConocoPhillips held the remaining 50 percent. At the instigation
of ConocoPhillips, the partners elected to take advantage of a
perceived market opportunity to sell Penreco in 2007, with ConocoPhillips
and MEZ & Co. jointly running a market-wide auction process that
yielded a highly successful and orderly disposition.
Penreco’s white oils and petrolatum have been used in a wide
range of pharmaceutical, cosmetics and food products. The company’s
solvents have been used by manufacturers of high quality ink, cleaning
products, and mining and drilling fluids. Penreco has been either the leading, or the second largest participant, in each market
in which it competes.
MEZ & Co. and ConocoPhillips had equal representation on Penreco’s
Partnership Committee, with oversight for Penreco’s two manufacturing
plants. MEZ & Co. worked closely with ConocoPhillips and Penreco
management to evaluate production performance, marketing strategies,
new product development, international growth, efficiency opportunities
and employee issues. While Penreco had its own employee base, Penreco
also benefitted from corporate services provided by ConocoPhillips
personnel, including its environmental safety, legal and finance
departments.
Back to Top
|
 |
