HOUSTON -- As a trained engineer, Bob Edwards believes in the power of technology to provide answers to the oil and gas sector’s challenges. As an investor, he believes in the power of a management team laden with smart people to put those answers into effect.

That said, the managing director of Irving, Texas-based NGP Energy Capital Management acknowledges that the oil market’s recent penchant for cliff diving raises troubling questions.

“It’s ugly in the Bakken right now when you have $60 oil and analysts say that break-even is $70 or $75,” he told a finance-oriented crowd at PrivCap Media’s recent Energy Game Change conference in Houston. “But trust me when I say this: Ten years from now, we’ll be drilling wells for probably 20% or 30% less and the individual well [investor returns] will still be extraordinary.”

NGP’s strategy is geared toward production growth, property improvement and long-term cost-reduction, so it is not as exposed to the recent plunge in the price of oil as others in the investment community.

“The capital markets were wide open in 2014—we listed five companies—that’s not going to happen in 2015,” Edwards said. “We returned $5 billion to our LPs in 2014. We probably will have a thin year in terms of distributions in 2015, but it will be an extraordinary environment for investing.

“You’re seeing it now,” he said. “BP [Plc] retrenching; [Royal Dutch] Shell [Plc] has written off $3 billion. There’s probably another $3 billion to write off. All those will create asset sales.”

Then there is Calgary-based Encana Corp., which last year switched its emphasis from gas to oil.

“I’ll bet the board would like to reconsider that decision,” Edwards remarked. “They’ve rotated out of gas and into oil so you can have this big rotation of assets that in 2015, with the price decks as they are, will create just an enormous opportunity for a private equity group.”

Long before shale redrew the energy map, Edwards’ approach to investing was to seek out and partner with focused management teams with an edge in a particular area. That hasn’t changed, and his faith in small players has been rewarded.

“The shale revolution has been pioneered by independents and it’s being driven today by smaller independents,” he said. “The majors, with few exceptions, have had their heads handed to them in trying to race in to North America and catch up with the smaller, fleeter-of-foot players that are pursuing the shale opportunities.”

That’s because nimble players are better able to make decisions in the field to deploy new technologies and devise better ways to use them. For all the noise generated by horizontal drilling and fracture stimulation, Edwards believes those relatively old technologies pale in the innovation arena compared to newfangled completion equipment like sliding sleeves, slickwater and crosslinked gel, and the techniques in utilizing these assets on a well-by-well basis.

“After [BP’s Macondo spill in the Gulf of Mexico], the major oil company is saying, ‘I can’t have any exceptions. I can’t let my drilling engineer make an exception without running it up and down the corporate ladder,’” Edwards said. “So there are some clear diseconomies of scale for the big major oil company that has processes and drilling departments to keep up with the technology.”

Still, there has been remarkable progress in enhancing production that Edwards expects to continue. That, he said, is where the investor needs to focus.

“The way God created oil fields was mostly in multiple stacked plays, each of which has most different permeability and porosity and fracture stresses,” he said. “In places like the Permian Basin—when you lease 20,000 or 30,000 acres and you’re looking for horizontal opportunities where for 50 or 60 years we’ve been producing vertical wells—you can analyze the value of the current production, you can analyze the value of potentially taking one of the layers and turning it into horizontal play.”

The way to approach it is to assume that there will be upside and be willing to pay the full PV 10 (present value of future oil and gas revenues discounted at an annual rate of 10%) for current production with a management team that warrants confidence because it knows how to employ technological advances.

“Just in the last three years, the average horizontal well drilled in the Permian Basin doubled the amount of sand and oil pumped into each well,” Edwards said. “That means longer fractures, that means higher productivity, that means more reserves. Longer fractures, more zones, longer lateral lengths—that’s all happening based on incremental technology improvement that’s being pioneered, not by the big boys, but by the small guys.”