A first year MBA student I am a mentee to is weighing the pros and cons of entering O&G IB from a top 10 program.
It's a space I recently left, partly for personal reasons, but mostly due to the outlook (I also came in post-MBA).
For those currently there, without bias if possible, should I tell him to steer clear? He is far from dead-set and waffling, everything I am reading shows a surge of industry consolidation for survival but after that (keep in mind he'll start in 2 years) I am imagining significantly depressed deal flow and capital markets continuing to be dead.
Given that he has so many alternative options (within IB and elsewhere), what do you think should be the recommendation?
The outleak is bleaker than other product groups. If he's at a top 10 he should be able to position himself to other groups. Why take the risk if he doesn't have to? It doesn't seem like he as a texas school and is limited to energy banking?
Appreciate it. Seems to square with my thinking. Not at a texas school so certainly has other options. Doesn't want to be in NY but Chicago/Charlotte and elsewhere on the table. I haven't heard of that many people moving from other groups into O&G/Hou later on (a consideration of his) but I doubt the door would be shut so long as he's in a semi-overlapping group, particularly as it loses favor with candidates.
Is this mentality the same for incoming analysts / incoming summer analysts(in terms of an industry that should be avoided)?
I would think this is only a concern if you're looking to climb the ranks/exit to energy PE. Exits outside of that world exist much more readily from the analyst level (there's always b school) but obviously the deal flow outlook is still a question mark during your time.
Appreciate the insight. Curious to hear if you imagine incoming interns will have a harder time with return offers because of everything going on or whether the short term will be packed enough with M&A that offers should not be hurt.
The best thing you can do is be honest with him. I think the reason you are asking is because if the poor dealflow continues, he goes O&G IB, then he is a casualty of the industry, you will feel bad. Just straight up tell him, the future looks bleak, you can always go NYC -> HOU but it is much harder the other way around. Starting out in NYC industrials, metals and mining, and power/utilities are all close enough that if he/she wants to pivot to Houston they easily can.
Appreciate the advice and you hit the nail on the head about why I'm asking. I guess I wanted to clarify that my pessimism and/or anxiety about starting life post-mba in that industry was not unfounded.
I also floated the idea of industrials/other tangential groups, I would imagine that could be a reasonable option if you wanted to keep the door open for later if deal flow picks up again or he still wants to pursue energy. He doesn't want to be in NYC, but I would still think a good group in Chicago or elsewhere would keep the optionality there. Thanks again.
Make sure he knows that living in NYC for 2 years is going to reduce the risk of his entire career getting stumped. Even the banks getting RX work won't be able to live on that another year. Yeah a chicago group might be a good idea as well. Also what about Charlotte? BoA has a Lev Fin group there for sure.
In these situations, everyone hopes that things will turn around by the time it matters for them.
However, think about this. Energy went down the shitter when in 2013 - 2014??? If you started as an analyst back then hoping things would turn around, you could be on your second year as a VP by now and you've never seen a good year in the industry....I mean WTF...
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Oil and gas banking is career suicide post MBA in my opinion. I managed to get out of the space a couple of years ago and was sweating pretty hard about the industry’s future back then. It sounds like QOL outside of NY is a consideration, in which case places like Chicago, Charlotte, Minneapolis, etc could offer that
What did you end up exiting to?
I went to an infra fund, was hired because of my midstream experience but now do zero oil and gas as it’s basically been written out of our future funds. Good timing I guess
OP - if you don't mind my asking, what kind of exit opps did you see as a post-MBA Oil & Gas IB Associate?
I was able to move to an industrials/infrastructure group through prior connections I had made.
Oil & Gas isn't going anywhere; do you realize how much of the world infrastructure depends on oil & gas and how entrenched industrial demand is? The global energy demand over the next several decades is going to far exceed what capacity renewables can provide which means oil & gas and even dirty coal demand will continue to rise. Plastics demand will skyrocket which bodes well for oil & gas. That fantasy that liberals imagine where everything is run on clean energy renewables? Yeah we're not going to live to see that. And this impending ban on fracking? Bring it on; prices are only going higher with these restrictions.
Right, I think most people who know the space clearly understand this.
I think the argument here is about IB activity, which has measurably declined and is forecasted to be subdued. The point is that for somebody starting a post-mba career, you would be signing up for an industry with declining headcount and activity when you have virtually unlimited alternative options. The anxiety that brings on is real--especially for somebody looking to climb the ranks (promotions to VP and beyond).
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