As crude oil prices continue to hover within the $50 range, energy buyers and lenders are exercising discipline by allocating less capital, which is stymying the M&A deal flow.

Public E&P companies are facing the biggest challenge currently as their stocks have not performed well and lower commodity prices have led to tighter cash flow. Plus, investors increasingly want to see capital discipline from E&P companies and returns on capital already employed—not to layer on more debt or sell more equity, according to Ethan Bellamy, a managing director who covers energy stocks at Baird, a Milwaukee-based investment bank.  

“The bonanza days of limitless capital access are over,” Bellamy said. “Self-financing is the key.”

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