If you live in a city or state where the local economy is dependent on or is massively enhanced by the oil and gas sector, it is an understatement to say that people are worried about the drop in oil prices. So, does another huge private equity fund targeting the energy sector imply that perhaps a bottom is near?

Blackstone Group L.P. (NYSE: BX) announced on Monday the commencement of the investment period for its second energy-focused private equity fund. The fund’s name is Blackstone Energy Partners II, but what stands out is that this fund has total financial commitments of $4.5 billion.

Before thinking about whether this will be able to pursue massive projects, that does not seem all that likely. The target looks to be opportunistic projects where Blackstone can have control. That means buying or investing into what could be very distressed valuations — after all, $50 oil is taking a serious bite into oil industry profits. And the large projects controlled by the major oil outfits can withstand low profits or losses for years. The same is not true of smaller projects and speculative companies with leveraged balance sheets.

Blackstone’s second private equity fund has shown to have received significant interest from both existing and new investors. In fact, Blackstone even said that total financial demand went above and beyond the fund’s $4.5 billion hard cap. Blackstone’s first fund of this sort (BEP I) was a $2.4 billion fund, and its final close was in September of 2012.

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Blackstone indicated that this second private equity fund (BEP II) will invest as follows: in control-oriented equity and equity-linked interests in companies, assets and development projects in the energy and natural resources sector on a global basis.

Blackstone went on to say that its private equity team focused on energy has now deployed over $8 billion in this strategy. The private equity giant went on to say that its $16 billion diversified global private equity fund will continue to invest alongside the new second fund of $4.5 billion in energy transactions on a 50/50 basis.

The long and short of the matter is that this means that Blackstone has the equivalent of 100% in internal leverage for the second fund. That is also before taking on any minority investors where it can still hold control.

Investors in the fund are said to include a diverse group of U.S. state pension funds, corporate pension funds, sovereign wealth funds, insurance companies, endowments, foundations and family offices.

The very end of the quote lets you know just how targeted the fund may end up being. David Foley, who is chief executive officer of Blackstone Energy Partners, said:

Following on the strong performance of BEP I, we could not be more pleased with the exceptionally positive reception BEP II received. We deeply appreciate the confidence that our investors have placed in us by entrusting us to continue to deliver excellent returns for the millions of workers and retirees they represent. Looking forward, we believe that our experienced team, deep network of relationships with talented industry executives, patient capital and proven strategy positions us uniquely well to take full advantage of the significant recent cyclical downturn in oil and gas prices.

That sounds very much like a bottom-fishing strategy. That being said, we also saw many private equity funds and private investment groups target troubled mortgages and distressed property assets during and after the recession. Some of the funds literally cleaned house, and others simply lost handily because they pursued the right strategy too early.

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