In the first half of 2015, EnCap Investments LP couldn’t bring itself to pull the trigger on a deal, but that doesn’t mean the private equity firm came away empty-handed. Companies under the EnCap banner picked some first-rate assets: people.

The firm stayed disinterested in the competitive transaction environment. Deals were marketed and underwritten for long-term oil prices of $75 to $80 per barrel—prices too rich for EnCap’s blood.

“We had trouble competing because we were not willing to buy in to and underwrite deals based on what we viewed to be substantial price upside on the oil side,” said Scott R. Smetko, director, in a webcast at EnerCom’s The Oil & Gas Conference.

However, EnCap was quick to snatch up top tier technical and leadership talent that otherwise might have looked past the management teams that EnCap backs.

“We were able to capitalize on the environment,” Smetko said. “It’s interesting the primary reason why some of this talent was available to us in the first half … was the value of their golden handcuffs—stock options and related incentives—was diminished as stock prices sank.”

In addition to devalued stock options, leaders also grappled with uncertainty due to layoffs, and they wanted more job satisfaction with drillbits and A&D activity grinding to a halt.

Smetko said EnCap was able to field new, attractive management teams and supplement others as a result.

“We believe that uncertain times often breed significant opportunity for those that are patient and willing to adapt while also continuing to adhere to their investment principals,” he said.

As the second half of 2015 lurched forward, the future of M&A may be in its run-and-gun past, Smetko said.

In 2001, 78% of EnCap’s Fund IV was aimed at the acquisition and exploitation of plays. The remaining 22% was devoted to low-risk drilling.

But the firm has a history of changing with market dynamics. By 2013, the priorities for its Fund IX were flipped—76% of capital went toward low-risk drilling and 24% to acquisition and exploitation, Smetko said. “It wouldn’t surprise us to see a shift back toward the ‘acquire and exploit’ model.”

The role of E&Ps, what they acquire and sell and the intangible value of talent is shifting yet again for the industry. In nearly three decades of up and down cycles, EnCap has found a way to capitalize, sometimes in distinctive ways.

After a soft first half in the A&D market in 2015, Smetko said natural gas, rather than oil assets, may be the commodity du jour.

“I also think personally we’ll see an uptick in the number of natural gas deals that are consummated,” he said. “I think oil operators will continue to hold on to their assets because there’s hope of oil prices returning to something close to their previous levels.”

While oil is in crisis, natural gas prices have remained relatively stable.

“Companies needing capital will sell natural gas assets and hold oil assets in hope of commodity prices improving,” he said.

The A&D market may improve in October, after lenders redetermine borrowing bases. The process is expected to involve increased federal regulatory scrutiny and pickier lenders.

If commodity prices stay depressed, M&A activity could pick up in the third and fourth quarters of 2015 as E&Ps’ hedges roll off.

“Cash will be king and well-funded firms will have significant buying opportunities,” EnCap said in its presentation.

In the first half of 2015, the bid/ask spread for assets remained too wide largely because of lenient borrowing redeterminations and easy to obtain capital, Smetko said.

“Our companies really didn’t see widespread acquisition opportunities,” he said, although the number of companies evaluating deals saw an uptick.

With new talent, EnCap will build new teams.

The firm typically commits between $200- and $500 million per management team, though it has funded as much as $1.1 billion to a single management team.

In the past 27 years, EnCap has invested in 227 oil and gas companies, with 166 of the deals generating a 2.4 times return on investment (ROI). The company’s goal is 2 times ROI.

“To put it simply, we’re focused on turning a dollar into two or three dollars on a consistent basis,” Smetko said. “And we’re happy to give up upside beyond that if we can trade and eliminate some of our downside risk.”