Real estate billionaire Sam Zell says he’s a buyer of distressed assets as the U.S. oil sector sees a slowdown.

He’s bought assets in California, Colorado and Texas at fire-sale prices from companies that are raising cash in anticipation of potential problems in the future, Zell said Thursday in an interview on Bloomberg TV. He said some oil companies are running out of money to drill and are selling their cash flow to raise more capital.

“The amount of capital available in the oil patch is disappearing,” Zell said Thursday. “I compared it to the real estate industry in the early 1990s, where you had empty buildings all over the place, nobody had cash."

The U.S. oil sector is seeing a decline in the number of active drill rigs as the equity and debt markets remain closed to most exploration and production companies. Chesapeake Energy Corp., once the second-biggest U.S. producer of natural gas, warned investors last week that it may not be viable as a “going concern” if low oil and gas prices persist.

'Keep The Game Going'

Zell and Tom Barrack Jr.’s Colony Capital Inc. said in September that they were teaming up to create Alpine Energy Capital LLC, a rebrand of Colony HB2 Energy, which was formed in 2018 and recently closed a $320 million investment with California Resources Corp.

That deal was structured as a so-called DrillCo, in which private investors pay to drill certain fields. Once oil begins flowing, the private firm receives the majority of the cash flow until costs are recouped and pre-agreed profit targets are attained.

“The seller in that was a big company -- not in trouble but not terribly liquid, and therefore looking for ways to, in effect, get somebody else to put up the money to keep the game going,” Zell said. “What we’re seeing are situations where companies are taking steps in anticipation of problems rather than responding to problems.”