Petroleum pump jacks are pictured in the Kern River oil field in Bakersfield, California November 9, 2014.
Petroleum pump jacks are pictured in the Kern River oil field in Bakersfield, California November 9, 2014. Reuters / Jonathan Alcorn

Quantum Energy Partners is raising a $2.25 billion fund that will lend to U.S. oil and gas firms as well as energy companies transitioning away from fossil fuels, allowing investors to pick whether they back activities that lead to higher greenhouse gas emissions, according to people familiar with the matter.

Founded in 1998, Quantum continues to be one of the most active private equity firms in the oil and gas sector but, like others which have traditionally invested in hydrocarbons, it is spending more time focused on cleaner forms of energy.

Quantum's fundraise comes as U.S. crude prices near $100 per barrel for the first time since 2014, driven by supply constraints and geopolitical concerns such as Russia's claims over Ukraine.

Many banks are still not comfortable lending to small and medium-sized U.S. oil and gas exploration and production companies because they are nursing losses from previous energy price plunges, ceding market share to private equity firms such as Quantum that are willing to step up and provide credit.

Concerns over the impact of the energy industry on climate change has also given some banks pause.

While private equity firms still find eager investors for their energy credit funds among sovereign wealth funds and insurance companies, investors, including some public pension funds, have become wary of supporting the production of fossil fuels that lead to greenhouse gas emissions.

Heeding these concerns, Quantum decided that its new fund will have two sleeves: a $1.5 billion tranche for lending to oil and gas producers and a further $750 million for companies supporting the transition away from fossil fuels, the sources said. Investors can choose if they want to invest in one or both.

The sources spoke on condition of anonymity to discuss confidential information. Quantum declined to comment.

The cash deployed will be in senior secured and direct lending, as opposed to the type of mezzanine loans extended using Quantum's previous debt fund, the sources said. Senior secured debt is paid out before mezzanine in a bankruptcy, making it a safer bet for Quantum.

It is the second energy debt fund for Quantum. The Houston-headquartered investment firm raised a $1.6 billion fund in 2019 that was used to provide structured credit and mezzanine finance to oil and gas companies, including Devon Energy Corp and Antero Resources Corp.