New York – January 26, 2018. Castle Placement, a technologically innovative boutique investment bank, announced today that it has seen a boost in energy companies seeking capital for conventional oil and gas exploration, development and production.
For the past several years, energy investors and independent operating firms have been favoring unconventional shale development over conventional plays, leaving fewer competitors in the latter and significant potential opportunities. Although nonconventional plays enjoy higher probabilities of success (i.e., no dry holes), the potential upside is generally limited compared with conventional, and the fully loaded breakeven price per produced barrel often well exceeded $50 in the lowest cost basins.
In addition, following the oil price collapse in 2014, most independents had to drastically cut their capital spending to match actual cash flows, which had declined. As a result, until recently none of these firms had an appetite or the budget to venture beyond their already-committed, and perhaps too extensive, shale plays, even though the opportunity set in conventional wells offered increasingly higher returns.
According to John Rogers, who leads Castle Placement’s energy practice, “We have been asked to raise capital for an increasing number of sophisticated clients that we believe are well-positioned to lead a resurgence in oil and gas conventional development and production. While many competitors had to exit this sector over the past several years, several of our clients are using today’s technology to identify and assemble portfolios of high quality conventional oil and gas PUD plays and prospects with very low breakeven costs/barrel. These portfolios offer downside protection with the opportunity to access massive new reserves.” Mr. Rogers also reports that Castle Placement is in discussions with several major energy investors that are showing a renewed interest in conventional E&P opportunities.
Founded in 2009, Castle Placement raises equity and debt capital for private middle market companies across a broad spectrum of industries. Highly experienced investment bankers and a robust, data-driven, innovative technology platform – including artificial intelligence/machine learning – match great companies with global institutional investors. Castle Placement’s proprietary app, CPGO, connects companies with investors in real time. It has over 64,500 private equity, venture capital and strategic investors, family offices, pension funds, foundations, endowments, sovereign wealth funds, hedge funds and lenders.