Houston Dealflow?
Hi everyone,
I'm an incoming analyst at one of the BBs in Houston and was wondering what the scene is like down there from people actually working as analysts and associates in Houston at the moment. I've been in touch with one of the analysts from my office but wanted some other perspectives as well. Last summer I worked on a ton of IPOs and secondary offerings but I assume equity issuances are very slow if existent at all right now. Has M&A, RX actually picked up as some people have predicted or are things really slow? Any rumors of layoffs? Just looking for a general bead on what the atmosphere is like in the oil and gas investment banking space right now. The doom and gloom on Fuelfix and other sources has got me a bit nervous. The BP CEO said today that the low price environment we're in now may take years to work out, but also that he doesn't expect a wave of big mergers unless prices stay very low for a long time.
Thanks guys.
I would argue there could be a fair amount of Distressed/RX situations in the energy sector if the price of oil remains low for months to come. Many big firms like Carlyle/Blackstone/Goldman Sachs are raising/raised dedicated energy funds that will mainly be targeting high yield energy bonds. They could be positioning themselves to be in the driver seat if any of these firms were to default on these bonds.
$50 is not as positive an environment as $100. That's for sure. We've seen a slowdown in the capital markets. Q1 M&A was nearly non-existent, but you're starting to see E&Ps with liquidity concerns explore M&A, particularly on the A&D front. No one wants to sell at the bottom, or buy before the bottom is reached, but by late Q2, companies will be compelled to divest.
In addition, there's a TON of capital on the sidelines, waiting for it to become less of a seller's market (value expectations are certainly well above market) both from PE funds, distressed funds, and the large strategics.
Someone else can opine on midstream, I'm sure.
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