Billionaire-backed commodity merchant buys natural gas assets

NEW YORK Tue Jan 15, 2013 3:06pm EST

NEW YORK Jan 15 (Reuters) - Global commodities merchant Castleton Commodities International LLC, owned in part by billionaire investors Glenn Dubin and Paul Tudor Jones, said on Tuesday it has acquired oil and gas assets in Colorado and Utah in a bid to build out its physical natural gas business.

The firm acquired 180 oil and gas wells, 150,000 net acres in mineral leases, a gas processing facility and a 262-mile gas gathering system from Houston-based Patara Oil & Gas, it said in a press release.

"This acquisition exemplifies our investment philosophy of focusing on quality assets that complement our existing merchant activities and build upon our long and successful track record in the energy sector," said William Reed II, president and chief executive of Castleton, said in the release.

Purchasing the assets represents the company's first effort "to pursue attractive opportunities in the upstream natural gas sector."

Castleton will set up a Denver, Colorado-based office and use Patara's personnel to run the operation.

Patara is backed by private equity firms Jefferies Capital Partners, Troika Resources Investment PEF and GE Asset Management.

Castleton is partly owned by DF Energy Acquisition LLC, a private investment vehicle owned by Dubin. Dubin also co-founded hedge fund Highbridge Capital Management, which he sold to JPMorgan Chase & Co.

In October, Castleton bought and renamed the former Louis Dreyfus Highbridge Energy, which was co-owned by French commodity conglomerate Louis Dreyfus Group and JPMorgan's Highbridge Capital.

Investment manager Paul Tudor Jones who owns Tudor Investment Corp, also has a stake in Castleton through an investment vehicle created through a family trust The same is true for hedge fund manager Timothy Barakett and the chairman and CEO of Continental Grain Company, Paul Fribourg.

Dubin was listed as number 285 on the Forbes 400 list of billionaires in September 2012 with a net worth of $1.7 billion; Tudor was number 108 on the same list, with $3.6 billion.

As tighter government regulations have forced banks to reevaluate and pare down commodities businesses, private equity-backed hedge funds and commodity merchants have stepped in.