If you are considering a career in investment banking oil and gas, there are several options for you to consider. There are several areas of expertise within the oil and gas industry, including Petrophysicist, Integrated, and Midstream. Each of these sectors offers a wide variety of career opportunities.
Petrophysicist
Petrophysicists are needed by investment banks to understand the long-term financial implications of oil and gas assets. The job requires extensive work in geology and petrophysics. The position involves correlating wells on a regional basis and preparing marketing materials. It requires quick decision-making and the ability to work under pressure.
A graduate degree in a related field is helpful in this profession. Petrophysicists typically work with cutting-edge technologies to discover and quantify oil and gas reserves. Their expertise helps companies make decisions on whether to invest in certain properties and how to maximize those assets. They can also be hired by oilfield service companies to develop data acquisition services.
Several major financial institutions have separate teams for energy. These teams include a finance/banking group and a technical team. To join the technical team, an engineering or geology degree is required. An MBA is preferred, but experience in exploration and production companies can also be an advantage. This experience will give you access to contacts and brand value that are valuable to investment banking.
Upstream
Investment banking oil and gas upstream is a growing industry with many opportunities. It’s an industry with cyclical growth and specialized skill sets. Investment banking professionals should have experience in the oil and gas industry. The role of investment banking oil and gas upstream specialists is to provide advice on the value of assets and the long-term financial impact. Investment bankers must evaluate risk and probability when evaluating an oil or gas asset.
In recent years, upstream oil and gas companies have faced difficult questions about when to pay down debt, how to accelerate capital and what to do with excess funds. Some have also been asked to justify the value of their high-PDP reserves and high-leverage structures. As a result, the industry has seen a resurgence of A&D transactions.
As a result, banks have begun to address this concern. Some of the biggest banks are reducing their energy-related risk by increasing the size of their renewables advisory teams and reducing their financial exposure to fossil fuels. Some banks have also stepped up their focus on clean energy and are looking to shift investment banking toward these companies.
The outlook for the upstream industry is uncertain and market risks are at their highest levels in decades. In addition to falling oil prices and falling oil production, the energy transition and the economic fallout from the coronavirus are complicating decisions regarding capital allocation. In the meantime, oil and gas companies may have to harvest the remaining value of their existing assets and reinvest it in new fields.
Oil and gas investment banking teams provide guidance to energy companies on financing and mergers and acquisitions. In addition, they advise companies on the drilling and production of oil and gas. From the extraction of crude oil to the transportation of finished products, oil & gas investment banking professionals help clients understand and value the company’s production.
Integrated
Integrated investment banking oil and gas is a career option that can give you a diverse range of oil and gas experience. Many investment banks require petroleum experts to help with their valuations and long-term financial effects of an oil/gas asset. These professionals also help the investment banks determine the risk and probability associated with an oil/gas asset.
Oil and gas investment banking professionals advise companies in all aspects of the energy industry, from exploration to production. These companies often have a variety of assets related to drilling for oil and gas, transportation infrastructure, and refining. In addition, many companies work in the retail business of petroleum and natural gas.
An integrated oil and gas company’s profitability is directly correlated with the price of oil. A change of $1 in the price of Brent crude can affect hundreds of millions of dollars in net operating income. As a result, a change in the price of oil can affect a company’s capital allocation decisions.
Most major banks have oil & gas investment banking teams and acquisition & divestiture teams. These teams are focused on asset level deals and tend to hire technical people like reservoir engineers. Candidates with these types of backgrounds should target these teams. Aside from demonstrating their expertise, you must demonstrate your interest in the energy industry.
Midstream
Midstream investment banking is an area of investment banking that focuses on the energy sector. In recent years, Jefferies has expanded its energy investment banking division by adding an office in Toronto and hiring former Credit Suisse Group AG banker Steven Latimer as head of the energy practice. The firm has also signed several high-profile advisory assignments in the midstream sector, including the $2.85 billion sale of Cordillera Energy Partners III LLC to Apache Corp and Williams Partners LP’s $2.05 billion acquisition of Caiman Eastern Midstream LLC.
Founded in 2010, Baird’s energy investment banking practice has completed more than two hundred energy equity and advisory transactions. Its team continues to grow, and the company recently added an oilfield services banking team in its Houston office. The alliance aims to provide clients with the highest level of independent advice and transaction execution services.
Investment banking is a lucrative sector for large global banks, particularly during boom times, as it helps companies finance deals and projects. However, the current market environment is challenging. While the recent energy boom was long-lasting, oil and gas prices have dropped more than 60% since last June. And the industry is experiencing a new era of uncertainty.
Midstreamers tend to have high net debt to EBITDA ratios. While their cash flows are stable, the high net debt to EBITDA ratio limits their ability to raise funds and increase their price. While Canada has a reputation for excessive leverage, most midstreamers are financially prudent. If they have high net debt to EBITDA, it’s a sign of trouble with their operations.
Midstream companies are often structured as Master Limited Partnerships (MLPs). These companies do not pay corporate income taxes, and they typically distribute a high percentage of available cash flows. The structure is similar to that of real estate investment trusts and private equity companies.
Services
Oil and gas investment banking is one of the dynamic niches in financial planning. This type of practice requires a deep understanding of the resource assets in question. 2022 has proven to be a particularly impactful year for oil and gas investments. Consequently, many clients are paying close attention to this sector.
The oil and gas sector is highly cyclical, which makes it a challenging field to break into. It is also highly specialized, making it difficult for new professionals to break into the industry. As a result, investment banks must have the necessary expertise to assess and evaluate oil and gas clients.
Investment banks that specialize in oil and gas transactions will need to be located in major financial centers. It is important to hire candidates who have strong local connections. Prospective oil and gas investment banking candidates should be able to demonstrate this local knowledge. Most oil and gas clients are interested in the upstream segment because it has the most corporate-level M&A activity.
Investment banking oil and gas has several benefits. It is a specialized field that has many clients and offers an array of financial services. It helps businesses raise capital, perform mergers and acquisitions, improve their business structures, and even help companies go public. For example, a company ABC may want to buy company XYZ but is not sure how much the company is worth. In this scenario, the investment bank would perform due diligence on both companies and recommend a deal at the right time.