Collin Eaton with The Houston Chronicle penned a good article on the influence of private equity in the oil and gas business, titled “Private equity poised for oil growth as public companies pull back”. Here is the link to the full story about the private equity firms who have raised billions: https://bit.ly/2q1g8Ev
The article contained some really interesting statistics on the size and scope of these investments and here is a sampling from that report.
In the oil industry, private equity firms play essentially the same role that venture capitalists play in Silicon Valley’s tech startup sector, betting millions of dollars on small, promising companies in the hope they’ll pay off big. Private equity was instrumental in the first U.S. shale boom, backing companies that experimented with drill bits and rocks, and literally sketched out the landscape of burgeoning shale plays still in their infancy.
Private equity firms have raised more than $200 billion in funds for energy investments since 2014, including $50 billion set aside for shale drillers, according to research firm IHS Markit. They have stakes in more than 350 privately held U.S. oil producers, including 73 companies launched last year with $12.4 billion in investments, according to research firm 1Derrick. Those investments came in about one-third higher than in 2016.
Private equity firms also were involved in $15 billion worth of oil-production transactions last year, three times more than from 2008 to 2012. They were party to 15 of the 20 biggest deals last year. Now, roughly 40 percent of the 979 rigs drilling across the continental United States are tied to private equity-backed companies, investors said.
In Houston, 20 local private equity firms have raised a combined $56.3 billion in funds over the past decade, most of it meant for the oil industry, according to Preqin, a company that collects data on alternative investment industry. A portion has been set aside for investments in healthcare, manufacturing and other industries.
One of the city’s largest such private equity firms by far is EnCap Investments, a 30-year-old private equity company with $13.5 billion in available capital for investments, according to Preqin. It manages money for hundreds of institutional investors, pouring cash into more than 240 oil producers and pipeline operators since the late 1980s. It has raised $31.3 billion in the past 10 years.
Following EnCap in size are Houston’s Quantum Energy Partners, which has raised $7.9 billion over the last decade; The Sterling Group, $2.3 billion; White Deer Energy, $2.2 billion; CRG, $2.1 billion; Post Oak Energy Capital, $2 billion.
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.
Update: Private Equity starts to exit oil and gas (2019)