EnerVest Said to Seek $2 Billion for Latest Energy Fund

EnerVest Ltd., which operates more than 26,000 oil and gas wells, is seeking about $2 billion for a new private-equity fund to purchase and manage properties in North America.

EnerVest Energy Institutional Fund XIII LP may also invest in the equity of companies as a way of acquiring assets, according to a fundraising executive summary, a copy of which was obtained by Bloomberg News. It will seek to generate a current return from producing reserves of the properties it acquires and to provide incremental gains by developing non- producing reserves.

The firm, based in Houston, is entering a competitive fundraising market for energy funds, with a number of managers seeking $1 billion or more for new funds. EnCap Investments LP this month started raising money for an oil and gas fund seeking $4.25 billion. Riverstone Holdings and First Reserve Corp. are both seeking $6 billion for their next energy funds.

The new EnerVest fund will focus on deals valued at $100 million to $300 million, and occasionally pursue larger transactions. Fund XIII is able to invest as much as 10 percent of its capital in higher-risk acquisition and drilling opportunities associated with new ventures.

Ron Whitmire, the Houston-based firm’s chief administrative officer, didn’t respond to a call and e-mail seeking for comment.

The fund is targeting at least a 20 percent net internal rate of return, the document shows. It will charge a 2 percent management fee and 20 percent of profits as carried interest after a 9 percent preferred return.

Fund Returns

Founded in 1992, EnerVest and its affiliates have managed 12 institutional private-equity funds and four co-investment vehicles. The most recent fund, EnerVest Energy Institutional Fund XII LP, raised about $2.4 billion in 2010, including debt and preferred equity. The fund has deployed about 86 percent of its capital and is expected to be fully invested by the end of the first quarter of next year, according to the presentation.

The firm’s prior funds, excluding Fund XII, have generated realized proceeds and unrealized value representing a net internal rate of return of about 31 percent, the presentation shows.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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