See all articles

Enervest energy fund 'loses nearly all value'

Reports say $2bn fund managed by private equity player has failed as lenders circle for assets 

Energy-focused private equity firm Enervest reportedly has seen the value of a $2 billion oil and gas fund it manages lose virtually all of its value following investments the company made just before the oil-price bust that began in 2014.

According to a report in the Wall Street Journal published on Sunday, Enervest borrowed some $1.3 billion as it built up the fund, using wells as collateral for the loans.

This debt structure spread risk across the fund's entire portfolio and allowed Enervest's bad investments to drag down the good ones, the Journal said.

The poor performance will leave investors - including many pension funds and a handful of charitable organisations - with pennies for each dollar invested, the Journal said.

Enervest chief executive John Walker told the Journal the firm is "not proud of the result".

Now the fund's lenders, including Wells Fargo, are negotiating to take control of the fund's assets to satisfy its debt, the Journal reported.

Enervest launched the fund in 2013 when oil was still trading near the $100-per-barrel range that sparked so much optimsim in the sector at the time. The portfolio includes assets in the Texas Panhandle and near Dallas, among other regions, according to the Journal.

In comments made to the Houston Chronicle on Monday, Enervest downplayed the impact of the fund's impact on the firm's overall health. Enervest has more recently bought into acreage in places like the Eagle Ford shale, and reckons planned asset sales in the coming weeks and months will allow Enervest to get back into the good graces of its lenders.

The Journal said the collapse of the Enervest fund could be the first time a fund larger than $1 billion has lost essentially all of its value.

Latest news
Most read