The Wall Street Journal reported this week that oil and gas investment funds in the United States are seeing renewed interest from investors in the industry. One of them, Post Oil Energy Capital, told Luis Garcia of the WSJ: “We see investors being more interested in investing in our new capital in the future than we have seen in the last 18 to 24 months.” The company also said it had plans to set up a new investment fund to take advantage of new investment opportunities in the oil and gas sector. An industry player named Lime Rock Management, for his part, told Garcia of the WSJ that he had recently raised more than $ 500 million to spend on oil and gas fields. It seems that, in the face of persistent industry constraints preventing U.S. producers from increasing production as quickly as they would like, energy investors can not resist prices above $ 100. And they are likely to stay there for a while longer. “The EIU expects oil prices to remain high above US $ 115 / barrel for most of the year. “The risk of further price spikes has also increased,” Matt Sherwood, chief economist at the Economist Intelligence Unit, said this week. Sherwood cited declining Russian oil production due to sanctions and the fact that surplus capacity among OPEC + members was concentrated in Saudi Arabia and the United Arab Emirates, and was only about 3 million bpd, except for the apparent of the two countries to develop it. What this price perspective means for the industry is the constant interest of investors, it seems. The longer prices remain high, the longer investors’ appetite will last, and this is very welcome news for independent drillers. They have been hailed as the big winners of the latest price rally, as they are not subject to pressure from shareholders in terms of capital discipline. However, as an executive of an independent energy company told Oilprice, the small drilling club is not without problems. Banks and private equity firms are avoiding investing in oil and gas, Margaret P. Graham said last week, following the federal government’s agenda to shift to renewable energy. Independents are seen as a major driver of any U.S. production growth this year and next — and that growth is expected to be significant, according to the Energy Information Administration. The renewed interest in investing in oil and gas, therefore, is even better news for future trends in oil and gas production in the US. However, it will take time. Last year, according to the WSJ Garcia, private equity raised $ 2.48 billion in seven oil and gas funds. That’s compared to the $ 15.66 billion raised by 21 funds in 2020. However, with prices remaining high, fund managers appear to be cautiously optimistic. “We still do not see much of this activity with legacies and institutions that made it a policy to stop investing in fossil fuels,” Jeff Eaton, CEO of Eaton Partners, told the WSJ. “We see it from some of the groups that either do not have these policies or are willing to skip them a bit because they are starting to see a potentially attractive investment opportunity. The data seems to be changing as global energy demand grows, while supply remains stagnant, offering new opportunities to energy investors and new sources of financing needed for energy companies. By Irina Slav for Oilprice.com More top readings from Oilprice.com:
