Thoughts on oil and gas IB?
What are y'all's thoughts on getting into the industry? Does it pigeon hole my career? Much appreciated help :)
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I worked in oil and gas IB and most banks in the space are literal cults and are willing to swear on their own life that oil demand will not peak within the next 100 years (I'm thinking of you, TPH).
there are too many renewable energy shills out there
it's propped up by government subsidies and tax credits. there's no real meat in renewables or energy transition. it's all a fake bubble.
So beyond true. Not sure what it is about O&G IB that attracts some absolutely insane and intense personalities. I think some of them would actually fight you if you said oil was on the way out
I don't blame them honestly. It's their way of life and I'd be defensive if I were in their shoes. Oil and gas is in their DNA and many trace their lineage back to famous oil barons of the 1900s.
Agreed. Got a super day where I met this one MD who yelled at me for even mentioning green energy. Let’s just say I didn’t go there.
No way, what'd he say?
Do a search on here for Houston IB, this is a very frequently discussed topic on here.
If you like energy and want to stay in TX, it's not a bad spot although hours and culture are typically rough. Most Houston banks are pulling 80+ hours all the time which is far more than the NY average. Your exit opps will be into energy or infra. It does pigeonhole you a bit in that moving to NY is kind of difficult, you can do it at the one year mark but hard to go TX -> NY PE for sure.
If you want to go to NY, you will have to do it at the 1 year mark and you can't tell a soul in your group, at your school, etc because it's a total Judas move around there.
At a fairly strong Houston bank currently, and about 4 months in. Want to make this move in August/September 2023.
Any advice on what people exit to? Was looking at things like AM, some sort of smaller infra fund or private credit fund with better hours. I know lateraling is a thing, but would rather not unless I have to. My group isn’t actually that bad—just works ungodly hours and doesn’t like people leaving for direct competitors which us reasonable, so would rather leave as lightly as I can.
Those exits are doable after 2 years but fairly rare at 1 year and I'd say going to be a tough climb if you also want to do NYC switch at the same time. Have seen people leave for industry corp dev, small (lowest of LMM) credit funds at the 1 year mark, but all in Texas or the south/midwest.
I know energy groups hate this but I would try to move to a NYC-based group at the same bank (M&A, P&U, infra if applicable) and do your second year there while recruiting. Your options will open up tremendously. Unfortunately NYC recruiters and interviewers just often view Houston analysts as second fiddle and you have to be significantly better than their NYC options to land offers, even though energy is one of the grindiest groups with very complex modeling...
Also I'm sure you know but AM is generally a difficult exit as there are so few spots at the top LOs and the skillset is a bit different from IB. It's been done but I'd say landing a top LO AM is arguably harder than landing a HF job. If you get level 1 or 2 of the CFA done that would help, but that is also very hard to do with banking hours.
Why is culture/hours so rough in Houston?
It's a combination of a lot of factors (little HR oversight, no other group to compare to / eyeball when they leave, oil just generally attracts some intense people) but it's well known to be rough. Just about any bank in HTX, including the ones that do very few deals, work NYC sweatshop hours
You won’t be pigeon holed (HHs reach out to anyone that has IB analyst in their LinkedIn profile) but if you’re not interested in commodity driven businesses (no creative marketing / innovative products) you might get bored. All about land and rigs and oil and gas in place
Here’s my $0.02 as a first year in Houston.
—
Most energy groups in Houston will be viable long-term
(1) Most groups in Houston do incredibly well for their firm on a revenue per headcount basis. There’s a reason every bank has a Houston office despite the negative press that comes with being at all a part of the O&G industry.
(2) Revenue per head is likely to trend up over the next 15-20 years as banks take M&A/Rx fees from a consolidating O&G space at the same time they are taking increasing cap raise fees from the absurd amount of infrastructure projects being funded through the ‘transition’ (energy groups in HTX and power groups in NYC typically split coverage of the space, so HTX covers CCUS, SAF, Alternative Fuels, Hydrogen, etc.)
