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Facing a tough commodity environment with fewer organic growth opportunities, private equity sponsors are turning back to acquire-and-exploit strategies, as opposed to lease-and-drill strategies, while also becoming the dominant buyers in data rooms for conventional properties, according to EnCap Investment partner Murphy Markham.

Speaking at Hart Energy’s A&D Strategies and Opportunities conference, Markham said that, until the recent crash in crude prices, the onset of the “resource play revolution” meant that the lease-and-drill approach accounted for roughly 80% of private equity activity. This was the mirror opposite of 10 years ago, when private equity strategies were focused roughly 80% on acquire-and-exploit, with only 20% employing lease-and-drill strategies.