Is Private Equity About to Return to Oil/Gas Drilling in Big Way?

In our headline we pose a question asking if private equity (PE) money is about to be lavished on the oil and gas sector once again. The short answer, according to an analyst who writes about these things, is YES! Anthony Mirhaydari, a senior financial writer at PitchBook, says because of the current high price of oil, “After a drought of investment as management teams aggressively trimmed expenses to stay afloat, an aggressive ramp-up in spending is needed.” According to Deloitte, the oil and gas industry will need to spend on the order of $3 trillion in capital expenditures from now until 2020 (two short years away). Some of that money comes from profits or is already in hand from other sources. But, according to Deloitte, “there is a funding gap of $750 billion to $2 trillion that will need to be met with outside capital.” That trillion dollar delta is where private equity comes in–private investors once again opening up their wallets so more oil and gas drilling can happen. And that’s good news for the entire industry, including the Marcellus/Utica region. More money = more drilling…

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