Where is the opportunity in a volatile energy market?

By Tomás H. Lucero

The energy market is as volatile as it has ever been. For the investor, it’s very difficult to identify winning opportunities, and even more difficult to place trust in them. Is there any room for opportunity at all in such a changing market?

In a recent interview with CNBC, Head of European Energy Research at Goldman Sachs Michele Della Vigna, discusses these issues. In his eyes, opportunity lies in the improvement of U.S. exploration and production (E&P.)  

“It’s a time of great change. And the industry is completely transforming as we think that the share producers in the U.S. and OPEC are fighting for market share, really making the rest of the industry fight for relevance at this point in time. We have key deflationary trends in terms of costs. We have continued improvement in the U.S. E&P’s in terms of efficiency and production curve and that’s exactly where we think the opportunity is. The opportunity is in those companies that can drive this continued improvement in productivity in the core of the shale plates in the U.S.,” Vigna told CNBC.

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In the next segment, Vigna got specific about what he was talking about.

“The key companies that would benefit here are the oil service companies that mainly work on the fracking and completion of the U.S. wells and the companies that own the best part of the Permian, the Eagle Ford and the back end. Where instead, the companies that will really struggle are the companies more connected to the deep water value chain, to heavy oil, to LNG and, more broadly, within the big oils will really struggle, within this environment, to rethink their whole business model,” he stated.

*Article is strictly for informational purposes only and is not intended as financial advice

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