Private Equity Sees Shale Escape Route by Building Cash Flow - Bloomberg

Private Equity Sees Shale Escape Route by Building Cash Flow - Bloomberg

Private-equity firms that bet big on shale for more than a decade finally are seeing glimmers of hope that their investments will bear fruit.

Pioneer Natural Resources Co. took analysts and investors by surprise with its $6.4 billion deal to buy DoublePoint Energy LLC, a Permian shale powerhouse backed by Apollo Global Management Inc., Quantum Energy Partners, Magnetar Capital and Blackstone Credit. It’s the largest acquisition of a closely held oil company since 2011.

Big funds were among the most-acquisitive suitors in North American shale fields such as the Permian Basin, planning to flip their holdings to giant public companies for quick profits. But the strategy collapsed as debt-fueled drillers contributed to a global crude glut, oil markets shuddered and would-be buyers of PE-backed explorers turned their backs.