Natural Resources Groups
I'm currently an undergrad looking to get into IBD and I am interested in the natural resources space.
From what I've read, this is a hot industry at the moment, so I was wondering how the different nat res groups in NY across the different banks compare? I guess since boutiques don't split clearly into industry groups, this is more catered towards the BBs, but if any boutiques are active in this space, please do let me know.
Thanks!
https://www.drco.com/
There are a lot of good energy only boutiques currently. Do a search, this has been discussed ad naseum.
Also, there are some good energy bankers in NY, but all the real Wildcatters are in Houston. For energy: HOU >> NY (sans power)
What do you mean by Nat Res? That sector encompasses Energy (Oil & Gas), Metals and Mining, Power, etc. All the major Energy groups are in Houston, all the rest are in NY.
I believe Barclays is known for having an especially strong Nat Res group.
Honestly can't think of any BB besides UBS that has a weak Nat Res group.
How does it come out when we compare the nat res groups for GS/MS/JPM? In terms of the prestige of the group on the street and within the bank? Do they differ at all in exit opps?
GS/MS/JPM do not hold the same prestige in energy as they do generally. Barclays and Credit Suisse seem to be the top in Oil & Gas which I think is the majority of Nat Res since some banks group power and metals and mining differently.
Citi is another one supposed to be strong in Houston as well but I've heard they are really overstaffed.
Jefferies is arguably one of the best upstream sell-side players.
Not sure that's accurate...certainly strong in A&D stuff but not sure they've been on anything of note really since Exxon XTO.
KKR / Samson? Biggest Energy LBO of all time and largest LBO of 2011, they were sole sell side advisor
Jefferies is without question one of the best in sell-side... you could make a case for TPH as well
Yeah I totally forgot about but still don't think they're that strong in upstream. TPH seems stronger.
Disagree on TPH for corp M&A, at least for E&P (can't recall the last big sell side they did sans A&D and JVs). Would say EVR is in the #2 spot, possibly #1 adj. for the KKR / Samson deal (of which Jeff had in the bag to start). Solid move on EVRs end bringing all the A&D wizs from Scotia, it's all about knowing the assets in sell-side.
There are about ten energy boutiques that I can think of. Most if not all are Houston/New Orleans based but may also have an NYC presence. Despite the strength of the energy sector, I can''t quite comprehend how all of those shops profit and exist. Seems like there's a tremendous amount of unneeded overlap in the energy boutique arena.
^They can exist because there is a ton of fragmentation within the energy space in terms of assets and businesses. As a result, smaller shops can build relationships with the "smaller" guys because the bulge brackets are looking to do the big deals.
Jeffco kills it in upstream/asset deals. Buying Randall Dewey got them Eads and that guy has done extremely well.
Deals mentioned above + chevron acquiring atlas for $4b+ (lead to atlas)
~$5b Fayetteville shale assets sale from chk to BHP (sole advisor to CHK...Eads was aubrey's college roommate..which probably helps).
Also advised Hillcorp (KKR) on sale of eagle ford assets to MRO. That was over 3b.
Won't see them elsewhere across the value chain but certainly doing just fine in that silo.
Agree on EVR rise...they have come on strong.
sorry, double post.
Most BB have good Nat Res groups (mature but dynamic industry with great and relatively constant deal flow), UBS's is rebuilding theirs (I think it was absorbed by Citi). Barcap is generally recognized as the strongest, but groups are solid all across the street.
Of the MM/ boutiques I know that RBC and Jefferies have solid groups. EVR has made something of a push last year through very competitive pricing; don't know how sustainable that is though.
A couple of specialized boutiques to keep in mind: Scotia & Waterous: strong for small/medium upstream A&D. They work on some corporate deals also. Simmons & Co. one of the strongest players (if not the leading) in the oil field services industry. Tudor Pickering & Holt (TPH): really strong energy (mostly oil&gas) boutique, most of the time they will be leading mandates working alongside BB on the bigger deals in the industry.
One thing to keep in mind, especially in BB, is how they group the industries they cover from "Nat Res", as you will see a wide variation in if they include/don't include O&G, Power, Mining, Utilities, Chemicals, etc... Also keep an eye about how they divide execution and marketing between their NY and Houston offices. Another thing is that most of the banks support deal teams worldwide from their NY & Houston offices and this provides an interesting international scope to the work you would be doing.
Natural Resources/Energy/Power (Originally Posted: 11/20/2006)
anybody in these group(s)? how are the exit opps?
