Private Equity, Oil & Gas, Caprock, DarcMatter

DM Manager Series – Caprock Oil & Gas Fund LP


As part of our DarcMatter Manager Series, we took the opportunity to interview Troy Calapp from Caprock Oil & Gas about the background of the firm and their strategy.

What is the history and background of your company, principals and funds?

Caprock was founded over 10 years ago by our CEO, Chris Jarvis. What started out as primarily a boutique risk management consulting firm, has since expanded to national recognition as an advisory and asset management company providing valuable services to the energy and commodity markets. Our management team has advised many clients over the years such as independent oil and gas investment groups, regional operators and exploration firms, and publicly traded companies in the oil and gas sector. Our diverse experience across the entire life cycle of an oil and gas investment helped propel our firm to create and launch our current investment fund, the Caprock Oil & Gas Fund LP.

How is your fund differentiated from other alternative strategies?

We feel our fund differentiates itself from others by not only being specialized in the oil and gas sector, but for the diverse potential benefits the investment can provide. So, any investor looking to gain exposure to the energy or commodity market, we feel our fund is a unique investment vehicle that should be considered.

Please explain the investment process for the strategy.

Caprock’s investment strategy is to acquire underperforming and undervalued oil and gas projects with existing production and infrastructure, proven reserves, and active positive cash flow. In addition, we strategically target projects with the upside opportunity to boost production and enhance value through re-working and improving existing infrastructure, drilling new wells and reducing costs across the operating spectrum. We follow a conservative enhancement and development approach, all while maintaining strict risk controls at each step of our process.

How does your fund complement an investment portfolio?

We believe our investment fund can be a great way to diversify a portfolio by adding an alternative investment that is less correlated to the broader financial markets such as stocks or bonds. Our fund is oil and gas focused, but it is also a hard asset based investment that can produce cash flow with lower volatility and managed risk. Our fund is actively managed and positioned to navigate both up and down markets. Caprock provides the energy expertise, experience and key industry relationships to help investors participate in investment opportunities available in the oil and gas markets.

Are you looking at any potentially attractive opportunities right now?

Yes, we recently completed a project acquisition in Louisiana that is in great alignment with our overall strategy. Initial production from day one, diversified production across several wells in the field, solid existing infrastructure, but also some key inefficiencies identified that we plan to exploit and improve to further enhance the value of the project. We also are going through final steps of due diligence on another project acquisition in Louisiana that could allow us the ability to participate in a very solid, long life producing field where we could partner side by side with a couple very reputable oil and gas owners in the area. (this one isn’t official yet, so only so many details can be discussed at this time). Overall, we are happy with our current deal flow and feel confident moving forward with our strategy.

How do you view the overarching investment environment for the remainder of 2017?

The oil and gas markets are both transitioning through structural changes in the market place. For oil, the May 25th OPEC meeting confirmed extending the already agreed upon production cuts of 1.8 million barrels of crude per day for an additional 9 months. With the apparent theme of OPEC and non OPEC producing nations continuing with these production cuts, we expect global supplies to tighten and demand to outpace supplies in the second half of the 2017, which should be supportive for higher oil prices. In addition, and as it has been the case year-to-date, we expect oil price volatility to remain relatively low, which we feel has been healthy for the market.

In regards to Natural Gas, we are quite bullish on natural gas short and long-term. Over the short-term, record exports of LNG and to Mexico could likely make the U.S. a net exporter of natural gas this year. We expect U.S. dry gas production to be roughly 71 BCF per day, while demand and export growth should likely average about 76 BCF per day creating a deficit this year. The wild card factor, which is always the case is weather. A stronger than expected cooling season this summer could send natural gas prices above $4.00 MMBtu. Overall, we expect natural gas prices to rise for the remainder of the year from current levels.

Please keep in mind that investing in private funds are risky, illiquid and can lose capital. The oil and gas industry has many specific risks that include supply and demand, macro economic factors, and weather. One should carefully review the full offering materials before making any investment.


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Securities offered through North Capital Private Securities, Member FINRA/SIPC.