Many savvy upstream executives claimed last year as their time to launch new E&P ventures, prompted by strong commodity prices and strong investor interest. "To put it simply, new companies are formed when capital embraces top-quality management teams, and 2004 saw its fair share of both," says Mike Bock, a principal at Petrie Parkman & Co. Yorktown, First Reserve, Natural Gas Partners, Quantum Energy Partners, EnCap and Lime Rock raised a total of more than $5 billion in 2004, he says. Donald Warmington of TD Securities points to M&A activity as the foundation for numerous start-ups. He counts more than $24 billion of U.S. M&A deals in 2004 in more than 60 transactions. "The larger companies with access to public capital are purchasing smaller companies, as 'bolt on' acquisitions. This is freeing up proven management teams to get a bigger piece of the pie," he says. Dan Steele, senior vice president of the energy lending group at Sterling Bank in Houston, says he has seen estimates of as much as $80 billion of private-equity capital that is available to E&P companies. Plus, there has been an expansion of available commercial bank debt. -Bertie Taylor

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