Shale Should Withstand Private Equity Pullback

Shale Should Withstand Private Equity Pullback

Share to Linkedin Pump jacks operate at dusk near Loco Hills on April 23, 2020 in Eddy County, New Mexico. (Photo by ... [+] Paul Ratje / AFP) (Photo by PAUL RATJE/AFP via Getty Images) The demand for shale producers to become self-sufficient with less reliance on outside capital is intensifying. The withdrawal of private equity, long a crucial investor in the shale sector, will take a significant toll on many shale companies, particularly smaller producers that lack strong balance sheets. Private money is behind as many as 500 oil and gas companies in the United States. These investors have little appetite for new outlays in the sector, and many are looking for ways to profitably exit the sector, perhaps for good. The increase in the price West Texas Intermediate (WTI) to $60 a barrel has helped the sector, improving cash flow and reopening debt markets for many companies. And while it has boosted share prices - energy is the top-performing sector in the S&P 500 so far this year - equity markets remain selective, and the path to going public remains challenged That removes a critical exit strategy for private equity-backed oil and gas companies. The recent flop of