David Baggett, the founder and managing partner of Houston-based oil and gas consulting firm Opportune LLP, spoke with Hart Energy’s Jessica Morales about the types of strategic plans and organizational designs he sees taking shape during the current downturn.
First, to get into the oil and gas business, Baggett said, “you have to be an optimist.” Though, he noted these same optimists understand oil and gas is a high risk business based on commodities with cycles—even the current “historic” down cycle.
“I don’t think anybody is in denial anymore about where we are. Sometimes that is the first phase of a down cycle, is denial—no one is there now,” he said. “People are doing divestitures where they can. Obviously, there isn’t a great market for that, but I think an improving one.”
Looking to the path forward, Baggett, who is a 38-year industry veteran, said: “There is not really a game plan for exactly what’s happened and how to go forward that’s proven. But, certainly I believe we are going to see fewer companies. There doesn’t need to be hundreds of companies in some of these plays. So, you are going to see fewer companies being backed by private equity, more consolidation, a continued focus less on growth and more on free cash flows and cost rationalization, which I believe will lead to things like outsourcing becoming more popular. ... There is going to be a new normal.”
Jump to a topic:
- Strategic plans and organizational design (1:30)
- Bankruptcy/consolidation outlook (2:52)
- Need for technology/automation (4:42)
- How do we recover in the near term? (6:03)
- Oil industry’s path forward (7:25)
Recommended Reading
Oxy’s Hollub Drills Down on CrownRock Deal, More M&A, Net-zero Oil
2024-11-01 - Vicki Hollub is leading Occidental Petroleum through the M&A wave while pioneering oil and gas in EOR and DAC towards the goal of net-zero oil.
Post Oak-backed Quantent Closes Haynesville Deal in North Louisiana
2024-09-09 - Quantent Energy Partners’ initial Haynesville Shale acquisition comes as Post Oak Energy Capital closes an equity commitment for the E&P.
Dividends Declared Sept.16 through Sept. 26
2024-09-27 - Here is a compilation of dividends declared from select upstream, midstream and service and supply companies.
EQT to Cut Workforce 15% Following Close of Equitrans Acquisition
2024-10-02 - EQT Corp. closed its $5.5 billion all-stock buy of Equitrans Midstream Corp. on Sept. 22.
ONEOK Offers $7B in Notes to Fund EnLink, Medallion Midstream Deals
2024-09-11 - ONEOK intends to use the proceeds to fund its previously announced acquisition of Global Infrastructure Partners’ interest in midstream companies EnLink and Medallion.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.