The U.S. oil and gas market offers something that virtually no other market in the world does—easy entry for non-traditional investors, who are helping to bolster the capital available for much-needed infrastructure buildout.
The U.S. oil and gas market is one of few in the world, if not the only one, that features all of the following: a growing oil and gas sector, relative ease of market entry for players of all sizes, strong institutions and a stable political environment (the last one is arguable). That mix of characteristics has made the U.S. the target of a growing class of non-traditional oil and gas players, such as Asian electricity providers and small-scale, pure-play financial investors.
The makeup of the investment community in the U.S. oil and gas industry has undergone a shift over the last five to eight years, Clark Sackschewsky, a Principal in the Natural Resources practice at accounting and consulting firm BDO, told Breaking Energy. It is no longer solely the purview of oil and gas companies with the financial firepower and on-the-ground management capabilities to buy other companies or their choicest assets outright in multi-hundred million- or billion-dollar deals.
"It started out with mergers and acquisitions, then progressed to joint ventures, and now it's trickled down to smaller investors looking for a way to get into the U.S. market," Sackschewsky said. "You have a return on investment that has rule of law, a legal system, and great infrastructure," he said. "There is a court system, there is police, and investors own the land—instead of buying the right to explore, they can own the land, which is not the case everywhere."
"You still have to worry about project success, but you're not worried about nationalization of your assets. That allows people a degree of protection, reducing the risk associated with investing in these types of projects," Sackschewsky said. "This is a good place to come park your money."