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Start for freeThe Current State of the Energy Market
As we look at the global energy landscape in 2025, it's clear that we're facing a significant supply-demand imbalance in the oil and gas sector. This presents both challenges and opportunities for investors who understand the market dynamics at play.
Supply Constraints
One of the key factors driving the current market situation is the severe supply constraints in global energy production. Here are some important points to consider:
- Oil reserves naturally decline by 2-5% every year as existing wells are depleted
- Approximately 5 million barrels per day of new production is required just to maintain flat supply
- Global energy production is severely supply constrained with no prospect of rapid increases
- JP Morgan projects a 7.1 million barrel per day shortfall by 2030 just to meet existing demand
Declining Investment
At the same time that supply is tightening, we're seeing a major pullback in new investments in oil and gas:
- Private equity investment in the sector has declined by 87.5% over the past 5 years
- This is largely due to ESG requirements and reallocation of capital to other sectors
- The lack of new investment is exacerbating the supply constraints
Steady Demand
Despite efforts to transition to renewable energy, global demand for oil and gas remains strong:
- Oil use is still highly correlated with GDP growth (99.3% correlation)
- Projections show a potential 40% increase in demand by 2050 if GDP growth averages 3%
- Short-term demand fluctuations don't change the long-term upward trend
This combination of tight supply, declining investment, and steady demand is creating what many experts believe is a looming energy crisis. For investors who recognize this opportunity, there are ways to potentially capitalize on these market dynamics.
A Unique Investment Opportunity
In light of these market conditions, a new investment fund called Build Energy Fund One is being launched to take advantage of the current opportunities in oil and gas. Here are the key details:
Fund Strategy
The fund's investment strategy focuses on:
- Acquiring existing producing oil wells (non-operating working interests)
- Conducting infill drilling to expand production organically
- Maximizing total investor returns over a 10-year time horizon
Experienced Management
The fund is a partnership between several experienced players in the energy investment space:
- Mahajer Energy Advisors - Led by Jeff Mahajer, a geologist with 4 decades of experience in oil and gas investments
- Aspen Funds - An investment firm with a strong track record in energy and other alternative assets
- Build Wealth - A platform connecting investors to institutional-grade private market opportunities
Track Record
The management team has an impressive history of generating returns in this sector:
- Mahajer's previous 6 funds have averaged a 50% internal rate of return (IRR)
- Their most recent fund (Fund 6) is currently generating a 35% IRR after 18 months
- Aspen Funds has $600 million in assets under management and has distributed $65 million to investors
Fund Structure and Terms
Some key points about the fund structure:
- $100 million total fund size (75% equity, 25% debt)
- $50,000 minimum investment
- 7.5% discount on share price for early investors
- Target IRR of 28-32% (based on conservative projections)
- Cash flow distributions targeted to begin in year 2
Projected Returns
Based on the fund's financial models:
- Base case scenario: 32.3% IRR, 30% annual cash-on-cash returns
- Stress-tested downside scenario: 13.3% IRR, 4% annual cash-on-cash returns
It's important to note that these are projections and actual returns may vary. However, the management team believes these targets are conservative given their past performance and current market conditions.
Why This Opportunity is Unique
There are several factors that make this investment opportunity stand out:
Market Inefficiency
The current pullback in oil and gas investments has created a buyer's market. Many assets are available at attractive valuations due to reduced competition and forced selling by some private equity firms.
Contrarian Approach
While much of the investment world is focused on renewable energy, this fund is taking a contrarian stance by investing in traditional energy sources. This approach aims to capitalize on the gap between current market sentiment and the reality of ongoing global energy needs.
Institutional Access for Individual Investors
Through the Build Wealth platform, individual investors can access an institutional-quality energy fund that would typically only be available to large family offices or institutions.
Balanced Risk-Reward Profile
The fund's strategy of acquiring existing producing wells helps mitigate some of the risks associated with exploratory drilling. At the same time, the infill drilling component provides upside potential for increased production.
Tax Benefits
While not the primary focus, investments in oil and gas can offer significant tax advantages. The fund structure allows for pass-through of deductions related to drilling and development costs.
Potential Risks to Consider
As with any investment, there are risks to be aware of:
- Commodity price volatility - Oil and gas prices can fluctuate widely, impacting returns
- Regulatory changes - Shifts in energy policy could affect the industry
- Environmental concerns - Increased focus on climate change could accelerate the transition away from fossil fuels
- Operational risks - Issues with drilling or production could impact well performance
- Liquidity - The 10-year fund term means this is a long-term, illiquid investment
The fund management team aims to mitigate these risks through careful asset selection, hedging strategies, and diversification across multiple wells and operators.
How to Invest
If you're interested in learning more about this investment opportunity:
- Visit build wealth.invest.com for more information
- Contact Mike Brown (investor relations) at [phone number redacted] or [email protected]
- Schedule a call to discuss your investment objectives and determine if this fund aligns with your goals
The fund is currently accepting soft commitments, with formal subscriptions expected to open soon. Given the high level of interest, interested investors are encouraged to act quickly to secure their allocation.
Conclusion
The current state of the global energy market presents a unique set of circumstances for investors. While the long-term transition to renewable energy continues, there remains a significant opportunity in traditional oil and gas assets. The Build Energy Fund One offers a way for individual investors to potentially capitalize on these market dynamics through a professionally managed, institutional-quality investment vehicle.
As with any investment decision, it's crucial to carefully consider your own financial situation, risk tolerance, and investment objectives. Consult with your financial advisor to determine if an investment in oil and gas aligns with your overall portfolio strategy.
The energy sector is poised for an interesting period of transition and potential volatility. For those who understand the market forces at play, this could present an opportunity to generate attractive returns while playing a role in meeting the world's ongoing energy needs.
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