{"id":40227,"date":"2015-04-29T12:41:28","date_gmt":"2015-04-29T17:41:28","guid":{"rendered":"http:\/\/stateimpact.npr.org\/texas\/?p=40227"},"modified":"2015-04-29T12:41:28","modified_gmt":"2015-04-29T17:41:28","slug":"mexican-venture-capital-seeks-permian-basin-opportunity-amid-oil-downturn","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/texas\/2015\/04\/29\/mexican-venture-capital-seeks-permian-basin-opportunity-amid-oil-downturn\/","title":{"rendered":"Mexican Venture Capital Seeks Permian Basin Opportunity Amid Oil Downturn"},"content":{"rendered":"<div id=\"attachment_40228\"  class=\"wp-caption module image right\" style=\"max-width: 300px;\"><a class=\"fancybox\" title=\"The growing number of oil rigs pulled in from the oilfield and stored in this lot in Odessa, Texas is a testament to the steep decline in the price of crude oil in the last year.(Lorne Matalon)\" href=\"http:\/\/stateimpact.npr.org\/texas\/files\/2015\/04\/standing_rigs_mexico_odessa_lorne_matalon.jpb_-500x333.jpg\" rel=\"\"><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-40228\" alt=\"The growing number of oil rigs pulled in from the oilfield and stored in this lot in Odessa, Texas is a testament to the steep decline in the price of crude oil in the last year.(Lorne Matalon)\" src=\"http:\/\/stateimpact.npr.org\/texas\/files\/2015\/04\/standing_rigs_mexico_odessa_lorne_matalon.jpb_-500x333-300x199.jpg\" width=\"300\" height=\"199\" srcset=\"https:\/\/stateimpact.npr.org\/texas\/files\/2015\/04\/standing_rigs_mexico_odessa_lorne_matalon.jpb_-500x333-300x199.jpg 300w, https:\/\/stateimpact.npr.org\/texas\/files\/2015\/04\/standing_rigs_mexico_odessa_lorne_matalon.jpb_-500x333.jpg 500w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><p class=\"wp-media-credit\">Lorne Matalon<\/p><p class=\"wp-caption-text\">The growing number of oil rigs pulled in from the oilfield and stored in this lot in Odessa, Texas is a testament to the steep decline in the price of crude oil in the last year.(Lorne Matalon)<\/p><\/div>\n<p><em>This story was reported by Lorne Matalon in collaboration with\u00a0<a href=\"http:\/\/www.fronterasdesk.org\/\">Fronteras, The Changing America Desk<\/a>.<\/em><\/p>\n<p>Mexican venture capital is hovering over distressed energy companies in the Permian Basin of Texas, the nation\u2019s highest-producing oilfield.<\/p>\n<p>Those companies \u2013 including oil and gas drillers, and service companies \u2013 crafted budgets when the price of crude oil was 100 dollars per barrel. It\u2019s now in the 50s. And those companies need capital that U.S. banks are sometimes reluctant to give in an oil downturn.<\/p>\n<p>\u201cThis is a buyers\u2019 market right now,\u201d said Carlos Cant\u00fa, an investor from Ju\u00e1rez.<\/p>\n<p>He\u2019s one in a stream of Mexican venture capitalists wanting in on U.S. oil and gas. Right now, the smaller players in the energy industry\u2014operating on thin margins\u2014can collapse without new capital.<\/p>\n<p><!--more-->Cantu was part of a group of Mexican CEOs recently visiting Odessa, Texas, in the heart of the Permian Basin.<\/p>\n<p>\u201cThere\u2019s lots of opportunities right now here in Odessa,\u201d he said.<\/p>\n<p><div class=\"related-content alignleft\"><h4 class=\"related-header\">Related<\/h4><div class=\"links\"><h5>Posts<\/h5><ul><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2014\/10\/22\/does-drop-in-oil-prices-make-texas-crude-too-expensive\/\">Does Drop In Oil Prices Make Texas Crude Too Expensive?<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2015\/02\/27\/looking-for-a-silver-lining-in-falling-oil-prices-in-texas\/\">Looking for a Silver Lining in Falling Oil Prices in Texas<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2015\/02\/23\/west-texas-to-mexico-pipelines-on-track-for-2017-finish\/\">West Texas to Mexico Pipelines On Track for 2017 Finish<\/a><\/li><li class=\"link\"><a href=\"http:\/\/stateimpact.npr.org\/texas\/2014\/07\/28\/in-big-bend-battle-looms-on-fracking-along-the-border\/\">In Big Bend, Battle Looms on Fracking Along the Border<\/a><\/li><\/ul><\/div><div class=\"topics\"><h5>Topics<\/h5><p class=\"topic\"><img class=\"alignleft\" src=\"http:\/\/stateimpact.npr.org\/texas\/files\/2011\/07\/Oil-FirstDrillinAustin-Trinity-street-By-Daniel-Reese-60x60.jpg\" height=\"60\" width=\"60\" \/><a href=\"http:\/\/stateimpact.npr.org\/texas\/topic\/oil-production-in-texas\/\">Oil Production In Texas<\/a><\/p><\/div><\/div>He wants to buy or invest in American companies that need an infusion of cash if they are to survive.<\/p>\n<p>The federal Energy Information Agency (EIA) says the world has a surplus of a million barrels a day. But the agency also predicts the glut will shrink sharply next year.<\/p>\n<p>Cant\u00fa wants to buy distressed companies now.<\/p>\n<p>And he says, Mexican companies that work the Permian Basin now and learn the tricks of hydraulic fracturing will have an edge at home once contracts are bid to drill northern Mexico\u2019s shale deposits.<\/p>\n<p>\u201cThe win-win situation becomes gigantic,\u201d he said.<\/p>\n<p>Cant\u00fa\u2019s went to scout a prospective acquisition target, an equipment company.