The move follows Lehman’s purchase of a one third stake in the company in 2006.
Run by former Dynegy executive Chuck Watson, Houston-based Eagle Energy manages supply, transportation, transmission, load and storage portfolios for wholesale natural gas and power customers. It has a 24-hour trading floor and offers hedging services.
The deal will see Lehman buy out the 33% of Eagle owned by Oklahoma upstream gas company Chesapeake Energy, and the one-third ownership of Watson and other Eagle managers. The investment bank plans to combine Eagle's physical energy commodity marketing with its own trading operations in financial energy contracts and derivatives.
The bank’s move into the physical energy market underscores the growing significance of commodities as an asset class. “We believe there to be enormous market opportunities in the commodities space in the coming years," said Roger Nagioff, Lehman’s global head of Fixed Income. "The combination of Eagle's remarkable contacts and knowledge in the physical and financial markets for gas and power, married with Lehman Brothers' capital markets expertise, will be a powerful contributor to this effort."
Eagle was formed in 2003 in the aftermath of the Enron crisis, moving to capitalize on the natural gas and power marketing opportunities that arose when the large energy merchants that once dominated the market scaled back their operations. Since its founding, Eagle has grown to 80 employees located in Atlanta, Calgary, Chicago, Fort Worth, Houston and Pittsburgh.