Solomon Partners Oil & Gas Survey Captures Market Inflection Point & Industry Evolution

Given the convergence of forces impacting the energy sector, Solomon Partners’ Energy Advisory Group conducted a survey of more than 100 senior oil & gas executives across the industry to understand what is top-of-mind. Key learnings from our survey’s respondents include:

Commodity Price Levels Here To Stay

• “New Normal” expectations sub-$50 / Bbl and $2.50 / MMBtu over the short- to medium-term
• Global economic timing uncertainty and current geopolitical volatility creates instability
• Drilling activity, and many return to production opportunities, are uneconomic beyond core areas
• Optimistic natural gas price outlook relative to the potential upside in current oil prices

Consensus Call For Consolidation

• Lessons learned from investor response, market receptivity and performance from recent transactions
• Size and scale is an absolute necessity in order to establish/maintain relevance
• Paves the way for an increase or maximization of operational synergies and efficiencies
• Expect zero premium, merger-of-equal combinations with cash flow neutral emphasis

High Hurdles & Evolving Focus For Available Capital

• Growth model in the rearview as investors demand cash flow generation and return-driven opportunities
• Energy transition and technology movement making an impact and will usher in the next phase
• Record macroeconomic high yield issuance largely untapped for energy, but only available to select few
• Despite 5-year E&P IPO market dormancy, increased optimism will see a turn in ‘21-’22

Please click below to see the full results.