Following 15 years of massive investment and a multitude of wells proving out the shale concept, the U.S. oil and gas industry has decidedly confirmed that it is unable to consistently generate alpha returns for investors, so said Chuck Yates, former managing director with Kayne Anderson. The reason? In this case beta—the volatility resulting from the price of oil—always and eventually swamps the alpha.

“In energy, as a collective, we have way over sold our ability to consistently generate alpha,” he said, and “we have way underestimated the impact that the beta can actually have on us.”

Yates shared his observations and analysis as part of Hart Energy’s virtual DUG East conference in December.

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