Future of Oil and Gas IB
Any thoughts on the current climate for oil and gas IB? With oil price hitting $90, is now the best time to be in oil/gas IB?
Feb 04, 2022
Feb 04, 2022
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Comments (24)
No. Late 2023 when WTI is $200 will be the best time.
Why do you see WTI at 200?
Because nobody wants pay anyone to get it out of the ground AND nobody wants to change their consumption habits
Wanting to be an analyst or associate in banking? Do it. Wanting to be more senior than that? Pick a different industry. Not enough runway for a career banker starting now. You'll have to transition to other areas of expertise just like the businesses you cover.
Will hit the desk this year and I want to doPEin another industry (consumer/infra/tech), would you recommend lateraling or is aBBin energy good enough to exit to non energy PE?
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Infra you will get some looks from energy, but your best shot at that is an infra/power group as a lot of infra funds have dumped O&G entirely. The other two you absolutely will not get in from energy and will have to lateral.
gonna do well for a few years but at some point there would only be a dozen or so big companies which makes you wonder where the m&a is gonna come from
+ lol at thinking high oil prices = good for O&GIB. it doesnt work like that.
True, but high commodity prices does = higher market caps, which = higher fees. Yes, stability in commodity prices is better for deals.
lmfao still remember the post from like a year and a half back talking about the end of oil and gas and found it laughable that that could be a thought. Especially as all the majors were selling off assets left and right, I saw that it was temporary and so did many experienced industry experts, yet many on the post were panicking because of
muh solar, muh tesla, muhclean energy, muh ESG
let me make this very clear: all of the ESG proposals are very pretty on paper, but the truth is that the world will continue to be powered by oil, gas, coal, dirty energy, etc. for the foreseeable future.
Environmentalism is a privilege of the rich, not an everyday reality
I tried to talk some sense into people on that thread but got called a shale homer :/
Energy is volatile and cyclical - that thread was mostly discussing which banks were weak in oil and gas or going to shut down their entire Houstonoffices likeDBnBMO
Any thoughts on the future of energyPE/HF? Will thebuyside continue itsshift away from oil & gas despite rising prices?
WhichBBsare topin the O&G space right now?
Have worked on a few O&G mandates as a generalist - my problem with the entire industry is that it's boring as fuck and run by bureaucratic do-nothings who are afraid of their own shadow (sure do love wearing cowboy hats in the office though).
There are far too many companies doing JUSSST well enough because even though they are run by trash management, high oil price will always a high stock price make. It's the definition of the peter principal - all these shitty managers - of which there are far too many - have had to do nothing except raise the dividend and buy up land financed by rock bottom rates for well over a decade. They will say it's part of some strategy - but the strategy is literally "we already have assets in [Permian /Eagle Ford] so we can get some (bullshit) synergies by buying up adjacent land".
What does that mean? No one wants to be innovative, no one looks to be strategic - because there's zero upside to it. So all you get are rinky dink asset sales or buyouts completely valued based on the land owned. They won't even launch buybacks or reshuffle the cap stack - I remembertrying to pitchmy VP on the fact that our client internalNAVassessmentimplied an equity valuefar above the share price, so let's buy back stock right? Nope, not gonna happen.
最有趣的这ng to happen in the industry was Engine No. 1, and Exxon LOST. Like the first major challenge, management of one of the biggest firms in the world got straight up smoked. Would also grant theSaudi AramcoIPO/deal would be cool, but even then, there's no story there, no pitching real value drivers, it's just "we have a shitload of oil and everyone wants it, no we are not going to screw you (maybe)"
Its obvious why you're just a banker since you quite literally have no clue what you're talking about. If you were talking about the space in 2018 then your comments would be relevant but still missing the big picture of the time (getting paid for growth so incentivized to spendcapexvs return capital, constant innovation through well design, dramatic shifts in capitalization, etc) but since it's 2022 and the industry has radically changed in the past few years, your comments aren't really helpful. For instance, buybacks are extremely en vogue. I will say that the industry today is kind of "boring" on it face, but more because investors want maxFCFwhich makes quarters much less variable.
Lastly, acquiring offset acreage that allows an operator to have a higher working interest, drill longer laterals, etc is by its very definition accretive. There's typically very real operating, asset and corporate synergies in E&P mergers if there's any asset overlap since you consolidate pumpers, add WI/drill longer laterals and don't need to add many corp personnel so can decrease your G&A/boe.
Not sure why the hostility. Never said it was a bad asset - just that it was boring because management has limited levers they can pull and no one is really incentivized to innovate. Everything you said reinforces my point that the industry still plays follow the leader to what the supermajors do (currently share buybacks) and land is still the only thing that matters in acquisitions. In my opinion, that's boring - but I suppose such is life in a commodity, price-taker business.
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