EnCap targets $6.5 bln for flagship Fund XI in rapid return

  • Firm wrapped up predecessor fund less than two years ago
  • EnCap seeking commitments for EnCap Energy Capital Fund XI
  • Commodity prices strengthen in 2016


Big energy GP EnCap Investments has returned to the fundraising market for its latest flagship fund aimed at the oil and gas sector less than two years after closing its predecessor pool, according to a source.

After a rapid pace of purchases and exits in the troubled energy patch of 2014-2016, EnCap is targeting $6.5 billion for EnCap Energy Capital Fund XI, in line with what the firm drew in for Fund X.

The firm may end up raising $7 billion or more for Fund XI, according to a source.

Back in 2014 and early 2015, EnCap hit its $6.5 billion hard cap for its 10th energy fund in less than six months, with commitments from Arkansas Teacher Retirement System, Oregon Investment CouncilTeachers’ Retirement System of Louisiana and State of Wisconsin Investment Board, among others.

EnCap declined to comment.

Murphy Markham, managing partner at EnCap, said Nov. 30 the Dallas firm has committed about 85 percent of Fund X to its stable of portfolio company management teams. Those teams have deployed about 35 percent of that pool. He didn’t mention any fundraising efforts.

EnCap has invested nearly $3 billion since 2015 during a difficult time in energy markets. As oil prices continue to rebound, EnCap plans to sell assets to big, strategic energy companies, he said. It’s also still finding places to put capital to work. (See related story)

Among the larger deals of late, EnCap led the $985 million capital reallocation of Southland Royalty Co from sellers Anadarko Petroleum and Energen. EnCap paid $530 million to private sellers for OGX Holding III, an oil and gas company based in Texas.

On the exit side, EnCap inked the sale of QStar LLC to SM Energy for $1.6 billion in a deal that was expected to close in mid-December. In early 2016, it sold Felix Energy to Devon Energy for $1.9 billion, among several other deals.

The vintage 2010 EnCap Energy Capital Fund VIII earned an IRR of negative 1.5 percent as of Sept 30, 2015, for California State Teachers’ Retirement System.

The vintage 2007 EnCap Energy Capital Fund VII LP produced a 20.7 percent IRR as of Dec. 31, 2015, for Houston Police Officers’ Pension System.

The vintage 2006 EnCap Energy Capital Fund VI LP rang up an IRR of 23.7 percent as of Sept. 30, 2015, for CalSTRS.

Action Item: EnCap Investments, http://www.encapinvestments.com/contact

A rig contracted by Apache Corp drills a horizontal well in a search for oil and natural gas in the Wolfcamp shale located in the Permian Basin in West Texas on Oct. 29, 2013. Photo courtesy Reuters/Terry Wade