Private Equity Firms Are Ramping Up Their Energy Investments
Since the oil crash more two years ago, buyout firms and distressed-debt funds have raised $100B to pick up cheap energy assets—but the opportunities to invest have been few and far between as drillers struggled along with the help of their bankers. Experts say that may soon change.
Blackstone Group, Apollo Global Management and WL Ross & Co are jumping at the opportunity to invest in energy cheaply—grabbing everything from undrilled and developed oil rigs to gas acreages and troubled loans. Deals are gaining momentum for several reasons, one of which is that oil prices are no longer in a freefall—although prices are roughly $40/barrel, below the $60 to $80 levels that drillers need to break even, Bloomberg reports.
As for banks, they're cutting off weak borrowers in the industry. During the first half of the year, US banks dropped loan commitments by 6.3% and increased the amount they lopped off their books in Q2. As of June 30, banks had committed to lend $2.19 trillion, compared to the $2.34 trillion committed to at the end of 2015. [Bloomberg]
