Oil and Gas Opportunities
Oil prices have been on the rise due to tensions in the Middle East and the Venezuela economic crisis. Last week oil prices hit a two year high and this week traded off due to a lower outlook for demand growth from the International Energy Agency and weaker than expected economic data from China. All this volatility does not surprise too many experts who believe the long term price range for oil is between $40-$60 a barrel.
This price range is a far cry from 2014’s price of $120 a barrel. Those who started exploration and production projects prior to 2014 have either gone bankrupt or had to massively reduce costs with fewer people, better equipment and a general squeezing of costs while those who invested post 2014 did very well. Even today with breakeven cost per barrel numbers coming down for both conventional and shale oil, many E&P companies are not profitable. As a result, 2018 budgets for E&P companies will be very constrained. Financial investors who can commit capital as co-investors to certain operating companies could do very well.
Many of the strategic and financial investors who traditionally invested in these projects experienced painful losses in 2014 and are at best slowly re-entering the market. New capital coming into the industry could therefore be getting exposure to great opportunities.
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Castle Placement is an investment bank (founded in 2009) that raises raise equity and debt capital for companies in a variety of industries from our institutional investor network (>27,000 investors – PE/VC firms, hedge funds, family offices, asset managers, lenders, etc.).