Energy Workforce hosted a Capital Markets panel at its recent 2023 Annual Meeting, with perspectives on capital markets and specific insights for energy services and equipment companies.
Moderated by James West, Senior Managing Director, Evercore ISI, panelists Salvador Pareja, Managing Director, Goldman Sachs; Jonathan Regan, Partner, Quantum Energy Partners, and Mike Scott, Managing Partner, Pelican Energy Partners discussed the availability of capital, the current merger and acquisition landscape, how companies are responding to regulators prioritization of ESG considerations and how oil and gas companies are investing in and deploying clean energy technologies.
West opened the discussion by asking about the ability of oil and gas companies to raise capital and the cost of capital compared to other industries.
Pareja said corporations that are looking to raise $400-500 million and above find it easier to raise capital in publicly traded syndicated markets than it is to raise capital below that threshold, noting that there is less of a liquid potential pool of capital available below $400 million.
The panelists were also asked about the merger and acquisition landscape.
“I think it’s really a bifurcated market. The best case that I can see is driven by the dynamic and settlements on access to capital. Companies need to find a way to produce a return during the whole period, meaning you need to turn the business into a cash flow producing asset.”Jonathan Regan, Quantum Energy Partners
Scott added, “Oilfield services and E&Ps are some of the cheapest cash flows you can buy today in energy. The oilfield service industry will be around for the long term and that’s why I think it’s actually a very good buying opportunity.”
“The oilfield services sector is absolutely making investments to improve their emissions profiles and improve their environmental footprint on site. If you add up all of those different layers of potential impact, that’s where you can actually make a big difference in terms of your overall profile.”Salvador Pareja, Goldman Sachs
When asked where they see the industry in 10 years, Regan said it will look different than it does today, at least from an investing perspective.
“I think we are going to transition back to the model where we are buying more mature assets and trying to get more oil and gas assets,” he said. “This will require investing in a whole new suite of technologies and a whole new set of skill sets.”
Scott agreed with that perspective and said, “I think we transitioned from a growth industry to a mature industry. We aren’t going away anytime soon.”
Corry Schiermeyer, Senior Director Communications, writes about governmental policies for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.