The U.S. has become the leader in production and energy supply. With this as a backdrop, private equity investors have become increasingly interested in investing in the space.
Since the beginning of 2014, private equity firms have invested approximately $12 billion in energy companies, according to Pitchbook Data Inc.
The oil and gas sector is garnering the most activity today, thanks to horizontal fracking—the technique in which rock is fractured by a hydraulically pressurized liquid. According to the U.S. Energy Information Administration, as recently as 2008, the U.S. produced 2.1 billion cubic feet of natural gas per day. Today, it’s 12.3 billion cubic feet and growing fast, thanks to the ability to frack.
Middle-market PE firms are finding their niche in the market, investing in companies that support the fracking industry. For example, in October, Southlake Equity Group sold machining and fabrication company Waples Manufacturing to an investor group led by Banyan Investment Partners. Headquartered in Fort Worth, Texas, Waples Manufacturing provides precision-machined solutions for the oil and gas market.
“Private equity firms are showing more interest in the energy sector, further driving the growth and investment capital that is needed to continue expanding the U.S. energy industry,” said Mike Lorusso (pictured), group head and managing director of CIT corporate finance energy group.
“With the explosion of mid-continent fuel production, especially the Bakken Shale, companies are looking for financing to build pipelines, terminals and processing facilities quickly to meet growing production capacity needs.”
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