IndustryVoice: Capital Options—Pearl Energy Investments – Oil and Gas Investor

At Pearl, we believe building strong partnerships is the key to success—and our portfolio companies can attest to that.

Founded in 2015 and based in Dallas, Pearl is focused on an investment strategy that leverages the team’s deep-rooted relationships in the energy industry to partner with best-in-class management teams pursuing attractive risk-reward opportunities in the upstream, midstream, and service sectors.  The firm has $1.1B of committed capital under management and closed its most recent fund at its hard cap of $600 million in July 2017. 

Pearl was founded by industry veterans Billy Quinn, former co-man-aging partner of Natural Gas Partners, and Chris Aulds, former co-founder of TEAK Midstream and Crosstex Energy Services. Together, Quinn and Aulds have more than 50 years of experience in the energy business.

This unique combination of energy investment and operational expertise sets Pearl apart and gives us the perspective to understand the challenges and opportunities in today’s energy industry.

Investment strategy

“First and foremost, we are in the business of partnering with entrepreneurial management teams that have complementary backgrounds and share a capitalistic mindset,” said Quinn. “We look for teams with clear-ly demonstrated technical and deal flow competitive advantages stemming from proprietary relationships and local market knowledge.”

Pearl targets small to middle-market investment opportunities with equity capital requirements between $25MM and $75MM, and has led investments requiring in excess of $125MM.

 Stewart Coleman, managing director, said, “We believe our targeted investment universe has an outsized number of opportunities with asymmetric risk-return profiles.”

Additionally, Pearl does not believe in “stacking” teams geographically and prefers to back one team in a basin.  “Our goal is to be a real partner, not just an equity capital provider,” Cole-man continued.

“We have the luxury of being selective with our teams, and purposefully sized our funds and equity commitment amount to allow us to exclusively pursue the highest-conviction investments in each basin,” said Aulds. “This helps us avoid competition among our portfolio companies, reduce conflicts, and improve alignment while also generating top-tier returns.”

Adding value

Pearl prides itself on its partnership approach and a differentiated ability to execute quickly, both during the initial process of backing a team and in work-ing with portfolio companies to grow and create value.

“The Pearl leadership team has a unique history of not only investing in, but founding and building, successful companies across the oil and gas value chain,” said Aulds. That diversity of experience extends across Pearl’s investment staff. For example, Vice President Steven Cobb started his career at Pioneer Natural Resources in various engineering and financial roles before joining Pearl in 2015.  

“The team’s complimentary areas of experience, perspectives, and net-works allow Pearl to truly understand the workings of a growing portfolio company, adding value at all stages of development from inception to successful exit,” Aulds continued.

Pearl believes in a customized approach to private equity that results in a company achieving its goals and reaching its full potential.

“Chris and I work directly with every company in the Pearl portfolio. We believe in a collaborative approach; listening to our portfolio companies, understanding what is important to management teams, providing open lines of communication, and maintaining transparency,” said Quinn.

“Our ultimate goals are to pro-vide resources and motivation to our teams, align interests, and add value for everyone.”

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