Oil and Gas Industry Outlook

The global oil and gas industry generates hundreds of billions of dollars globally each year. The US is the largest producer of natural gas on earth, and one of the biggest producers of oil. There are five important trends to watch.

The United States is now the largest producer of oil and natural gas in the world. Oil prices have largely recovered from the post 2014 downturn.  Most economists believe that prices will remain volatile but range-bound for the remainder of the year. The US is expected to produce 12.4 million barrels a day by the end of 2019, and 13.2 million barrels a day in 2020. The EIA has forecasted that the global liquid fuels supply will rise by 2.0 million barrels/day in 2020. 

This increase in supply, paired with a decrease in demand, rising shale production, a slowing global economy and the prospect of a deepening US-China trade war may lead to increased volatility in oil markets in 2020. 

Sustainability moves into the mainstream 

Sustainability has transformed from what was once a niche issue for energy companies into a mainstream issue. It is moving to the forefront of strategy and investment decisions and, as a result, many major oil companies are investing in renewable energy. 

Prices

The EIA expects Henry Hub natural gas spot prices to average $2.77/MMBtu in 2019, down 38 cents/MMBtu from 2018, and to continue to average $2.77/MMBtu in 2020.

Brent spot prices are forecasted to average $67/b in 2019 according to the EIA and continue to average $67/b through 2020.

The Growth of Natural Gas

Moderately priced natural gas in North America, especially from the Marcellus and Permian Basins, has not received much attention in the oil markets. Nevertheless, its abundance is significantly changing the US and global energy markets. Generating power through natural gas continues to increase in popularity as a lower-carbon alternative to oil. The EIA expects the “US total utility-scale electricity generation from natural gas-fired power plants to rise from 35% in 2018 to 37% in 2019 and to 38% in 2020.”

Advent of Revolutionary Technology 

The energy industry as a whole, especially the oil industry, is looking at broad deployment of artificial intelligence, robotics, and analytics to increase efficiency, reliability, productivity, and predictability in operations. However, scaled technologies implementation can be complex and capital-intensive in the oil and gas industry. Yet the upside is alluring. Newer oil fields are increasingly difficult to find, making the deployment of AI and the broad implementation of technology to find new oil fields a new and exciting development in the oil industry. 

Castle Placement is actively raising capital for companies in energy technology, waste-to-energy, and sustainable energy. Let us know if we can help your company.

About Castle Placement: 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.

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Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
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(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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