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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
  • 121 items added with 79,194 views
  • Nov 5, 2021
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Investors either exiting the sector or demanding greater capital discipline and lower reinvestment rates, these producers need a long-term strategy that ensures enough outside capital to fight the headwinds of increasing environment, social, and governance (ESG) imperatives

 

THE STRATEGY
  1. Landscape is shifting toward fewer, larger companies, affording greater flexibility with scale. 
  2. Trend across the peer group of increasing free cash flow helps companies build credibility with creditors and equity investors.
  3. US Independents has 30 key producers generating US$688 billion in free cash flow from 2021 to 2030
  4. Healthy balance sheets and increased dividends are likely to attract new investors that can help companies accelerate their ESG efforts.
  5. To meet increasing investor and shareholder demands on commitments to ESG, they need to show stakeholders and potential investors that they have a long-term strategic plan for decarbonization, lower emissions, and more sustainable operations.
  6. Independents strategy is one of “disciplined growth,” wherein they scaled back development on new acreage. 

 

Business models that support self-funding limit the need for new equity capital, buying time to restore confidence from investors and attracting more capital by deploying their own capital.

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