Oil & Gas M&A

Question

Hi,

I've got the opportunity to join the M&A team of a Non BB bank in the Oil & Gas sector. I'm sure everyone is aware of the transition oil and gas is undergoing, but I spoke to a couple analysts who said the deal flow is still there and will be there for the foreseable future. Does anyone have any further insight into the sector, is it something I should do? Also, will I be branded as a Energy/O&G banker if I do join this team or is it easy to move groups? (Might be worth mentioning that I dont plan to stay at this bank for long).

caymanoffshoremaster · Accepted Answer

Oil and Gas in my opinion is one of the most exciting industries, as well as a bedrock of American high finance. Hydrocarbon resources are a staple of the investment banking landscape, and will be for the foreseeable future. Liquefied Natural Gas is transforming the way energy is bought, sold and transported around the world and subject to some of the most sophisticated feats of engineering. Oil and gas is the best industry by far, and i am not even an oil banker but i respect the shit out of the industry as a whole. it is actually really cool and complex

apollotime · Answer

I mean, intuitively, O&G isn't going anywhere. If you were thinking about going for, say, Coal M&A, that would of course be a sector to stay away from as its been under severe pressure for decades. However, O&G are here to stay for quite a few years.

Let's just take the example of oil first. 66% of US oil consumption goes towards transportation. Now, while the trend of EVs may put severe pressure on the gasoline segment, some of the more niche segments will continue to persevere.

kingb · Answer

YuknoomCh'een

What do you mean by Houston bankers being obsessed with relative lifestyle achievements? What makes it different from the clout chasing cultures of most other banks?

It's a Houston thing - its really hard to leave because you get enamored with the lower cost of living combined with high earnings potential of energy and energy adjecent jobs. While the city is diversifying, you just don't really have many alternatives to move away from energy so people naturally shift their focus on how big their McMansion are vs.

ValueJedi · Answer

I think O&G would be a very interesting place to work as an M&A analyst for a few years...the pigeonhole is only as real as you make it.

The trend in O&G M&A right now is consolidation of production, not new exploration focused. On top of that, no one has cash for M&A (or at least, a desire to use it) and debt financing is not cheap unless you are a scale player with like > 10-20mboe/d. The result is that you have a lot of cash flow focused deals going on with nuanced equity structures that get pretty complex.

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Oil & Gas M&A

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Oil & Gas M&A

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