Private equity (PE) continues to pour into the North American oil and natural gas patch amid higher commodity prices and capital discipline by publicly traded companies.

drilling rig

Privately held exploration and production (E&P) firm Sabalo Energy II said Wednesday it has closed a $300 million equity commitment from EnCap Investments LP. The objective “is to build, operate and generate significant cash flow from a portfolio of upstream assets located in premier U.S. basins,” Sabalo said. 

Sabalo’s management team and EnCap have joined forces this year already. Sabalo management acquired more than 21,000 net acres in the Permian Basin’s Midland formation and grew production to 14,500 boe/d before selling the assets to Laredo Petroleum Inc. in a $715 cash and stock transaction.

“Our team has a long history of value creation and excels at evaluating, building to scale, and successfully divesting large-scale asset packages in sought after development fairways,” said Sabalo’s Barry Clark, president. He said “we are excited about the opportunity set we see in the industry today.

“We believe the current macro environment presents an exciting opportunity for experienced management teams with strong financial backing to leverage the technological learnings of the past decade to generate strong stakeholder returns,” while pursuing a balanced environmental, social and governance focus.

EnCap partner Brad Thielemann said Clark and the Sabalo team “have a demonstrable track record of capturing assets and creating value across various market environments. The equity commitment is a testament to our confidence in Sabalo’s operational and technical ability to execute across multiple oil and gas basins.”

Meanwhile, Calgary-based oilfield services firm Inclusive Energy Ltd. said Thursday it has “significant” PE  capital “available and ready to deploy…in the North American energy and natural resource industries, including the upstream, midstream, infrastructure, oilfield services and renewables sectors.”

The company “is actively seeking upstream investment opportunities and joint ventures with energy companies, projects and assets which offer a strong financial return and sustainable growth potential.”

Inclusive Energy CEO Bilal Hydrie said, “We believe strongly that the time is right to support and invest in the energy business. We see a lot of upside in the cycle and have capital immediately available for investment opportunities.”

Hydrie said “the banks and traditional lenders have essentially abandoned the small energy producers, leaving them financially stranded. With a scarcity of capital in the energy markets, Inclusive can fill a market niche, add value and assist in growth for these companies.”

Sierra Energy Holdings LLC, meanwhile, said this month it plans to pursue mineral and royalty stakes in the Lower 48, backed by a $500 million PE commitment. 

Privately held U.S. E&Ps continue to outpace their publicly traded peers in seeking drilling permits, according to note issued Sept. 20 J.P. Morgan analysts.

The research team led by Arun Jayaram said “Lower 48 rig count trends have remained consistent with operator messaging, as majors and public E&Ps have kept a flattish rig count since early June, while the privates have continued to build up activity levels, adding 72 rigs in the same period.”

Total approved permits in August for horizontal wells fell by 6% month/month to 922 permits, researchers said. Of these, private operators had 480 approved permits, versus 442 public operators.