GlobalOne EPC
  • Home
    • Company Values
  • Services
    • Government
  • Contact
  • Industry News
  • Careers
Info@GlobalOneEPC.com
713-909-0106

Signs Of Problems For Energy Private Equity Funds

7/20/2015

0 Comments

 
Picture
We have commented in the past on what we believe to be a major problem for the energy business, which is the large pool of private equity funds seeking investment opportunities. That money may merely extend the current difficult environment for the business. Our view is that much of this money will wind up supporting weak companies that should be eliminated or consolidated in order to help reduce industry capacity and accelerate the recovery that is necessary in order for the industry to return to profitability. This does not mean that all energy-focused private equity funds are poor investments or that all their investments will fail, but normally when so many dollars are seeking investment opportunities, future returns shrink and losses often become the norm rather than outsized profits. A recent story in The Wall Street Journal discussing the travails of First Reserve’s two recent multi-billion dollar private equity energy funds highlight this conundrum.

First Reserve may be the oldest energy-dedicated private equity fund having been founded in 1983 by John Hill, an Energy Department undersecretary in the Ford administration, and William Macaulay, an investment banker with Oppenheimer & Company. (In full disclosure, we know Mr. Macaulay and our prior employers did business with First Reserve.) These two gentlemen were early in seeking energy industry investment opportunities, starting during the industry’s first significant bust – the mid-1980s, oil-price-induced collapse. For those who experienced that period, many energy companies were victims of overleveraged balance sheets that were unsupportable when asset values collapsed in response to the dramatic oil price decline orchestrated by Saudi Arabia and the subsequent drop in activity. Often there were solid businesses underlying the debt debris, but many times the good and bad were both destroyed. During the mid- to late-1980s, by working with the banks to restructure loans and through judicious use of the U.S. bankruptcy courts, balance sheets of companies in the energy business were restructured.

First Reserve Billion Dollar Funds Struggling

Picture

Read More
0 Comments

    Author

    Billie Hanley, Managing Director of GlobalOne EPC.

    Contact Us
    Info@GlobalOneEPC.com
    Phone: 713-909-0106
    Picture

    Archives

    October 2015
    September 2015
    August 2015
    July 2015

    Categories

    All
    Alternative Power
    Baker Hughes
    BP
    Chevron
    Condensate
    Discovery
    Duke Energy
    Eagle Ford
    Energy
    Energy Credit
    Energy Reform
    Fracking
    Funding
    Gas
    Halliburton
    Houston
    Iran
    Job Cuts
    Low Oil Prices
    Marines
    Mexico
    Military
    Net Metering
    Nigeria
    North Carolina
    Offshore
    Oil
    Onshore
    Permian Basin
    Petrobras
    Private Equity
    Procurement
    Profit Fall
    Rate Increase
    Renewable Energy
    Rig Count
    Saudi Arabia
    Shale
    Solar Farm
    Solar Power
    Statoil
    Wind Farm
    Wind Power

    RSS Feed

    © 2012-2015 GlobalOne EPC. All Rights Reserved.
    Terms of Use
Powered by Create your own unique website with customizable templates.
Photo used under Creative Commons from Raymond Bryson