Private equity firms increased their investment in oil and gas companies in 2017. Private Equity investment has played a substantial role in the U.S. oil and gas production surge. The recent wave of private equity investment was at least partially prompted by the oil and gas industry downturn that started in 2014 and lasted through mid-2016.

The drop in crude oil prices generated favorable asset valuations and exposed some distressed asset sellers. In addition, public markets and debt capital markets tightened, and technological innovations allowed drilling and operating costs to be slashed while well production saw a boost. These factors position Private Equity firms to make and continue investing in oil and gas companies.

Because of the specialized nature of the upstream, midstream and downstream segments, potential investors often address the need to understand potential risks by being familiar with the ins and outs of the industry. A lack of specialized knowledge can create barriers to entry for would-be investors.

Oilfield services companies follow the more traditional private equity model of acquisition of controlling stakes in target companies. These companies typically attract generalist Private Equity firms looking to get into the oil and gas space.

Some large, diversified investment companies have divisions dedicated to energy (including oil and gas, power, alternative energy and other businesses). Other firms concentrate on oil and gas. Investment in oil and gas companies can require specialized industry knowledge.

Major players in the Private Equity space such as The Carlyle Group, Blackstone and others continue to shore up their investment in the oil and gas industry, but this list focuses on energy-specific investment firms.

The Private Equity firms with a dedicated focus on the oil and gas industry understand the complexities that make oil and gas investments both high-risk, high-reward. As the upstream market slowly climbs out of the largest downturn since the 1980’s, the firms that understand the market have positioned themselves to capitalize on higher oil prices and a renewed optimism about the upstream industry.

If there are any additional Private Equity Firms focused on the oil and gas industry, please let us know who they are and why they should be on our list by emailing SPRI at info@sprioilgas.com.