In this roundtable discussion, hear what these oil market experts—Subash Chandra, managing director and senior analyst for Northland Capital Markets, Duane Dickson, Deloitte’s U.S. oil, gas and chemicals leader, and Jim Wicklund, managing director of energy investment banking at Stephens Inc.—see ahead for the New Year.

“We probably need to get ready for more consolidation in the industry,” Dickson said also adding, “it’s an exciting and disruptive time and in a way we’re all pivoting to a new energy future—it’s just what has to happen.”

Additionally, the roundtable discussed lessons learned from 2020 including the “black swan event” of negative WTI futures as well as the 80% drop of rig counts in a quarter.

“I’m surprised and impressed mostly by those [black swan] events and how the industry dealt with it,” Wicklund said. “I think the industry came to realize that $70 oil might be a little ways off and, instead of waiting for it to come back, we need to reduce costs again and more thoroughly now.”

Chandra added that maybe the OPEC price shock from 2014-15 gave the U.S. oil and gas industry the flexibility to help deal with the events of 2020.

“But, nonetheless, [U.S. producers] have become more nimble over the years,” he said. “That being said, I feel like at least as far as equities go, the easy money has been made. ... To drive the commodity beyond this point, we need good things to happen. More importantly, we need bad things to not happen.”

The experts expect some things to not return to normal including rewarding growth as far as traditional energy goes. However, Chandra noted the surge of clean energy companies despite no revenue, no profitability predicted for many, many years.

“I would love to see somehow the upstream companies bridge the gap into new energy,” he said. “I don’t know if there’s a natural fit—it’s beyond me. But if there was, that would be a wonderful transition because what I really worry about is this idea that we just cash flow to death, we dividend to death—that is just not appealing from an equity perspective.”

“It is a slow death,” he continued. “We have to figure something else out here and we see the new energy model being rewarded. I feel like it is in the very early stages of that. This is just the beginning, just like early shale, I want to see this industry somehow bridge that divide.”

ESG will be a major driver for the industry going forward, according to Dickson.

“The big new dynamic that is there, in addition to regulation and regulatory pressure, is that the consumer is starting to really make up their mind on what they will consume, use and buy based on the track record of ESG in the supply chain,” he said.

Jump to a topic: 

  • 2020 surprises (0:21)
  • 2020 effects from investment POV (5:24)
  • Growth opportunities in 2021? (10:52)
  • E&P sector’s future (16:08)
  • Industry’s path forward (20:54)
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