Posted on 04/10/2015 9:54:03 AM PDT by thackney
Private equity firm EnCap Investments has closed its tenth energy fund with $6.5 billion to back North American oil and gas producers, the latest firm to collect billions to pump into the shale business.
The Houston firm this week joined Blackrock, Walburg Pincus, Riverstone and others in raising more than $25 billion in recent months, according to data collected by Bloomberg, aimed at the battered oil industry after a nine-month slide in crude prices. Many investors see bargains in the business while assets are cheap and oil prices are low. EnCap said its Energy Capital Fund X was “significantly oversubscribed.”
EnCap and other private equity firms’ business involves backing management teams that have proven track records in the oil patch. Often, these teams acquire oil-rich land in private transactions. In the first quarter, private acquisition-and-development deals have fallen low because buyers and sellers largely can’t agree on what assets are worth – oil prices are still jerking up and down.
It may still be too early to see a significant wave of merger and acquisition activity, D. Martin Phillips, a founder and managing partner of EnCap Investments, said in an interview with Fuelfix.
“There’s a dramatic bid-ask spread,” he said. “We do think (deal activity) will pick up later in the year but as a general rule patience is a virtue right now.”
Phillips said that since the firm’s beginnings nearly three decades ago it has seen several periods of ups and down, in terms of oil prices. But he said it has weathered storms effectively – some storms present opportunities.
There are also some bad invesetments available:
http://fuelfix.com/?s=bankruptcy
A lot of projects that didn’t make sense will at 70%, 50% and 30% of asset values.
Sure, and if you have money willing to risk, you can get some good deals on drilling, hydro frac and other services as well. Lots of folks looking to keep some crews busy.
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