Any meeting involving money is a sig­nificant business, perhaps more so for a private-equity firm and its backers. In April, as the COVID-19 pandemic con­tinued to weaken oil demand and shutter the United States, Billy J. Quinn, managing direc­tor at Pearl Energy Investment, met with the private-equity firm’s limited partners.

Quinn began his assessment of his portfolio companies and the world of oil and gas by deliberately bypassing the pandemic. Quinn’s aim was for Pearl’s investors to see what he’d been seeing, starting from where the firm had left off in 2019. It wasn’t, Quinn said, “a ban­ner year for the oil and gas business.”

Untangling the COVID-19 mess will take time, Quinn said. First, he wanted to drive home a point. “I wanted to have the right frame of reference,” he said. “And 2019 stunk. It didn’t feel like this was a great busi­ness. And we averaged $57 oil. But that al­lowed most of our companies to be prepared for what happened in March.”

If there’s a unifying point of view in the pri­vate-equity world, it’s that pragmatism gets results, and hope is the equivalent of hemlock. For too long, as private-equity players see it, a group of fragile E&Ps have been struggling to survive as they waited—or hoped—for oil prices to rise.

The pandemic has effectively snuffed out magical thinking.

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