Capital Perspectives: Energy Outlook 2017 (Oil & Gas Financial Journal)
Excerpted from Oil & Gas Financial Journal.
By Bryan Frederickson and Eric Swanson
THE SENTIMENT around the oil and gas deal-making community seems to be, at long last, one of cautious optimism as we begin 2017. Investors raised billions of dollars early in the downturn seeking to take advantage of the financial distress caused by the dramatic fall in commodity prices, only to discover in many cases that the timing of deployment was premature or that the quality of assets marketed was insufficient to meet investment hurdles.
Second lien financings and secondary purchases of both public and private debt accelerated when WTI pricing appeared to stabilize around $60 per barrel in the spring and early summer of 2015. But within months, many of those investments were already deeply impaired as oil continued its decline to less than $30 per barrel in early 2016. Predictions for a quick recovery repeatedly proved wrong and a wait-and-see attitude permeated the capital markets and merger and acquisition communities.
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