Your Survival Guy

Preparing your investments and family for when disaster strikes.

Compensation was paid to utilize rankings. Click here to read full disclosure.

Are EnerVest Investors at Risk?

By

The energy hedge funds of private equity firm EnerVest are said to be worth “essentially nothing” to its investors by the Wall Street Journal. But the firm’s senior vice president Ron Whitmire says that’s just not true. According to Houston Chronicle reporter Jordan Blum, Whitmire “disputed that assertion, arguing that upcoming asset sales will create the necessary value to pay off much of its debt. That may not alleviate the concerns of investors who have seen their financial bets largely disappear. Whitmire declined to comment on what EnerVest is telling its investors, citing confidentiality.”

EnerVest is betting big on selling its oil and gas acreage to pay down debts and realign the funds’ balance sheets. It will also rely on renegotiating with lenders to help solve the funds’ problems.

Life Comes at You Fast. Slow It Down with My Friday Email. It’s Free.

Blum writes:

Rather than speculating on future oil prices, EnerVest invests directly in the oil-and-gas-producing assets, said Pavel Molchanov, an energy analyst at Raymond James in Houston. The acreage, even if considered safe investments at the time, falls prey to the low oil price environment.

“The lesson for everyone is that excessive leverage in a commodity downcycle can be lethal. That’s what led to EnerVest’s meltdown. No big surprise there,” Molchanov added.

Still, Whitmire contends EnerVest is in a solid position overall because of its diversification, investing now in areas like South Texas’ Eagle Ford shale when everyone else is paying top dollar for assets in West Texas’ Permian Basin.

EnerVest’s most recent “Fund XIV” is doing well with almost $2.5 billion committed to it, he said, with the fixes needed for its XIII and XII funds. Likewise, EV Energy Partners partners with EnerVest on some of its acquisitions, but EnerVest’s funds don’t invest in EV Energy.

Still, EV Energy warned investors in May it faces default risks in early 2018 if it can’t work out new deals with its lenders and its finances don’t improve.

Read more here.

The following two tabs change content below.
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

Recent Posts from YourSurvivalGuy.com

Stop America’s Zombie Apocalypse before It Starts

Your Survival Guy has unfortunately experienced the discomfort and uncertainty of a prolonged natural gas outage. When gas service went out in much of Newport, RI, back in 2019, it took days to recover, and many people in town faced significant hardship. Your Survival Guy and Gal did just fine, but it was a real-time […]

Small Government Just Works

You have read a lot on Your Survival Guy about how states that treat residents like customers rather than like piggy banks to withdraw funds from are winning. Your Survival Guy’s 2023 Super States features a group of states that put residents ahead of politicians’ personal agendas by focusing on lower taxes, and smaller government. […]

Locking In a Generational Opportunity in Fixed Income

UPDATE 11.30.23: Have you added fixed income to your portfolio yet? After over a decade of loose monetary policy, some investors have forgotten about the benefits of fixed income in their portfolios. Some younger investors have come into adulthood having never experienced bond yields worth sinking their teeth into. Now they can. Don’t miss a […]

RIP Charlie Munger: Keeping It Simple Never Goes out of Style

You may have read that Charlie Munger, the vice chairman of Berkshire Hathaway, has passed away. Munger was a legend in the world of investing, and was known, as Jason Zweig of The Wall Street Journal explains, “for his straightforward advice to business leaders.” Zweig writes: Business and financial leaders made frequent pilgrimages to Los […]

Explosion in Gun Ownership Creates Difficulties for Progressives

Banning certain forms of gun ownership has become a centerpiece of the progressive political platform. But after radical progressive politicians fomented a crime wave beginning in the summer of 2020, many Americans, even those in left-wing constituencies, began purchasing firearms for protection. The Editorial Board of The Wall Street Journal explains: More than half of […]

It’s California vs. Florida in the Big State Debate

On Thursday, November 30, Fox News and the station’s primetime personality, Sean Hannity, will host a debate between California Governor Gavin Newsom and Florida Governor Ron DeSantis. Isabella Simonetti explains the debate in The Wall Street Journal, writing: They aren’t running against each other. Still, Ron DeSantis and Gavin Newsom will take their fiery feud to Fox News this […]

Shiffrin Brings It Home with World Cup Win at Killington

You have read about the amazing career of competitive skier, Mikaela Shiffrin. Last time she appeared on YourSurvivalGuy.com, she had notched her 87th World Cup win. It was already safe to put Shiffrin in the GOAT category of athletes near Tom Brady, Michael Jordan, and Michael Phelps. No one has ever dominated skiing the way […]

Prepare for Solar Storms in 2024

The sun experiences solar storms in a roughly eleven-year cycle, and according to scientists, that cycle could peak next year. The peak of this cycle, called the “solar maximum,” has the potential to hit the earth with solar storms that can damage satellites and even electronics on the ground. Jonathan Chadwick reports for the Daily […]

Can the Supreme Court Stop Wealth Taxes Before They Start?

You probably haven’t heard of Moore v. United States, a little-known case working its way through the courts that could have major implications for America’s savers and business owners. The case revolves around the government’s power to tax unrealized gains. These are gains on assets that an owner hasn’t locked in yet, and which could […]

Families Can’t Save Enough

American households are the least prepared they’ve been in a decade to cover an unexpected $2,000 expense. That’s a sign that inflation and slow wage growth have hurt the ability of Americans to save. Bloomberg’s Alexandre Tanzi reports: The ability of US households to cover an unexpected $2,000 expense is at the lowest level in […]

Biden’s Inflation Blame Game

First, it was the “Putin price hike,” now Biden is blaming inflation on corporate greed, an old and tired excuse. CNBC reports: President Joe Biden took aim at corporations Monday for charging prices he said were artificially high even though the rate of inflation has slowed and some shipping costs have fallen. “Any corporation that has not brought […]

Are Investors Ready to Pounce?

Investors waiting to pounce? Not buying it. They finally have rates they can sink their teeth into. They’re in no rush to take on more risk. At least, that’s not what they’re telling me. In The Wall Street Journal, Jack Pritcher suggests investors are looking for more risk. He writes: Stocks and bonds have surged […]

Disney Signals Problems with the ESG Agenda

You have read about Disney’s war against Florida Gov. Ron DeSantis and parental rights. Now, it appears that Disney is realizing the error of getting involved in America’s culture wars in order to boost its ESG rankings. Johnathan Turley writes in The Hill: In recent filings, Disney appears to acknowledge that Smith’s invisible hand is […]

Biden Gave Americans 10 Years of Inflation in Only 3

Americans have endured a decade’s worth of inflation during the three years Joe Biden has lived in the White House. Bloomberg’s Reade Pickert and Jennah Haque report on the cost-of-living squeeze Americans are suffering through today, writing: After years of inflation, US consumers are shouldering a burden unlike anything seen in decades — even as […]