Growing limited partner (LP) acceptance of extended holding periods for energy assets is driving a surge in oil and gas continuation vehicles (CVs), with 10-15 transactions currently in market.

“You have a market that is more robust on both the supply and the demand side, and that leads to pricing being fuller,” said Mark Boyagi, a New York-based parter at Kirkland & Ellis’ investment funds practice group. He added that positive outcomes for top sponsors prompt others to follow suit, creating a self-reinforcing cycle driven by available buy-side capital.

The current flurry of CV activity punctuates a broader step-up from prior years and reflects growing LP comfort with the structure as the market matures. This has come with greater confidence around asset quality and pricing. “LPs are more used to seeing these assets and there’s less skepticism,” said Brent Burnett, managing director and global head of infrastructure and real assets at Hamilton Lane.

Improving sponsor and asset quality are not only supporting stronger pricing, they are clarifying the logic behind CV momentum.

“When a sponsor has both a high-quality asset and a high-quality team, a CV is a very natural fit to provide a liquidity option to existing investors but also pursue further growth and value creation by drilling undeveloped inventory and engaging in opportunistic M&A,” said Stephen Noh, a corporate partner at Kirkland & Ellis’ Houston office who focuses on representing private equity sponsors.

Sponsors are increasingly using CVs to extend ownership of higher-quality assets once they begin generating stable cash flow, challenging earlier perceptions of CVs as a fallback option for underperforming portfolios. “Pricing is stronger, often in the 90s [percentage of net asset value] – unlike a few years ago. It can now be a win-win-win for GPs, LPs, and buyers,” said Boyagi.

CVs are also gaining traction as a source of full or partial liquidity, provided valuations are supported by third-party capital, said Burnett.

This news service reported last month that sponsors are increasingly prioritizing capital returns to LPs through dividends, CVs, or asset-backed securitization over headline exit multiples.

“There’s been a lot of money stuck in existing assets, and so to the extent that they can return capital to their investors, [GPs] are getting happier investors,” said Vicki Odette, a partner and global chair of Haynes Boone’s investment management practice group.

The rise in upstream CV activity follows broader secondaries growth, particularly in energy, driven by supportive US policy, rising power demand linked to artificial intelligence (AI), and geopolitical tensions. GP-led energy CV volumes in 2025 increased by about USD 3bn year-on-year from 2024, according to Campbell Lutyens.

Given their longer holding periods, energy assets are well suited to secondaries investors seeking exposure to mature, cash-flowing businesses. “If you derisk it, or at least you’ve moved further along in your development stack, it’s a natural candidate for this,” one secondaries advisor said.

Some LPs view CVs as one of the few remaining ways to maintain upstream exposure amid constraints on new investments in the sector. “I’ve had a couple of situations where clients have been faced with issues like that,” said Mark Proctor, a New York-based partner at Latham & Watkins. He added that even long-term upstream investors may scale back new commitments due to high commodity exposure.

LPs operating under rigid mandates may be forced to sell at the first available exit, including CV transactions, said Odette. It very much depends on how much discretion LPs’ internal rules allow.

Meanwhile, interest in natural gas-linked assets remains strong, supported by long-term demand for power generation and data infrastructure, as reported by this news service. The AI buildout is seen as a tailwind for midstream and downstream CVs, with some deals involving vertical integration between data centers and power generation, a large secondaries investor said.

While gas-heavy portfolios continue to be active, given the outlook for longer-term natural gas drivers, CVs backed by crude-focused assets are also coming to market, according to Robert Teigman, managing director and co-head of Houlihan Lokey’s financial and valuation advisory energy and infrastructure practice.

Catching up to the broader market

Oil and gas had lagged other sectors in adopting CVs, but activity is now increasing alongside broader secondaries growth. Last year, 17.9% of CVs reviewed by Houlihan Lokey were in energy and infrastructure, tying with industrials and ranking behind only technology. Still, the sector remains skewed toward single-asset transactions, limiting its share of overall GP-led volume.

Execution timelines are also a limiting factor. Oil and gas CVs typically take longer to close, partly due to a relatively limited upstream investor base. The sector sits between private equity and infrastructure mandates, leading some investors to reduce exposure after inconsistent returns. “You end up with limited participation, which reduces competition and slows processes,” Hamilton Lane’s Burnett said.

A much smaller buyer pool can lead to two outcomes: competitive auctions that favor sellers, or single-buyer situations where the lead investor can dictate more joint-venture-like terms, especially around governance, said John Kelley, co-head of Latham & Watkins’ investment funds – secondaries group.

Commodity price volatility has added complexity. Fluctuations in crude prices – and to a lesser extent natural gas – can create valuation gaps between signing and closing, Burnett said.

Houlihan Lokey’s Teigman observed that LP advisory committees (LPACs) are spending somewhat more time reviewing transactions in the wake of controversy surrounding Energy & Minerals Group’s (EMG) CV for its stake in Ascent Resources.

In December, sovereign wealth fund Abu Dhabi Investment Council filed a complaint alleging EMG engaged in self-dealing, inadequate disclosure, and coercive tactics. Another LP, Mason Capital, also raised concerns. EMG announced the closing of the CV in March, with USD 1.5bn aggregate capital commitments.

Investors’ technical capabilities in oil-and-gas diligence for CV transactions have improved significantly in recent years, Kirkland & Ellis’ Noh said. Prospective investors in energy CVs tend to be more specialized than in the broader private equity universe, with investors often approaching opportunities as energy specialists first and CV investors second, Latham & Watkins’ Proctor added.

Longer timelines also contribute to some cyclicality in the market, with clusters of transactions typically launching in the first half of the year, Teigman said.