Sell-side ER to Buy-side: Energy - E&P, Midstream, and/or Refiners

Posted something similar a few weeks back in regards to choosing a sector. Well, unfortunately, that decision was made for me and I will be covering one of those 3 verticals in the title.

Without providing too many revealing details, I did sell-side ER for a small handful of years and then grabbed my MBA from a top 2 program with a few buyside internships along the way.

My goal is to continue to pursue buy-side opportunities, and my question to guys in actual buy-side seats is this:

  • Is it going to be as difficult as I imagine it to be to make the transition from sell-side to buy-side in what I perceive to be such an unloved sector?

Happy to take the conversation off-line for more depth/specifics, for those with highly relevant/helpful insights.

Thanks!

Comments (12)

 
 
Most Helpful
Dec 29, 2020 - 12:27pm

Some people will write you off, but others will surely consider you. I would also focus more on networking, research other sectors for your personal portfolio, and have pitches ready that are not Oil & Gas-related that show you know other industries well. When networking/interviewing, I would also focus on how you can use your expertise in Oil & Gas for other sectors. For example, Oil & Gas skills would translate extremely well to coverage of Chemicals. In addition, Oil & Gas is a very complex sector--if you can figure that out, how hard can consumer goods really be? Try to stress that point--the fact that you were able to figure out Oil & Gas shows you can break down something complex and can learn fast.

 

Lastly, try looking at credit funds. Oil & Gas is still a huge part of the high yield sector, as well as chemicals (and usually commodity-chemicals). While everyone in distressed/high yield credit has O&G experience because of how badly the sector crashed (and continues to crash), they will also appreciate the skillset you have.

 

[Source: I covered O&G on the buyside at a fixed income shop. I recruited for other buyside positions, so have a sense of what you are going through. Instead, I ended up going to a Real Estate PE/Dev shop. Eventually moved to O&G ER because I found out I preferred the public markets. While I could have held out for another buyside job, I wanted to remain in the mid-tier city I was in that doesn't have a big finance presence, and honestly I just wanted to jump ship and get back to public markets ASAP].

 
Dec 29, 2020 - 12:48pm

First of all, I wouldn't write out a rebound in energy despite all the EV / renewable hype. If you think about how stable demand has been for oil year over year, it takes very little supply chock to see dramatic price swing in the commodity. So your coverage is not as unattractive as you or many others think. Is carbon energy a negative terminal value business? Yes, but it will take much longer than what the market is pricing in. 

Now, transition from sell-side to buy-side is hard no matter what sector / shop you are from. Particularly if you aspire to non-multi managers, just as access diminish to long onlys and longer term minded HFs while sell-side tilts heavily toward serving high-commission high velocity type clients. You can control your destiny by developing an expertise in "sexier" sectors on your own and hammer out stock ideas that demonstrate your competency in analyzing things beyond your day-to-day coverage. For you, the most natural "growthy" adjacencies would be clean energy (solar / wind and the new value chain that caters to that) and EV (rare earth / lithium mining, etc.) It always positions you well to have expertise in industries / companies that are catered to some secular tailwinds. 

PM me if you wanna chat. You have a very prestigious background, I am not too concerned about your situation. 

Follow me on Instagram: @dickthesellsider

  • 2
 
  • Associate 3 in Consulting
Dec 29, 2020 - 1:23pm

Glad to see people from top 2 MBA  programs still jumping into energy. It feels like a falling knife right now, though I strongly agree that the renewable energy/ EV stuff is overhyped and the market will realize the world will still need fossil fuel way longer than they think. But surviving in energy right now is just so difficult. 

 

https://www.wsj.com/articles/toyotas-chief-says-electric-vehicles-are-o….

 
  • Senior VP in HF - Other
Dec 29, 2020 - 2:26pm

So much opportunity in energy, lots of assets mispriced because "my PM won't touch energy" or baby and bath water scenarios. I think being in a out of flavor sector is actually better bc there are more opportunities to make money. As said above lots of credit stuff. Also, people will eventually want energy exposure so getting a solid knowledge base is good. I cover midstream/ofs (among a couple other sectors) and personally find it really boring - its very simple in many respects and you're not learning about different business models and strategies, etc (I was pretty bummed when was assigned the sectors). But again...lots of opportunities exist at the moment. I don't think making the sell-side to buy-side transition is too hard if you network properly. I'd imagine relative to a random buy-side person, you have/will have a much larger network of tons of funds. 

 
  • VP in ER
Dec 29, 2020 - 2:38pm

From what I have seen lately on the equity side, energy pods in MM platforms are shutting down, long-onlys still stay away from energy, energy companies are laying off people. I think it is really difficult to network to an energy buy-side role in this market, maybe there are opportunities on the credit side, I am not sure. Just think about it, the sector is shrinking, tons of people are looking for jobs, even if there is a buyside opening available, unemployed HF analysts may take the job.

 
  • Senior VP in HF - Other
Dec 29, 2020 - 2:45pm

This is a very valid point for an immediate transition to the buyside; however, if the plan is for a couple years down the road those unemployed people could have moved on / are just stale vs someone that has been in the flow. Overall, all aspects of the industry are shirking - buyside and sellside. We all have jobs in secular decline, ha, I'm just holding on as long as the ride lasts.  

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