[Editor's note: A version of this story appears in the March 2021 issue of Oil and Gas Investor magazine.]

The special purpose acquisition companies, or SPACs, have always felt a little slippery and dangerous, like mercury bubbling out of a broken thermometer. Yet all of the market saw their undeniable power in 2020. A mudslide of money—more than $80 billion—was bankrolled for noninvestments. At their heart, SPACs are sleight of hand financial vehicles that, at the end of the trick, allow a private company to emerge from nowhere and take a bow through a backdoor IPO.

Investors filled up the coffers of shell companies at a record pace last year. After a public offering, SPAC shell companies go off in search of something to buy. The oil and gas sector saw that fad beginning, in earnest, in 2016. Billions powered SPACs to make what were, in retrospect, several foolhardy or overconfident investments in shale hinterlands.

The question now is whether SPACs, which have become vehicles for respected CEOs and celebrities alike, might return to the oil and gas arena, where an acute need for capital could help further consolidate shale resources.

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