I just got a position as a first year analyst starting in May 2007 (BB), and they made it sound like most of their analysts either stayed on, went to PE or Hedge, went into industry (energy companies), or went to get MBA. From what I understand this is fairly standard stuff, but again I have no first hand knowledge beyond what I've been told by people in my future company, info sessions with other companies, and interviews.
Natural Resources? (Originally Posted: 02/05/2011)
What qualifies as a natural resources company (sorry, I'm still in college, and don't know much about this group)?
Can someone describe the type of companies that will be in the NRG group?
Thanks!
Oil, gas, power, metals & mining, etc... some firms split energy and power, others handle it all under NRG...
Some Nat. Res. Groups also include coal, paper products and chemicals.
Yep this is also true...
Energy (Oil +Gas) + Metals & Mining + Timber. If the US had a large corporate farming segment, that would probably also fall under natural resources, but I don't think there's a single US or Canadian corp that grows grain.
I disagree with some of the other posters about how we divide up natural resources. IMHO, if the industry involves processing stuff from one form to another at a facility (IE: refining, traditional power generation, chemicals, and paper), that's not natural resources. That's generation/utilities, chemicals/basic materials. Natural resources, by definition, is stuff that can't be made in a factory.
IP this may be true (that it isn't a true Natural Resource by definition) but it's handled by the Nat Resources group. Speaking from a coverage standpoint...
I know that it was mentioned that some banks separate energy, but would alternative energy companies also be covered by Natural Resources? Or is it only Oil & Gas? I have a SA offer and am trying to find out more about Natty Res as it is a group I am interested in.
Some banks have cleantech groups..but .I've never heard of a nat resources team handling alt energy cos but that's probably also a function of their insignificance (from a size standpoint). Most large alt energy initiatives these days are parts of larger multinationals (GE EFS, big oil). I'm guessing the solar cos probably fall under industrials as they are in the manufacturing space more than the power generation space.
Most clean tech is within tech, although occasionally power bankers will get involved
Seeking Overview on Natural Resources Groups (Originally Posted: 03/30/2008)
Attempting to gain further insight. Older posts while using a search option left some things to be desired.
So basically
Opportunities? Is it restrictive to merely that sector? Is it highly specialized like Real Estate?
I recall a poster months ago stating that something about the convoluted nature of the industry's rules.
What type of deals would one see?
The future of the industry?
Pros? Cons?
Any other insight would be great.
I don't know what you mean by restrictive. You obviously learn skillsets tailored very much towards mining. Opportunities aren't too bad. Obviously a lot of consolidation happenning lately and this will probably continue for quite some time.
What sort of deal? Rio/Alcan, BHP/Rio, Vale/Xstrata?
I say restrictive, because it is a term that I hear a great deal in the old posts about Natural Resources, and I was seeking clarification.
What they meant by it was that the skillset was HIGHLY specialized, and I just wanted 2nd opinions.
First, natres covers mining, oil, oilfield services, pipelines, sometimes power etc.
Second, the skills you will learn are tweaks of the same skills from other groups. For example instead of using a discounted cash flow model, we use a net asset value model. An NAV model is basically a blow-down model with no terminal value. You learn to project capital and operating costs, as well as slightly more complex revenue models given the various grades of commodities and pricing differentials.
You also learn to use comparable company analysis that is not unlike other industries. We have our own metrics and sometimes use them to the exclusion of more standard financial metrics, but there are reasons for that. Finally, you will learn precedent transactions and how and why certain deals are more and less comparable, particularly in different parts of the commodity cycles.
These are all valuable skills and some people say specialized or highly specialized because the industry jargon sometimes keeps other professionals from entering the sector. Basically, it creates a barrier to entry which often is good for natres bankers. The exit opportunities are PE and hedge funds, just like other sectors. The better news is, there are dozens of PE and VC shops that are wholly dedicated to the sector and the opportunity for people knowledgable in the sector, it can be very lucrative.
You would see M&A deals, equity deals, high yield as well as fixed income deals, commodity based lending, hedging, structured products, farm-ins, asset swaps, asset sales and so on. Deal size can run the gambit from tens of millions to hundreds of billions depending on the group and focus. Most of what I do is in the $500 mm to $15 billion range. Think 5-6 deals a year.
Future of the industry is probably pretty good. New, riskier and more challenging areas need to be accessed to satisfy demand, as well as new technologies (think green) that also need to be financed and sold. Also, natres can be seen as a defensive industry, so the chance of living through a downsizing is a little better than say Tech, real estate or something more levered to the economic outlook.
