EIV Capital, based in Houston, is an energy private investment firm that provides growth equity capital to small and mid-cap North American energy companies. EIV invests primarily in the midstream sec-tor, and also considers investments across the rest of the energy value chain. Founded in 2009, EIV has raised three funds employing similar strategies, clos-ing its most recent $450 million fund in early 2017.

Experienced, entrepreneurial team

In the current environment with numerous funding options available, EIV’s diversity of energy industry experience allows it to differentiate itself as a potential partner for entrepreneurs.

Collectively, the EIV investment team has 200-plus years of experience invest-ing in and operating energy companies with a diverse array of backgrounds, including operational, entrepreneurial, commercial and financial. Due to this broad assortment of experience, EIV can quickly understand the business, capital and leadership requirements necessary for a potential partner to achieve long-term growth and profitability as well as identify and avoid possible challenges. 

EIV enjoys working with executives to build their business and commits time and capital to help management position the company for success. In many of its recent investments, EIV spent considerable time alongside its potential partner refining the business plan or providing strategic guidance prior to making an initial capital investment. EIV provides valuable, practical solutions and advice to its partners using firsthand personal experience, both at the outset of a partnership and during growth.

EIV’s differentiating experience is best illustrated by one of its initial investments. In early 2011, Brent and WTI oil prices diverged sharply, which many attributed to geopolitical tensions. However, EIV attributed it to insufficient infrastructure available to move rising U.S. crude production to market. Within four months, EIV partnered with a midstream company to piece together the infrastructure to purchase oil in Oklahoma, transport it to Louisiana and sell it directly to refineries, capturing the arbitrage. EIV also implemented a hedging program to protect its investment. This project demonstrates why EIV is not solely a source of capital, but also a partner that brings experience and helps its partners execute their business plans.

Focused investment strategy

EIV invests the majority of its capital in traditional midstream businesses, such as transportation, logistics and processing. The firm also pursues opportunities throughout the energy value chain, including post-completion oilfield services, downstream, petro-chemical, power and renewables.

EIV’s thorough understanding of the energy industry allows it to partner with entrepreneurs focused on providing high-quality service to producers, midstream companies or other customers regardless of investment size. While EIV’s typical equity investment ranges from $20 million to $80 million, EIV is willing to invest larger or small-er amounts if the opportunity has an appropriate risk-adjusted return. EIV’s focus on return vs. capital deployment allows it to pursue niche opportuni-ties and support its partners as their businesses grow into stable, profitable enterprises with steady cash flows that are attractive to potential acquirers.

Three recent partnerships help demonstrate EIV’s capabilities. In June 2017, EIV worked with existing investors at AMP Americas to commit $47 million to allow AMP to pursue growth opportunities across its businesses, which include both renewable natural gas production and CNG fueling infrastructure.

In April 2016, EIV partnered with H2O Midstream to pursue midstream opportunities focused exclusively on oilfield water. Well before oilfield water logistics was a hot topic, EIV identified the sector as primed for growth, professionalization and cost savings. Upon introduction to H2O Midstream, EIV knew it had found a like-minded partner and brought an initial $100 million commitment to the team, with incremental capital available if needed for the strategy. In June 2017, H2O Midstream closed the acquisition of Encana’s produced water infrastructure in Howard County, Texas, and executed a long-term agreement for midstream water services.

In February 2016, EIV partnered with CAM Integrated Solutions to form a new engineering, procurement and construction management company. CAM is focused on supporting producers with the “first mile” midstream tie-in from the wellhead to the main header/gathering system in top-tier producing basins within the Lower 48. EIV and CAM felt this market was underserved as most engineering companies focus on larger projects. Due to CAM’s experience and relationships, it has built a well-regarded engineering firm serving top producers within its first 18 months of operation.

Personal support and relationships

EIV’s experience allows it to provide commercial, financial, accounting and/or operational support to its partners that may not have a full suite of upper-level management in an effort to control costs. By concentrating its investment focus and limiting the number of investments per fund, typically eight to 12, EIV ensures its operationally-focused team can be a resource for its entrepreneurial partners throughout the investment lifecycle. This ongoing support allows the executive teams to focus on what they do best.

While the executive teams might be small, EIV firmly believes that partnering with the right people is key to delivering successful results. For that reason, EIV seeks to partner with motivated, ethical and experienced partners and enjoys getting to know its partners on a personal and professional level both prior to and during the company’s growth cycle. Establishing these personal relationships early creates a culture encouraging open dialogue and regular communication allowing EIV and its partners to collaborate to avoid potential pitfalls, quickly act on growth opportunities, or solve the unforeseen issues that occur in a growing business. 

Current opportunity set

Throughout its existence, EIV has not changed its fundamental strategy: to partner with high-quality management teams to pursue business plans based on solid operating fundamentals and strong customer relationships requiring long-term service. These opportunities exist and can be profitable regardless of size, market cycle or geography. The current environment presents opportunities for both first-time and serial entrepreneurs to identify inefficient or underutilized assets and work with capital providers, such as EIV, to enhance midstream operations, improve customer service and drive returns.

Even in mature or out-of-favor basins, producers still need high-quality service and appreciate midstream providers that bring solutions to improve margins. Innovative teams can generate attractive returns as in-fill midstream opportunities are developing in maturing unconventional basins. This is particularly true for smaller capital projects that have been overlooked purely due to size.

Most of EIV’s investments are sourced through the team’s personal and professional relationships, and EIV continues to evaluate a substantial number of high-quality opportunities. EIV is excited to partner with knowledgeable executive teams to develop profitable, customer-driven assets in the current environment.