A lot of good recent posts about the current situation.
Cyp0111 said:
it is on debt notes to an extent, I think you can get good paper there. However, that space is still pretty limited. You're unlikely to see upsized equity offerings outside of the better pure plays.
The investment environment is still very very frigid.
The banks have gotten smarter, but you basically need all the resources of small energy company to verify the claims of the company across the table asking for money.
The decline curve games were absolutely ridiculous, but it goes both ways. Neither the private operators or the banks want to downgrade the forecasts, so they lie to themselves with extremely flat declines to make each other happy.
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Just a couple other things I'd add.
First, in regards to the last quote, the private equity funds and their companies are involved in a very similar way. They are constantly trying to raise more money based on the success of their current/previous funds. Thus, there is extreme motivation to make sure that the value of their current investments are kept high (regardless of what the actual market value is) and reserve auditors are all too happy to oblige in the lies because they don't like looking bad either (they were the ones who supported overpaying for the asset based on poor PDP forecasts, drilling assumptions, models, spacing, etc.).
And second, money continues to want ESG-friendly industry. I've seen it personally and several heads of large private equity groups have said this publically. I know I may get ridiculed for this because it is bizarre as it sounds but there are large, institutional investors who simply won't invest if there are ESG rating concerns or if there is any planned investment of the fund into "fossil fuels" regardless of the economics. The investors are literally telling them they don't (or even won't) invest in funds with allocations to "fossil fuels;" accordingly, many of the large private equity companies have continued to shrink their allocation to hydrocarbons when raising funds (one that I work with closely has gone from 25% to 10% to <5% in their recent raising efforts).