Natural resources analyst (Originally Posted: 05/09/2012)
Do natural resources analyst (assuming the firm had a natural resources group) get to work on both oil&gas and metals and mining? Are there any firms you know which allow analyst to work on both. As always, thanks for the input.
Not sure on this. I'm interning in a commodity trading house and they actually asked me which products I was interested in working with... It'd be reasonably difficult to learn about all of them at the same time too.
Pretty sure the Nat Resources makeup differs by firm.
Depends on the bank. It might even include chemicals
As much as it depends on the firm, it also depends on the office/city. For example, NRG analysts in my firm's London and HK offices are generalists and cover both energy and metals & mining, whereas the NRG guys in Houston and Calgary cover purely energy while the NRG guys in Toronto cover purely metals & mining.
natural resources (Originally Posted: 02/01/2011)
Just wondering does the working culture for the natural resources department in an I-Bank shares "24/7" type of working style? Do those natural resources PE firms share same I-bank style working hours?
Generally, yes.
Natural Resources/Energy Group (Originally Posted: 09/09/2014)
Any thoughts on what the career trajectories of individuals in these groups are like? I really like the oil & gas industry and I do not want to focus on one highly specific facet of it, is there an opportunity to be a generalist in these groups rather than just a specialist? I don't want to be the guy checking soybean prices in Illinois 24/7, 365. Thanks in advance.
Also very curious to see responses to this question.
i see this thread is a year old but in my BB energy group all the analyst have exposure to a wide variety of projects - all three sectors (E&P, Midstream, OFS) and various products (M&A, HY/LevFin, ECM, etc.)
and no one cares about soybean prices in Illinois...how does that have to do with energy
Natural Resources (Originally Posted: 12/17/2006)
who has the top groups on the street?
more specifically, energy
it's been posted before, but to answer your question.
1) Lehman, then decent drop 2)GS, CS
Based on what exactly?
I think when you look at Lehman as a global energy franchise across all banking activities they would be considered number 1. And by that I mean:
1) Research- very good industry research team 2) Trading- top 1 or 2 traders by volume for many of the largest energy firms 3) IPO placement 4) US M&A is very good 5) EU M&A is picking up steam
There may be an individual area where they are not #1 or #2, but across all of them they give the bank a strong energy platform.
My two cents
I interned in Lehman's NY group and then went over to GS in NY.
Go to GS. Much better people and the experience is A LOT better. You get tons more responsibility and you work on a ton of big deals. In my first year as an analyst I worked on 5-6 M&A deals worth a total of $68 billion. Yes, you read correctly, $68 billion.
Natural Resource/ Oil & Gas Groups (Originally Posted: 01/19/2008)
Hey, I was wondering if you could tell me in your opinion the top 3 or so banks for this group. Thanks.
Not an industry I'm really involved with but the names that come to my mind are:
Lehman - Their name always seems to come up. I think their also pretty big in resources-related S&T, which never hurts your banking franchise.
JPM - They advised Exxon during the Exxon-Mobil merger.
Goldman - Advised Mobil on the big merger. Has to count for something.
CS - Again, I just hear this name come up a lot.
By " I think their [sic] also pretty big in resources-related S&T, which never hurts your banking franchise." I meant energy and resource-related EQUITY S&T -- the rationale being that it is to a client firm's advantage if it's advisor/underwriter has a large trading presence in their relevant industry (easier to place/stabilize new securities issues and highly correlated with the quality of equity research that the bank can/will produce).
Lehman is tops, followed by UBS, CS, in that order. ML is certainly on the rise w/ the acquisition of Petrie- would put them behind CS.
JPM is after ML, and then there is a big drop in the BB names. Citi and GS round out some other key names
Where is BofA ranked among the banks for this group?
Fairly low- could not tell you specifically, bu tdefinitely below the likes of Citi, GS. It is still a good bank, don't get me wrong, but it is not on the level of a JPM
that is the case for banks in the Americas, but if you are talking about NatRes in EMEA than it would have to be Deutsche Bank by a long shot
anyone have details about Lehman's natural resource group and their exit opps into pe firms?
Is it on par with GS TMT or MS M&A or a notch a below?
Much below. A lot of their work comes out of Houston, as their Group Head works out of that office. While it is most definitely not a T5 group on the street, I think it is certainly a T10, T15 group on the street. Speaking from the Houston perspective, I have personally known several analysts to go onto First Reserve, Carlyle, Hicks Muse, and several other large PE Energy funds. Again, my experience is much more aligned with their Houston group than with their office in New York.
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