2020 Capital Options: Opportunities in a Challenged Landscape
Blame COVID-19, OPEC, Russia and the like, but the capital exodus began well before the global lockdowns tanked oil prices. The landscape for energy money is looking a lot like the financial desert that was the late 1980s.
But that doesn’t mean all is without hope. Wall Street’s cold shoulder will force public E&Ps to refocus plans, tighten up efficiencies and (hopefully) consolidate, ultimately resulting in stronger companies that can build value and not just barrels.
Burned by a sector gone bad, energy capital providers are hyper risk-averse or just absent. Capital will flow back into the space when certain conditions are met, and those that are prepared will prosper.
Energy companies will continue to use preferred stock as an alternative financing source to fund their existing operations and future capex.