Data Report: Oil and Gas VCs Pumped on Startup Prospects

There aren’t a lot of venture firms that regularly invest in the oil and gas industries. But those that do have been keeping themselves quite busy lately.

Since last year, at least four venture firms with significant exposure to the sector have closed or initiated fundraising for new funds collectively valued at more than $800 million. The two largest, Energy Ventures and Braemar Energy Ventures, raised funds of $350 million and $300 million, respectively. Strategic investors, such as Chevron Technology Ventures, have also been active.

The investment pace has been brisk, as well, with sizeable funding rounds going to developers of lift systems and pump technology as well as tools for evaluating exploration and drill sites. Einar Gamman, a partner at Energy Ventures, says he expects the momentum will continue.

“There is a considerable interest for our sector right now,” he says, “And one of the reasons is that others in the venture arena and the private equity arena are starting to see that it is a market where you can do good deals in terms of exits and IPOs if you do things correctly.”

Energy Ventures has a had a couple of exits in the past few years. Stingray Geophysical, a provider of seismic reservoir monitoring technology, sold to TGS in 2011. Novadrill, a developer of downhole drilling technology, sold to Schlumberger in 2010. Though the purchase prices were not disclosed, both were “very good exits,” according to Gamman.

The IPO pipeline, meanwhile, is filled with oil and gas offerings. Companies involved in oil and gas transportation, pipeline development, exploration, distribution, storage and product development have filed to raise more than $3.5 billion over the past two quarters. In the past three weeks, Energy & Exploration Partners, an oil and gas exploration company, and Alon USA Partners, a petroleum products manufacturer, have field to raise $275 million and $230 million, respectively.

Though the oil and gas companies currently in registration to go public are not venture-backed, VC-funded companies in the space have some history of carrying out offerings. One was RigNet, a provider of communications services to the oil and gas industry backed by Altira Group and which went public in December 2010.

Among VC firms active in the oil and gas space, most are broad-based energy investors. Firms such as Altira and Braemar invest in alternative energy as well as oil and gas, though Altira in its recent investments has been leaning more to the oil and gas side.

In the accompanying chart, we look at prominent venture investors in the oil and gas space, looking at recent deals, exits and dry powder.

Photo of gas nozzle in New York by Shannon Stapleton, Reuters.