—
Exits are self-selecting, most banks in Houston won’t pigeonhole you
Most of the people I see in Houston go for infra PE or energy PE given that’s what they’re interested in and/or they probably want to stay in the south. At least at the few banks I work at/have friends at, there are routinely people every year who place into generalist PE roles in NYC.
Is it harder to go for NYC when you’re not there, sure, but I wouldn’t use the word pigeonhole
—
Caveat
I am in a group that seemingly has done well with exits on the grand scheme of things, obviously do your own research for whichever firm you get leads on if that’s something you’re worried about.
An analyst parroting what his MD said on a call. Cute.
Edit: Can the prospects and interns stop MSing me? This was meant to be subtle humor that obviously went over the heads of the prospects MSing me.
Classic ‘I’m gonna say you’re wrong and not provide any reasoning’
Good value-add Associate 2 - PE.
This is a bizarre take. BBs don’t do RX and most of that cleaned up RX in 2020 for energy.
the energy transition teams in houston are all complete jokes with (1) minimal revenue and (2) deals mostly below $250mm if any deals at all and (3) have zero relationships with infra sponsors
I have never seen a houston team market an infra / renewables opportunity - all NYC P&U teams for that
Not at a BB, not sure I’d comment on long term viability of a lending business or the merits of working at one in Houston, so I didn’t opine. Citi just had their top dogs jump ship this summer for an independent advisor, likely from the mounting corporate pressure to decarbonize the portfolio.
Rx for an industry is never ‘cleaned up’ for good lol. Houlihan & PJT literally just opened a Houston office. Why would they do that if they didn’t see sustainable fee generation potential?
I am staffed on transition mandates. My friends at other banks are on transition mandates. Read the IRA and it should be pretty clear (1) what naturally falls into Houston coverage (typically anything with molecules instead of wires) and (2) the absurd Capital flowing into areas of the transition you’ve never heard about. I promise it’s not all going through P&U.
As a former analyst in Houston at a top group who moved to a top group in New York before moving to the buyside, the amount of interviews I got from top notch UMM funds was exponentially more as soon as I moved to NYC and got a tiny bit of deal experience.
Part of the issue is energy candidates traditionally didn’t perform well in generalist interviews so there is a lot of bias against interviewing energy kids. On a high level, non energy PE interviews are all about being able to think through business quality, industry dynamics and competitive positioning - which are all things that do not get discussed in same level in energy. The bottom line is when does porter 5 forces matter for upstream companies?
Is it really that difficult to learn porters 5 forces and proficiently apply it to various businesses? In other words, is this stigma true, or is it just because they have no incentive to interview htx o&g people for generalist roles?
Also, you mentioned that after moving to NYC you received more interviews--was that because you also switched industry groups or is it just because it's geographically more convenient for them to interview you?
It was simply because I switched groups (both top groups). CPI, HSP took me way seriously as a candidate. This happened during COVID so location was not an issue.
On the porter 5 forces, the main issue I encountered was that during off cycle (doesn’t apply to on cycle and you won’t get any generalist looks on-cycle in Houston), you would have to talk about your deal experience during almost every interview. A normal candidate would talk about product, market share, organic growth, margins and business model. However, you just can’t talk about your deal experience in the same way. Now if you are doing 10 interviews and this keeps coming up, there is going to be an inherent bias against you. Then when it comes down the final decision and they have multiple good candidates with the same pedigree including you, it’s tough to select you vs the NY kid. The question you want to be asking is if you want to handicap yourself like this.
Note this only apples to trying to interview at top UMM / MM funds and sure you can swing a generic MM fund if you play all of your cards right.
