Sago Energy

Investment Status: realized

Sector: Gathering & Processing

Investment Fund: Fund I, Fund II

Geography: Louisiana & Texas

Initial Investment: March 1, 2000

Date of Disposition:March 1, 2004

In March 2000, Fund I acquired a 93.6% ownership interest in Sago with the purchase of the Ledco gathering and processing facilities in Louisiana from Tejas Gas LLC, an affiliate of Shell Oil Company. The assets were small non-core assets that Shell deemed non-strategic after its acquisition of Tejas Gas. Haddington had a historical working relationship with one of the founders of Sago and believed that Sago could establish operations with the purchase of the Louisiana assets, and then grow through opportunistic acquisitions of additional smaller, under-performing midstream assets.

Revenues from the Louisiana assets served to fund overhead while Sago pursued additional acquisitions. After evaluating more than 30 follow-on acquisition opportunities over the next three years, Sago purchased the Jameson Processing Plant and 2,200 miles of natural gas gathering systems in West Texas in March 2003 at an attractive earnings multiple. This follow on investment was made by Fund II and significantly augmented the size of Sago’s business and permitted it to expand operations into the Permian Basin of West Texas. In March 2004, Sago was acquired by West Texas Gas Inc.