<\/p>\n<p>The company is near a gravel lot in Odessa that speaks volumes about the contraction in the oil business. It\u2019s a week by week growing collection of oil rigs brought in from the field because operators are scaling back.<\/p>\n<p>Cant\u00fa was here with Jorge Uranga.<\/p>\n<p>\u201cWe\u2019ve found 24 business leads here in the Permian Basin. And now we\u2019re doing market research on these business leads,\u201d he explained.<\/p>\n<p>Uranga runs the state of Chihuahua\u2019s Energy Project, an agency formed to promote investment in Mexico\u2019s domestic energy sector. Mexico\u2019s changed its constitution in 2013 to allow foreign energy companies to work in Mexico.<\/p>\n<p>\u201cWe think the projects for oil and gas, exploration and drilling, is going to happen in 10 years or 15 years,\u201d said Uranga.<\/p>\n<p>\u201cSo we want to learn and we want to invest here in the Permian Basin, in Odessa, in order to so that we can learn and when Chihuahua is ready for that project, we are going to transfer that technology and we can do the same things there.\u201d<\/p>\n<p>And it\u2019s not just Mexican money, said energy analyst Jim Wicklund at Credit Suisse in Dallas.<\/p>\n<p>\u201cToward the end of last year is when you started to see the private equity money really start to raise. And it ballooned in the first quarter of this year,\u201d he said.<\/p>\n<p>Wicklund said between 100 and 108 billion dollars has been raised by private equity in the last few months. Some of that venture capital comes from firms that are recommending that clients invest in energy funds created to take advantage of depressed crude oil market.<\/p>\n<p>From Bloomberg Business;<\/p>\n<p>The firms have already raised $15 billion for general energy investing in recent years. Carlyle Group LP, Apollo Global Management LLC, Blackstone Group LP and KKR are raising billions more for new funds created in the past few months to invest in distressed oil producers.<\/p>\n<p>\u201cThe U.S. rig count has dropped faster than any other down cycle. And the private equity money raised to take advantage of that drop has been raised faster than we\u2019ve ever seen,\u201d he said.<\/p>\n<p>In the Permian Basin, one of the people the Mexicans investors rely on in their hunt is Kirk Edwards.<\/p>\n<p>\u201cThis is probably my seventh meeting with them,\u201d said Edwards.<\/p>\n<p>Edwards is an oilman, an energy advisor to the Texas Lt Governor and a former member of the Dallas Federal Reserve. He was recently praised by the Odessa Chamber of Commerce for having a quote \u201can innate sense of timing for purchasing properties and liquidating them.\u201d<\/p>\n<p>He tells would-be investors to proceed with caution.<\/p>\n<p>\u201cIt\u2019s very difficult and it\u2019s very expensive to be in this industry. And it\u2019s very risky,\u201d he exxplained.<\/p>\n<p>\u201cYou just don\u2019t jump in and go drill an oil well somewhere. You\u2019ve got to have a staff and an infrastructure and things like that.\u201d<\/p>\n<p>Along with domestic, Chinese and Russian interest, Edwards confirms the Ju\u00e1rez visitors are part of a huge pool of money that\u2019s ready to pounce.<\/p>\n<p>\u201cThere\u2019s probably a hundred billion dollars of private equity that\u2019s been raised just in the last six months to look into distressed companies that are in Texas, in the Bakken,\u201d he said.<\/p>\n<p>That\u2019s the Bakken Shale in North Dakota.<\/p>\n<p>\u201cSo there will be companies that reach out and say, \u2018Hey I could use some capital I got overextended at hundred dollar oil.\u2019 Everybody\u2019s looking for that opportunity.\u201d<\/p>\n<p>Bloomberg Intelligence reports there are 4700 drilled wells in the U.S. that haven\u2019t been completed while oil producers wait out the downturn. The group from Ju\u00e1rez wants to hit the ground running before that happens.<\/p>\n<p><em>This story was reported by Lorne Matalon in collaboration with\u00a0<a href=\"http:\/\/www.fronterasdesk.org\/\">Fronteras, The Changing America Desk,\u00a0<\/a>a consortium of NPR member stations in the Southwest.<\/em><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This story was reported by Lorne Matalon in collaboration with\u00a0Fronteras, The Changing America Desk. Mexican venture capital is hovering over distressed energy companies in the Permian Basin of Texas, the nation\u2019s highest-producing oilfield. Those companies \u2013 including oil and gas drillers, and service companies \u2013 crafted budgets when the price of crude oil was 100 [&hellip;]<\/p>\n","protected":false},"author":51,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[59],"tags":[21],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/40227"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/users\/51"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/comments?post=40227"}],"version-history":[{"count":7,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/40227\/revisions"}],"predecessor-version":[{"id":40235,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/posts\/40227\/revisions\/40235"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/media?parent=40227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/categories?post=40227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/texas\/wp-json\/wp\/v2\/tags?post=40227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}