Energy investment firm offers a lifeline

New Andros Capital to help struggling oil, gas companies

An energy investment firm has launched with $250 million available for new U.S. oil and gas projects at a time when the historic industry downturn has squeezed available credit.

Andros Capital Partners, headquartered in Houston, plans to help fund oil and gas projects valued at $25 million to $200 million each.

Andros could fill a void left by banks that have widely stopped backing U.S. oil and gas company operations after years of lagging industry returns. The ongoing coronavirus pandemic has exacerbated the credit crunch.

The fund will allow Andros to enter into credit agreements, invest in assets directly or make private equity deals in which it would loan money to companies in exchange for ownership stakes.

“There’s an extreme lack of

capital availability in the energy sector today,” founder and managing partner Phillip Gayle said. “Both equity and debt markets are — for all practical purposes — closed for business. Yet, there are many attractive investment opportunities.”

Gayle is joined on the firm’s investment committee by former Apollo Global Management senior partner Gregory Beard and Beemok Capital Chief Investment Officer Kurt Palmer.

The committee, Gayle said, plans to seek out small and medium-size domestic projects carried out by exploration and production companies and companies that build pipelines or storage facilities.

“The lower to middle market is underserved,” Gayle said. “We hope that we can be a good partner to those companies.”

Andros has already received interest since its Tuesday morning announcement, said Gayle, adding that there are no deadlines for the fund to disburse money. Partners also will be allowed to make additional investments into a promising project or company.

Ed Hirs, an oil and gas industry expert with the University of Houston, said Andros’ launch follows the pattern seen during previous industry downturns when private equity firms financed promising companies.

But, Hirs said, smaller companies have been overlooked by large investment funds for years.

“This makes them an attractive oasis,” Hirs said. “They’ve got fresh money and a newly put together team. For those management teams with good assets and good ideas, this will be very positive.”