Connecticut-based First Reserve Corp. may be ready to make a large play to extract natural gas in the Colorado Rockies after closing a massive $7.8 billion fundraising effort Thursday.
While executives declined to confirm specific plans, the private-equity firm currently invests in Denver-based Aspect Energy, which is extracting natural gas from shale in the Dallas-Fort Worth region and Fayetteville, Ark.
“We’re currently investing with Aspect, and we will expand from there,” said Craig Jarchow, a First Reserve director in Houston. “We anticipate moving into the Rocky Mountains” after the fundraising push.
Newer technology makes it cheaper for companies to extract natural gas from shale, Jarchow said. First Reserve plans to spend 30 percent of the new fund, or more than $2 billion, on oil and gas exploration and production, Jarchow said.
“We can’t talk about specific opportunities we’re pursuing, but the oil and gas plays in the Rocky Mountains fit us quite well, since they are capital-intensive and involve a lot of drilling,” Jarchow said.
It’s just the latest signal that the region’s oil and gas boom times are continuing, said Marc Smith, executive director of the Independent Petroleum Association of Mountain States.
Oil and gas exploration and production have skyrocketed in northwestern Colorado and on the Western Slope in recent years, boosted by new technology and rising global prices.
“Denver has become the Silicon Valley of the oil and gas industry,” Smith said. “A lot of entities have raised capital to come to Denver to take advantage of what the mountain West has to offer in terms of potential and a highly skilled workforce.”
Such a large fund sends a message to oil and gas entrepreneurs in the West that investors are still bullish on the sector, said Federico Peña, a principal of Ves tar Capital Partners in Denver.
“It puts the energy entrepreneurs in the driver’s seat,” Peña said.
Vestar invests across all industries and has one energy investment, Peña said.
Energy and industrial companies accounted for 8 percent of the more than $6 billion in venture capital invested across the country in the second quarter of this year, according to a Money Tree report from PriceWaterhouseCoopers.
Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.
