[Editor's note: A version of this story appears in Capital Formation 2021, a supplement to Oil and Gas Investor magazine.]

After a tumultuous, unprecedented year for oil and gas markets, commodity prices have returned to a level of relative stability. Similarly, the freeze in equity and debt investment in the oil and gas industry appears to be thawing.

While markets seem to be reopening, the effects of the pandemic and other geopolitical developments have had lasting results on how deals get done as well as the terms and negotiation of deals going forward. While the beginning of 2021 shows many reasons for optimism, it is important to be aware of how the previous year’s developments have affected the negotiation and structuring of deals as well as the rise of alternative deal structures and new market participants growing out of this turbulent period.

When commodity prices collapsed in 2020, deals ground to a halt and everyone shifted their focus from growth to survival. While the public equity markets had spurned the oil and gas industry for a while, private equity investors similarly stopped investing and focused on managing through a downturn. The pressures of low prices coupled with ESG headwinds made new equity capital extremely hard to find.

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