Luxe Energy CEO A. Lance Langford senses another Delaware Basin opportunity, just as he did beginning in 2015 when he and President Jeff Larson cobbled together leasehold that later sold for half a billion dollars.

Fueled by $820 million of capital from its private-equity backer and previous A&D success, Luxe Energy is set to make its return to the Permian Basin. This time, however, Langford sees a market for consolidating companies, in part due to investor apathy regarding public Permian companies.

Luxe Energy CEO A. Lance Langford

“The public markets are, for the most part in the Delaware Basin, on the sideline,” Langford told Hart Energy. “We feel like, with our large commitment, it puts us in a unique position where we can be a consolidator in the Delaware Basin.”

Langford’s thesis is partly tied to market demands that public E&Ps steady their balance sheet spending and reduce leverage, effectively hamstringing them from deals that require equity raises or adding debt.

“What happened last year is that the public markets basically insisted that public companies start spending within cash flow and execute on the positions that they had already acquired,” he said. “When that happened we felt like there was an opportunity for private equity to move back into the Permian Basin.”

The Austin, Texas-based company will split the upsized commitment announced Jan. 4 from NGP Energy Capital Management—the largest in the firm’s history—between itself and a new minerals affiliate. The funding includes an earlier commitment of $524 million to Luxe Energy in October 2016 and a $254 million commitment to Luxe Minerals in March 2017.

The mission, however, remains the same: build a big position in the Delaware Basin.

The first time through the Delaware, Luxe scrambled to find acreage as prices escalated. This time, the deadline will depend on when investors turn their attention back to the Permian.

“I think that opportunity is only going to last for so long because the public markets are going to come back,” Langford said.

In early 2016, Luxe assembled a position of roughly 20,000 acres right before the basin was hit with an epic wave of A&D activity. Despite selling those assets for a handsome payday, Langford said the initial Luxe’s time was cut short because public companies had easy access to capital, in particular for Delaware deals.

“We basically got priced out of the Delaware Basin before we could get our position big enough,” Langford said of the original Luxe.

Luxe was formed in 2015 amidst one of the industry’s toughest downturns by Langford and Larson. Having worked together for more than two decades, the men previously helped Brigham Exploration Co. and later Statoil ASA (NYSE: STO) explore the Williston Basin before leaving to start their own company.

At the time, both were questioned for leaving a promising company for something so risky. “People were like ‘why are you leaving this great job and oil prices are falling?’ We did it because we felt like the opportunity was then to buy at low prices and then sell when oil prices recovered,” Langford said.

Luxe’s strategy of acquiring unconventional properties in oil and liquids-rich basins took the team to the Delaware Basin while it was in relative infancy. The company’s acreage, primarily in Reeves and Ward counties, Texas, was quickly snatched up by Diamondback Energy Inc. (NASDAQ: FANG) for $560 million.

“For us, we hit the cycle pretty well,” he said. “It was definitely a record sale in the Delaware Basin when it occurred, price per acre.”

Luxe’s sale to Diamondback in September 2016, was then among the highest publically disclosed acreage prices in the Delaware at roughly $27,000 per acre. However, the second half of 2016 saw an explosion of A&D activity in the Permian, where acreage prices increased more than 5x, peaking with QEP Resources Inc.’s (NYSE: QEP) $57,000 per acre Midland Basin acquisition in October 2016.

With the A&D frenzy in the Delaware since quieting, Langford said he is now seeing another opening in the basin.

Luxe’s team will be divided between an E&P focused on building a core Delaware position and the minerals company targeting acquisitions in both the Midland and Delaware basins.

“We have the two largest dry commitments in NGP’s history. This shows confidence in our team’s ability to execute on a large position,” he said.

Langford added experience is only part of it, but ultimately it comes down to execution and he’s confident in the company he and Larson have built.

“We have a large team for a private equity-backed company, with over 30 people, and we are built to execute a large capital program,” Langford said.

Emily Patsy can be reached at epatsy@hartenergy.com.