The Green New Deal was the No. 1 one conversation at the 47th Scotia Howard Weil Energy Conference in post-Mardi Gras New Orleans at the end of March.

Wait, not that Green New Deal. Rather, the conversation about green was from a parade of investor-starved E&Ps promising to return profit from free cash flow—real green—to financial backers.

The latter theme—operating an energy company as a real business—was the New Deal part of the discussion in an industry that has spent $1 trillion during the past 15 years in the hunt for tight formation hydrocarbons but, to date, generated $750 billion in revenue.

E&P management teams spent podium time discussing the finer elements of financial engineering as a way of arguing that the energy sector can pay its own way, grow production and generate profit for shareholders.

Think of Scotia Howard Weil’s annual New Orleans’ confab as spring break for the investment sector. The venerable gathering occurs at a perfect time of year, after E&Ps close the books on the previous year and outline freshly finalized corporate strategies and budgets for the upcoming year. The terminology that flows from the podium is a primer on what is top of mind for the oil and gas industry.

It is fascinating to watch E&P management teams scramble to differentiate themselves from peers. The current narrative is not about becoming free-cash-flow positive in 2020. Rather, it is about “sustainable” free cash flow at strip pricing. ROCE? Check. Disciplined capital allocation? Got it. World class assets? Check, although many are upgrading/high-grading portfolios. It is about managing through the hydrocarbon price cycle.

The good news is that E&P leadership teams are aware of the changing landscape when it comes to investor perception about energy. For one, there are more slides about reducing carbon footprint, good corporate citizenship and operating in a responsible manner than there are slides about using big data to improve oilfield outcomes. "It’s the right thing to do,” said Robert McNally, the newly minted CEO at EQT Corp.

Apparently, investors this year opted for a nontraditional spring break destination, judging by the fruitless search among E&Ps for the generalist investor. Sightings were as rare as the Dune Sagebrush Lizard in West Texas. If you are a generalist, rest assured there is an E&P management team that wants to buy you a beer. For contrast, investor interest this year revolved around capital spending in the second half of 2019. Several management teams, Encana Corp. among them, plan to substantially front-end load 2019 capex.

As for differentiation, the fact is investors no longer care whether one company’s lateral length is 500 feet longer than peers, or that proppant per thousand foot of lateral is higher by 500 pounds. They are not interested in minor variations for 30-day IPs, the shape of the type curve, half-cycle cost or internal rates of return. Basically, few investors are interested in 15 years of stranded inventory, thousands of future locations or 30-year EURs, regardless of volume. It is all about PDP valuation, which is echoed in the price of recent M&A transactions and net present value. The rare investor who provides money to energy today wants an accelerated return as quickly as possible in the form of dividends before the industry fades into historical twilight.

The bad news is that E&Ps don’t fully understand that the investment community has undergone a philosophical inflection point when it comes to energy. Gone are the days of outspend-funded production volume growth as a way to attract capital. Investors are “meh” on using net asset value as a way to value rising reserves. That philosophy exited at the same freeway off-ramp as the one valuing technology stocks on website eyeball visits back in the 1990s. NASDAQ can tell you how that turned out.

The real Green New Deal is that Wall Street generalists subscribe to the peak demand scenario. Many—rightly or wrongly—view the energy industry as an aimlessly wandering dinosaur of depletion where the clock is just a decade or two from meteor impact.

Judging from management team presentations at Scotia Howard Weil, there is little worry about the energy equity market in 2019. Everyone promised to buy back their own shares.

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