The cyclical nature of the oil and gas industry is a known feature in which investors have accepted the risk and volatility in favour of exceptional returns. And as technological advancements have allowed for greater exploitation of wells, a belief that both frontier and maturing fields could be exploited for exceptional gain whet the appetite of private equity firms the world over, especially in North America. Shale gas exploration & production had advanced technological efficiency to such an extent that The Permian was awash with acquisitions by private equity firms who saw an opportunity to acquire and exploit assets themselves.
The United States soon became the world’s largest oil and gas producer but, when demand faltered, a supply glut saw the longest consistent drop in oil price in nearly 50 years between 2014-2016. These private equity firms held steady in their belief that the cyclical market would correct if they held on just a little longer…. It may have, at least until Covid-19 made its mark.
With a timeline for a global economic recovery unclear, the models of the past now outdated and technological advancements stuttering, we ask the question – are we witnessing the death of the Oil & Gas Private Equity Company?
The Oil and Gas Council invited five of the industry’s leading voices to share their opinions on the motion:
In favour :
- Geraldine Murphy, Managing Director, Investment Banking at Tudor Pickering Holt & Co.
- Fergus Marcroft, Strategic Advisor at Hannam & Partners
- Eskil Jersing, Director at Eskoil
- Adam Waterous, Managing Partner at Waterous Energy Fund
- Yash Kaman, Partner, Investment and Portfolio Management at Kerogen Capital
We took a poll at the start of the debate to see where our audience sided with the motion “We Are Witnessing the Death of The PE Company?“