Oil and gas exploration company
Oil and gas exploration company Terralliance has raised an undisclosed amount of funding mostly from existing investors, despite reports that it squandered almost $300 million in capital on questionable purchases -- Russian jets not least among them -- before laying off more than half of its employees.
The company is not taking money from just anyone, either, naming Kleiner Perkins Caufield & Byers, Goldman Sachs and Passport Capital among its backers. It has raised $450 million to date, including $150 million in debt from Passport. It remains in violation of that loan after losing out on a $1 billion investment from Singapore firm Temasek Holdings. None of this is helped by the fact that its chief executive, Erlend Olson, resigned under less than ideal circumstances -- nor by the media poking holes in its claims that it can detect gas deposits with 93 percent accuracy.
It's unclear whether the new round of funding will be enough to pull Terralliance back from the brink -- and beyond that, why any previous investors have re-upped their commitment to the company after getting or seeing their colleagues get burned. One possible reason is the potentially massive payout possible in the oil and gas industry despite the high risks and capital-intensive demands, says a source close to the company. For example, the Russian jets and expensive satellite technology that most onlookers have equated with waste are vital tools used to pinpoint underground fuel sources, he explains. That's all well and good, but $450 million is still a huge chunk of change for a company that has yet to kick out any real returns.
Based in Newport Beach, Calif., Terralliance has also taken funds from DAG Ventures and Ithmar Capital. It says it has already converted the bulk of its debt into equity.