Kimmeridge Energy Management, a New York-based firm, has successfully raised more than $1 billion for the acquisition and development of oil-and-gas assets. This new fund, named Kimmeridge Fund VI LP, surpassed its predecessor fund by collecting roughly 25% more capital. It is also the largest fund raised by Kimmeridge since its establishment in 2012.
The firm sees lucrative investment opportunities in the oil-and-gas sector due to a shortage of capital, which has caused a decline in asset prices. Despite concerns about climate change and the future value of traditional-energy assets, investors remain cautious about backing fossil fuel-related strategies. This has resulted in fewer funds being raised in the sector compared to previous years.
Research provider Preqin reports that North American private-equity firms raised $2.37 billion across five oil and gas-focused funds in the first half of 2023. This amount is only a tenth of what was raised in the same period last year. Furthermore, no fund has closed with more than $1 billion so far this year, whereas five funds achieved this milestone last year.
Kimmeridge Energy Management has a successful track record in the energy sector, particularly in the Permian Basin. It has capitalized on aggregating undeveloped oil-and-gas fields in this region and selling them to publicly traded energy companies. However, the dynamics of the sector have changed since then, with public companies shifting their focus to maximizing returns rather than pursuing unchecked growth.
In addition to its investment activities, Kimmeridge also employs an activist fund strategy. It has been involved in advocating for changes in public energy companies and has capitalized on these changes when opportunities arise. For example, Civitas Resources, an oil-and-gas producer formed through a merger, was one of Kimmeridge’s main investments. The firm’s stake in Civitas Resources was valued at approximately $990 million, with a return multiple of 4.6 times invested capital.
Overall, Kimmeridge Energy Management’s successful fundraising reflects the firm’s confidence in the oil-and-gas sector and its ability to identify profitable opportunities amidst changing market dynamics.
Read the latest issue of the OGV Energy magazine HERE