Mid-market oil & gas companies barreling along until demand picks up

Energy Infrastructure Spot On

The current unprecedented COVID-19 situation has thrown the oil & gas industry into turmoil and left it sailing in uncharted waters. Oaklins’ energy infrastructure specialist, Neal Patel, gives us an overview of the additional factors that helped contribute to the market drop – such as the disintegration of Saudi Arabia and Russia’s oil coordination efforts – to help explain how a worldwide decline in demand is having dire consequences. In terms of M&A, Neal expects the main focus to be on capitalization, whereas traditional M&A will go out of the window.

In these times of uncertainty in the oil & gas industry, we continuously analyze the supply/demand fundamentals with consideration to the financial or speculative trends occurring within specific submarkets. The main driver behind recent large sell-offs has been speculation on top of dislocations between oil & gas producers and oil & gas users. Distinguishing between the physical and the financial, we believe that there will be a faster recovery in the North American energy infrastructure landscape than other parts of the industry. NEAL PATEL, ENERGY INFRASTRUCTURE SPECIALIST, OAKLINS

A recovery timeline is still not certain given the fact that the coronavirus spread has stalled economies across the globe and that they will undoubtedly reopen in staggered stages. However, it is not all bad news: while we cannot predict exactly what prices will be doing in the near future, Neal sees some positive signs in the future and expects that demand will increase and be as strong as before.