NetworkOil Inc., a new privately held Houston company, will soon join the ranks of electronic commerce sites, facilitating the exchange of new and used oil and gas equipment and procurement of services. It already is attracting stakeholders from the production and financing communities. Slated for a first-quarter 2000 launch, NetworkOil's initial investors include 25 E&P companies, an energy venture capital fund and the managing directors of 18 investment banks. Executives of Natural Gas Partners, Encap Investments LC and Ocean Energy Inc. talked recently about their investment in NetworkOil. "We're strategic to NetworkOil in that we have a strong network of portfolio companies on the E&P side that are out there buying equipment and services on a regular basis," says Billy Quinn, a principal with Natural Gas Partners, which has a portfolio of about 15 upstream companies. "This is the first time we've made an investment in a business-to-business e-commerce application," says Quinn, whose office is in Fort Worth. Natural Gas Partners has looked at various energy-related e-commerce opportunities during the past year, and it is likely that it will make additional investments in other energy-related technology opportunities in the future, he said. "The NetworkOil transaction for us happens to be as close to a perfect fit as you can get because their primary focus, at least coming out of the box, is on the E&P side," Quinn says. Bill Transier, Ocean Energy's chief financial officer, said that the Houston independent invested in NetworkOil, along with "a number of other companies in our peer group," because of "a very unique strategy on NetworkOil's part" to get financial endorsements from the energy industry for its web site. NetworkOil was created in September by two businessmen with knowledge of the oil industry and e-commerce. They are Chris O'Sullivan, president of O'Sullivan Oil and Gas Co., and Steve Martin, founder of the online trading firm Lynx Capital. Martin sold Lynx in 1999 and served as a financial advisor to technology businesses. Martin, NetworkOil chief executive officer, and O'Sullivan, NetworkOil chairman, say NetworkOil's goal is to become the "Nasdaq of the oil and gas world." O'Sullivan says, "Given the frustrations around procurement and the restrictive communication between buyers and sellers, we know there's a need for our Internet-based solution. We are offering price discovery and transparency, neutrality, depth of content and liquidity." NetworkOil's board of directors includes J. Kent Sweezey, managing director and head of the energy service practice for Donaldson, Lufkin & Jenrette Securities Corp., and James D. Calaway, former president, chief operating officer and director of Edge Petroleum Corp. Encap managing director Robert L. Zorich has invested in NetworkOil as a personal interest; it's outside Encap's mandate of investing in companies. "NetworkOil's particular approach is long overdue," he says. "The oil business appears to be a perfect target for this kind of a monetization approach toward buying and selling all of the various services and products of our business. If this thing really takes off, which it should, I think it's going to revolutionize the buying and selling of products and services in the oil business, which is a $20- to $30-billion-a-year business." The energy business uses state-of-the-art computers to find oil and gas, but it is behind in its use of computers in other areas, he said. NetworkOil will provide a forum for various electronic transactions, including requests for bid, auctions and reverse auctions. It is in the process of setting up field offices in Corpus Christi, Dallas, Midland, Denver, Lafayette, Oklahoma City, Bakersfield, Traverse City and Calgary. -Paula Dittrick