A Gusher Of Cash For Domestic Drilling

While the rest of the country frets over surging energy prices, a small but growing group of businesses is fueling a boom of sorts in the U.S. oil patch. Dozens of new exploration and production companies, backed by billions of dollars in private equity, are forming to take advantage of flush times. While such players have sprung up in past cycles, "it will be much more pronounced" this time around because investors are confident that oil and gas prices will remain high, predicts energy analyst John E. Olson of Sanders Morris Harris Group Inc., a Houston-based brokerage.

The new money is increasingly focused on drilling for new pockets of natural gas and oil, not simply acquiring and exploiting mature properties left behind by the majors and the large independents, which are chasing bigger opportunities overseas. "The United States oil-and-gas story isn't one about BP Amoco (BP ), Exxon (XOM ), or Chevron (CVX ) anymore," says Kenneth A. Hersh, managing partner at Natural Gas Partners, a big private-equity firm in Irving, Tex. "There are many private companies who are doing exciting things, who are making things happen."