Houston-based private equity firm EnCap Investments has successfully closed a continuation vehicle for EnCap Minerals and Rock River Minerals - together EnCap Minerals - with aggregate capital commitments of about $3.5-billion.

This marks the largest capital raise on record for a continuation vehicle in the upstream energy sector.

The vehicle spans 134 000 net royalty acres in the Permian basin producing roughly 37 000 bbl/d of oil equivalent.

The continuation vehicle is anchored by funds affiliated with Melange Capital Partners. EnCap Minerals' portfolio was built through partnerships with Fortis Minerals, OGX Resources, Piedra Energy III and Pegasus Resources, which continues to manage the assets today. For example, leases are operated by major firms such as ExxonMobil and Diamondback, built through partnerships managed by Pegasus Resources.

For context, a continuation vehicle, or continuation fund, is a specialised investment fund created by a private equity or private credit sponsor to purchase one or more portfolio assets from an older, existing fund that is reaching the end of its lifespan.

EnCap Investments says investor demand was significant and well in excess of required commitments, with strong support from existing investors as well as new, high-quality institutional investors.

EnCap Investments believes the portfolio represents a best-in-class private Permian minerals asset, offering exposure to leading development inventory and operator economics in the Lower 48 and a durable, long-term cash flow profile that requires no future capital expenditures.

Managing partner Doug Swanson says the company is grateful to its limited partners for their continued support and for the opportunity to keep owning this exceptional asset well into the future.

"We have long held strong conviction in the Permian basin, and we believe it will remain a critical economic engine for many years to come, particularly as industry innovation continues," he adds.

He also thanks Pegasus Resources and other management teams that helped build the portfolio alongside EnCap Investments. EnCap Investments was an early mover in acquiring upstream minerals at scale, and it continues to execute that strategy today through its flagship institutional funds.

"We look forward to making this continuation vehicle a success for all investors," Swanson states.

Since 1988, EnCap Investments has been a leading provider of growth capital to the independent sector of the US energy industry. The firm has raised 25 institutional investment funds totalling more than $47-billion and currently manages capital on behalf of more than 350 US and international investors.