Douglas Prieto, CEO of Tailwater E&P, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss technology and infrastructure investments in the energy industry.
Tailwater is a middle-market private equity firm with approximately $5 billion in AUM, with a focus on infrastructure and upstream energy investments. After $57 trillion in capital has left the space, Prieto notes that now is a great time to be involved in oil and gas. While the new administration’s stance of “Drill, baby, drill!” will make it easier to access drilling permits, Prieto doesn’t see those permits substantially increasing drilling activity.
As a private equity firm, Tailwater invests in a variety of technologies. These tech tools can be used to enhance recovery factors, which improve the quantity of oil and gas extracted from a given location. Only 15% of the oil is extracted in primary recovery, which is the first time drilling in a specific location. In addition to investing in technology firms, Tailwater has three million acres of land and midstream infrastructure assets. About 25% of all rigs in the Permian Basin are running on the Tailwater footprint, giving the firm access to a large volume of drilling data.
Tailwater is embedded within the sponsor, which charges investors a single layer of promote, similar to a direct investment. While the firm’s strategies are focused on total return, the funds offer substantial distributions.
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