Energy / Oil and Gas PE Recruiting Process
Will be starting at a well-respected bank in Houston and am very interested in getting into Energy / Oil and Gas PE at any of the MM - UMM shops in Texas in the future. Shops like Quantum, EnCap, NGP, Carnelian, Post Oak, Kayne Anderson being examples. Would love for someone who has gone through interviews with these firms (or any that are similar) to shed some light on the process from head hunter outreach through interviews.
A few specific questions:
Assuming there are modeling tests, do these firms give the standard LBO test or is there some sort of oil and gas component (NAV buildout)? In short, what did your modeling test look like?
Do most of these firms recruit internally or use a head hunter? If I’m going to one of the “top banks” in Houston, will they reach out directly or should I be proactive in showing interest in their firm?
Is there an “on-cycle” for these shops? If so, when has it been in the past? If not, how far out are these firms looking to hire for?
Not too much out there on this subject so any current information would be appreciated.
It’s very similar to traditional LBO recruiting, with a heavy emphasis on why energy and why texas (if the fund is there).
should have some thoughts on macro (why is gas $60/mmbtu in Europe but $3/mmbtu in US) and cycle timing.
should have some thoughts on relative valuation (producer vs infrastructure)
I hope you are not interviewing for an energy position because gas is definitely not $60/mmbtu!
About $9 right now vs. domestic gas at $4 (RIP LNG export guys)
Would add that you should do some research on “energy” funds. A lot got wiped out during the shale downturn and weren’t able to fundraise. Some have managed to survive and begin to pivot towards “energy transition” but most of these funds don’t have great returns or track records because they all crowd into the industry up-cycle and get destroyed in the way down lol
Thank you for the responses. Any color on what the recruiting process looks like when it comes to head hunters, timeline, etc?
As far as the firms you mentioned, I would advise that you proactively reach out to them once you have started your IB analyst stint and that you feel comfortable that you know your story (as well as deal experience attained at that point, if any) and can constructively talk about your interest in pursuing energy PE in the event an initial coffee chat or phone call ends up delving into a bit of a pre-screen. A few of the names you have mentioned have typically sourced candidates directly vs. using headhunters. On the headhunter side, Dynamics has traditionally had the strongest presence in Texas but I've also heard of SG and HSP occasionally being involved. Most of these shops tend to hire between ~12 months out to near-term (immediate hire) vs. going "on-cycle" 2 months into your IB analyst stint with the expectation that you will start nearly ~2 years in the future.
All of the firms you mentioned have had returns that are good enough to facilitate an ability to continue raising money going forward. Specific to Kayne, I believe they will continue to pursue deals out of their Income Fund strategy but likely not through the "traditional" PE bucket.
Modeling tests differ from shop to shop but are usually some form of Upstream NAV analysis or LBO (usually midstream-based if so) or a "softer", qualitative investment case study that doesn't involve running a ton of Excel analysis.
Energy PE / Banking is a surprisingly tightly-knit community. I would be fully prepared to get referenced checked either via backchannels or directly through your more senior coworkers if your bank is supportive of PE recruiting. Fit is generally a more important aspect of recruiting (on a relative basis vs. roles at large NYC funds for example) for the firms you mentioned as they tend to be a little less focused on "2 and outing" every associate.
This is great. Thank you for the info. To your knowledge, are there any firms in the Energy PE scene that I listed or are not listed that stand out among the others (whether that be returns, culture, comp, etc.)?
Late to this but the only firm that's been noticeably successful is Carnelian. Q has great fundraising but it's so busy at the upper level that I wouldn't want to build a career there.
Any insight into EIG?
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