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The Private Equity Puzzle: Rebuilding Portfolios After M&A Craze

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Each of the past three World Jigsaw Puzzle Champion winners assembled 500-piece Ravensburger scenes—tigers prowling jungles, blue-chaired outdoor cafes, pastel housing—in less than 40 minutes.

As impressive as that is, jigsawing a shale unit map of the Haynesville Shale would clearly be next level. For one, the Haynesville covers about 5.76 million square acres—each a potential piece. And Louisiana state activity maps show shale units in red, preproduction in green triangles. The overall effect is of a Christmassy Lite-Brite project gone too far.

Still, it’s what’s not there that could matter. The puzzle for private equity’s startups in all shales is to find the spots that don’t yet shine. And, regardless of the play, it won’t be easy after rampant M&A ransacked the Lower 48’s PE portfolio companies, along with some large publics.

Beginning early last year, Post Oak Energy Capital began supporting a number of companies with equity commitments. The companies are working to assemble positions in some of those same lucrative (and expensive) plays as private equity firms begin to rebuild after the running of the M&A bulls.

During the latter part of 2024, Oil and Gas Investor caught up with three of the new companies: the Haynesville Shale’s Quantent Energy Partners; Delaware Basin-focused Ichthys Energy Partners; and the Utica Shale’s Tiburon Oil & Gas Partners.

Building a profitable footprint in any of those plays will be no easy task. Quantent, Ichthys and Tiburon are banking on a network of connections, a feel for their respective plays and a willingness to lock down every profitable piece of acreage still available. All while facing off in the oil and gas version of Squid Game: A&D.

haynesville well activity map
The Louisiana state activity map of the Haynesville is so dense that even a jigsaw puzzle master would struggle to find the individual pieces—but that won’t stop companies from trying. (Source: Louisiana Department of Energy and Natural Resources)

In the Haynesville, most of the best and biggest blocks of acreage are locked down by major producers waiting to cash in on increased LNG exports. Operators range from privately held Aethon Energy to public E&P Expand Energy, the country’s largest natural gas producer. Expand holds 650,000 net acres in the play and averaged 2,452 MMcfe/d in the third quarter.

But Quantent has already locked down one acquisition and sees more opportunities ahead.

In the Utica, the liquids-rich areas have been swarmed by new entrants chasing EOG Resources and jockeying with top producers Encino Energy, Ascent Resources and Infinity Natural Resources. Finding a viable large contiguous position will be increasingly difficult there.

Scott Hudson, president and CEO of Tiburon, sees a lot more grassroots leasing that can be done in what he calls “pockets” or “donut holes” in which an operator can pick up three-or five-well units.