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Interview
What are the biggest risks and rewards private investors see in upstream oil and gas today? The principal risk is commodity price volatility, particularly in natural gas, which has seen significant swings in recent years. This volatility can complicate planning and capex deployment. However, the reward potential could be strong for investors if oil and gas continue to be a meaningful part of the future energy mix.
How would you describe the current state of M & A in the energy sector? Are deals picking up, slowing down, or just changing in nature? M & A activity remains strong, particularly in upstream and in gas-weighted assets. Strategic buyers have been more active in 2024 than in recent years. OFS deal activity has seemed softer than some of the upstream interest. Stephens has remained active across all segments, helping clients navigate this evolving landscape with bespoke solutions that reflect the clients’ goals and objectives.
How confident are investors about the future of oil and gas, and what factors are influencing their decisions? Investor sentiment is bullish, particularly among some family offices looking at this sector that think the energy transition will be long and complex, and hydrocarbons will remain essential throughout. A more supportive regulatory environment potentially could further boost confidence.
With fewer traditional financiers in the space, are valuations being affected? Are deals becoming more competitive? Yes, valuations have adjusted due to capital scarcity, particularly from traditional institutional sources. This has created opportunities for private capital to step in. Some family offices and newer entrants are increasingly active, which could bring greater competitive tension to certain transactions. â–
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