Private-equity investments made by New York firm Warburg Pincus depend on several tactics to "create ways to be lucky," managing partner Peter Kagan told Houston Energy Finance Group members recently. He cited evolving technologies, such as sophisticated fracture jobs that are turning formerly marginal resources into economic assets now. Warburg's focus is on creating companies, not investing in one-off projects. Its most recent monetization was the sale of privately held, Tulsa-based Latigo Petroleum Inc. to Pogo Producing Co. for $750 million. "We are willing to take exploration risk, and unlike a lot of people in this business, and because of our large scale, we tend to be longer term than many other funds, with a five- to seven-year horizon. People come to us with their vision and it is our job to put ourselves in their shoes." Although some private-equity firms have capitalized and then sold E&P investments quickly in the past two years, for big returns, that is not Warburg Pincus' style, he adds. "Even though 50% returns sound great, we tend to be patient capital. We trade liquidity for a better return," Kagan said. "If you look across our portfolio, we've had rates of return of 30% to 40%, well above the market and other private-equity funds."