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Mid-Caps
In Oil & Gas Hard Pressed
for New Money
Mid-cap
oil and gas companies are
having trouble securing
fresh investments because
fund managers are reorienting
their priorities towards
alternative energies, says the
chief financial officer of one
such company, UK-based Hurricane
Energy, as quoted by
Energy Voice.
Private
equity firms are still willing
to invest in oil and gas
exploration, but this is not the
case with investors in public
companies. As a result, Alistair
Stobie told Energy Voice, the
industry needs to do more to
restore faith among investors
that fossil fuels will have a
role to play in the future
energy mix even if it is a
smaller one.
The
biggest part of the problem
facing medium-sized energy
independents seems to be that
most specialist investors—those
focusing specifically on the
energy industry—were “wiped out”
during the latest industry
downturn and now sector players
are finding themselves having to
deal with what Stobie called
“generalist” investors: funds
and institutions who spread
their investments across many
different industries and whose
priorities are different.
An
important group among these is
investment funds who are now
placing a lot more emphasis on
environmental, social, and
governance factors than pure
growth in returns. For now, the
problem is not acute, the
executive said, but in might
become so in the future.
“There
are fewer oil and gas experts
available and the pressure not
to invest is greater,” Stobie
told Energy Voice. The rise of
the generalist investors also
means there is less specialist
knowledge among investors about
new discoveries and their future
prospects, he added.
Hurricane
Energy is one of the private
equity-backed energy
independents that flooded the
UK North Sea when
the supermajors began to pull
out to focus on quicker-return
projects in U.S. shale and
elsewhere. The company is
operator of the Lancaster field,
one of the largest recent
discoveries in the area
estimated to hold some 500
million barrels of crude oil.
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