From my experience at a NY MF (didn't personally go from HOU -> NY), but have worked with some and also hearing from several friends who have -
1. Still a ton of meaty opportunities in O&G. Tilts more toward distressed - era of IPO and big upstream efforts are gone - but the space has been smeared so bad that the few who have the mandate for it can make a lot of money supporting essentially critical-infra. I really wish sometimes that I could invest myself in some of these opptys
2. Brand and deal flow matters much more in your formative years as an analyst over industry and location. NYC will be an option if you want it later
3. It will be hard to get direct looks into generalist / special situation groups at MFs, but slotting into energy/infra MF/UMM NYC funds or a complete 180 in tech LMM etc all very doable. It's funny because IBD is mostly O&G but when you switch over to the buy-side it's all renewables / green energy (even within HOU lol) - there's only a handful of people/groups that focus on that in advisory, so where are the bulk of buy-side hires being made? That's right - conventional energy
4. People in Houston are very passionate about being in Houston, and if you don't have that same fervor then you'll have to B/S them to get a job. They will be extra skeptical if you don't go to a Houston school like Texas A&M and instead go to USC trying to pitch "how much you love Texas." Which means that in 1-2 years when you say you want to move to NYC (either as a lateral within or new job) inevitably some relationships here may get ruined and you'll prove out the doubt they had in the first place - just be prepared for that
5. The best banks in Houston are very grindy and attrition is high - "culture" is a bit of an after-thought. Again, be prepared for that
6. The gap between the best and worst bank within Houston O&G is some of the biggest delta for any industry/city in North America. DYOR
TL;DR No you will not get pigeonholed. Spray and pray is your best bet as an under-grad - count your blessings if you land at a top group in Houston.
What are the best and worst banks in Houston?
Lots of threads about them. Not going to touch on this as not my specialty. I've met some great co-workers / friends from EVR though who check all the boxes - great to grab a beer with (personable), can grind, smart and well-rounded (work is not their be-all end-all in life)
How are Mizuho's and Greenhill's Houston offices? I saw they both did some deals this year. Any details would help.
Not in any real conversations to be honest. I would take most reputable MMs over either of these, although if these are your only offers late in the game that is a different story of course.
Mizuho gets thrown the occasional bone because they do a lot of debt/project finance work. Greenhill's brand overall is struggling and energy has never been a strong practice for them
Also don't take their "deals" for face value - i.e. Greenhill lists Altus/Eagle Claw $9B merger prominently on their website... they were on it yes, but #3 of 5 banks advising that group and were not the main party by any means. Same for some other deals on there. The ones they actually did by themselves were the ones that are like $100M and a company that doesn't have a functional website.
Brand name helps a lot if you’re stuck doing Houston O&G banking but want to leave to a non energy opp for whatever reason. GS/MS will help quite a bit if you want to do NYC/SF/wherever (and actually place better outside of Houston than in).
Yes completely agreed - aligned with my point on brand and reps mattering most. Brand for on paper visibility and reps for actual learning and being a value add person to a team you join
I’d like to get others’ perspectives but anecdotally I see O&G teams taking on more than just traditional upstream/exploration. They seem to be broadening their mandate and I see it transitioning to broader energy IB than purely O&G long term.
Especially true when considering European super majors but don’t have as much experience with the large US guys
Is this a question? It doesn’t make sense as a statement further down in the comment.
most banks now have one global / NA group head for all Energy types - Citi and CS were the first to do it I think
the power & utilities teams run renewables processes. Houston pitches kids on Energy transition work but there’s not much of it and in most cases all the relationships sit up in NY for infra / renewables.
houston has too many MDs and bankers in general to cover existing oil and gas companies (coverage is shrinking and so are deals) - houston analysts may start to work with NYC power teams if the bank has that setup but its TBD - the houston analysts are generally weaker (certainly at the smaller banks with no deal flow)
Question
Means you’re not getting an offer/waitlisted
Did you do a superday?
If this counted as a mini "superday" or final round - You're probably next or second next for an offer and they are trying to figure out how much to push their first choice. If you don't hear back from them consider it a ding and accept whichever offer you like better between Monday and Wednesday. If this current place is head and shoulders above your other offers, you can send one follow up on Monday saying XYZ bank is your top choice and you would accept an offer on the spot, but you have an offer expiring today and would really appreciate an answer either way.
If you still need to do a superday - prob trying to figure out timing / how quickly they need to get you in, but interested
Thank you for the response. Trying to be optimistic.
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