BOSTON – Despite a sharp contraction in the nation’s oil and gas industry amid low oil prices, ArcLight Capital Partners, LLC is betting $200 million on the future of the oil industry.

The company’s ArcLight Energy Partners Fund VI LP has teamed up with Midland’s Element Petroleum LP to form Element Petroleum III LLC.

The $200 million aggregate equity commitment will be used to find, develop and acquire oil and gas reserves and production, primarily in the Permian Basin of West Texas and southeastern New Mexico.

“We’ve all made our careers in the Permian Basin, we’ve lived through these cycles,” said Todd Gibson, president and chief executive officer of Element. Serving alongside him will be longtime Element team members Eric Hopper, Jamie Small and Jiri Klubal, among others.

Gibson said Element and ArcLight think “now is the time to make acquisitions, between now and early next year.”

Element III hasn’t made any acquisitions yet, and while it isn’t limiting itself geographically, it plans to focus on the Permian Basin, Gibson said. “We’re patient and also opportunistic.”

After it acquires assets, the company will follow its previous operating method of drilling and developing those assets and then considering whether to continue developing them or sell them, he said.

Element III marks the third partnership between ArcLight and Element’s management dating back to 2006. Gibson said Element I “has been monetized” and Element II is still drilling horizontal Wolfcamp and Spraberry shale wells in Howard County. It currently is operating two rigs.

To date, Element has drilled more than 300 wells on more than 120,000 acres throughout the Permian Basin, including the first successful horizontal Wolfcamp well in Howard County in May 2013. The focus has been in Howard, Glasscock, Martin and Dawson counties.

“We’re very excited to continue our partnership with ArcLight,” Gibson said. “ArcLight has been a great partner and our partnerships have worked out well for both of us.”

He said the company’s success is also due to the team that has worked for Element for years.

“You can’t compete without great people,” he said. Gibson said Element III’s founding, and ArcLight’s continued commitment speaks of long-term confidence in the Permian Basin of west Texas and southeastern New Mexico.

Bloomberg describes ArcLight as a “private equity and venture capital firm specializing in buyout and growth capital investments in the energy sector and infrastructure assets” that prefers to invest in power generation; production; midstream; electric transmission; and distribution. Within the midstream sector, it focuses on gathering; processing; storage, terminals, and transportation of oil; natural gas; coal; pipeline; and related products.

According to Bloomberg, ArcLight “primarily invests in companies based in North America, Western Europe, Australia, and New Zealand. It typically invests between $10 million and $300 million in its portfolio companies with enterprise value of more than $200 million.”

Earlier this month, Limetree Bay Holdings, an affiliate of ArcLight Capital Partners, offered to buy the petroleum storage facility at HOVENSA for $184 million.