Technology Capital: OFS Investment Opportunity

Private-equity firms are seeking new technology for oilfield service assets.

Travis E. Poling, Contributor
Technology Capital: OFS Investment Opportunity

TWMA, a portfolio company of Buckthorn Partners, developed the TCC RotoMill, a technology that separates drill cuttings for recycling and reuse. (Photo Courtesy: Buckthorn Partners)

Unlike venture capital, private equity is chasing companies with positive balance sheets and getting them to the next level. But some have found ways to get start-ups that aren’t making money into their portfolio through less direct means.

Most of the investments are for acquiring cutting-edge technology that will improve the operations and efficiency of existing oilfield service companies or investing alongside venture capital arms of major firms such as Saudi Aramco and Schlumberger Ltd., said Brittany Sakowitz, a partner at Vinson & Elkins’ M&A and private-equity practice.

It has been especially true in the past five years that venture capital has been actively investing in technology companies in oilfield services or with applications for that industry, particularly because they do not require a large amount of start-up capital, and even relatively small seed investments can reap sizeable returns, she said. Private equity’s interest in those same companies once they have a track record also can lead to a quicker payout for the venture investors.

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