Energy Investment Banking - Interview Technicals

For anyone recruiting for full-time or SA IB roles in energy, the web page called "Oil & Gas Investment Banking: The First Victim of the ESG Cult?" on the Mergers & Inquisitions site is very helpful and comprehensive in what you will be asked in energy banking interviews and super days. Google the words in the quotes and you'll find it. Here are some key items that you should focus on. 

1) NAV Models: Be sure to have a strong understanding of NAV models and how to walk them through a NAV model step by step.

2) Valuation: Be able to explain the different valuation methods that are used for each vertical of oil companies (upstream, midstream, downstream, and integrated) and the different corporate structures that each one may have (Master Limited Partnerships, Joint Ventures) and why they are structured this way. Be able to explain what a DACF is and what EBITDAX is and why it's used. Be able to explain why DCFs and LBOs aren't typically used for upstream oil & gas companies (this understanding will make you realize why they use NAV models)

3) Commodity Markets: Check the prices of WTI Crude, Brent, and Natural Gas and be able to explain what each one means and why there's a difference between the prices.

4) Geography: Be able to name at least 5 of the major oil basins in the US, members of OPEC, and 3-5 oil basins that are in Texas. Be able to name the top 5 oil-producing countries in the world, and the top 5 oil-importing countries in the world that don't largely produce their own oil (ex. Spain, Germany, Japan)

5) Accounting: Be able to explain the financial statement items of oil & gas companies and why these types of companies have them (large amounts of derivative assets, asset retirement obligations, asset impairment charges, dry hole expenses, large amounts of capex, highly levered, and the difference between the successful efforts and full cost accounting methods)

6) Recent Deal: Make sure to walk the interviewers through a recent oil & gas or energy transaction including the price paid, the types of capital used, valuation multiples, type of transaction, the effect on the companies' stock prices if they're public, which basins/assets they acquired, and what synergies they will realize from this transaction. 

7) Connection & Interest to Energy: Be able to have a strong and easy-to-understand interest in why you want to work in Energy Banking. If you don't have any direct work experience in energy prior and aren't from Texas or Oklahoma, they will likely drill you harder on the technicals to see if you truly want to do this. Study hard. You can do it.