Financiers : Family Offices Worldwide are Queuing to Invest in E & P

Family offices worldwide are rapidly investing billions in energy and exploration and production (E&P) companies, particularly in the U.S., to fill the void left by public-facing investors exiting the sector due to anti-carbon mandates. Tailwater Capital, for instance, raised $900 million from six family offices in eight weeks, highlighting the speed and scale of these investments. The interest from family offices, including those in Europe, the Middle East, and Asia, is driven by the demand for low-risk, high-yield returns and the belief that hydrocarbons will remain a significant part of the energy mix for the foreseeable future. Despite the growing interest, family offices are cautious and prefer to invest for the long term with lower risk. They are often more interested in heavy-drilling deals and are willing to follow rather than lead in investment decisions. The investment gap left by the exodus of capital since the late 2010s is significant, and family offices alone are unlikely to fully replace the capital that has left the sector. Public equity remains a large pool of capital to replace, and many domestic family offices are hesitant to engage with the sector. The need for capital in the E&P sector is still high, with significant investment required to develop primary and secondary basins. The growing demand for natural gas to fuel power generation and U.S. LNG export capacity further underscores the need for investment. While family offices are contributing to the sector, their investments are not yet filling the void left by public-facing investors. The energy transition is expected to take time, and family offices are positioning themselves to capitalize on the long-term demand for hydrocarbons. <|end|>

Source: hartenergy.com
Published on 2024-10-07

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