It was a tale of deals, capital and commodity prices at the Hart Energy’s Energy Capital Conference at the Fairmont Hotel in Dallas. Craig Lande, RBC Richardson Barr, said publics are selling “really big deals,” with lots of acreage and production on the market. Who will be the buyers? Lande said it will be private equity.
A roundtable on raising capital for small deals discussed the opportunities for a different kind of transaction. The speakers, including Stewart Coleman, Pearl Energy; J.W. Sikora, Cibolo Energy; George McCormick, Outfitter Energy; and Preston Powell, Carnealian Energy; indicated that there are opportunities in the lower middle market space. But companies need to be resourceful and find the underappreciated upside and, ultimately, sell into a liquid buyers’ market. They said finding the right 20,000 acres or so in plays with good returns is the key.
Networking opportunity at the 2018 Energy Capital Conference
Meanwhile, Riverstone Holdings’ Christopher Abbate said energy companies can access the credit markets via direct lending, mezzanine and credit opportunity funds. He said his firm believes the bank and bond markets will continue to be large supporters of the energy sector.
Chuck Yates of Kayne Anderson and Sean O'Donnell of Quantum Energy Partners discuss how private equity is adapting to the current environment
A panel of analysts closed out the first morning session with a macro look at PE. The panel, including Kayne Anderson’s Chuck Yates, Quantum Energy Partners’ Sean O’ Donnell and EnCap Investment’s Murphy Markham, indicated PE is still a small part of the overall capital needed in the oil and gas industry. The trio agreed that much more capital is needed to meet worldwide demand and said now is the time for private companies to create value while public companies are somewhat out of favor with investors. They also indicated that PE companies need to prepare to hold properties longer and invest more capital in development.
Whether those speculations come to pass remains to be seen. What we at Hart Energy do know and can predict is that whatever comes next in this fast-evolving industry, it will be interesting, and it will be part of the wide range of discussions we have again at next year’s Energy Capital Conference. We hope you’ll join us then to be a part of it. See you then!