Here’s how the private equity industry views oil

Not worth investing in carbon energy: Guy Hands
Not worth investing in carbon energy: Guy Hands   

There's little doubt that oil is one of this year's biggest market themes. No wonder, then that it's also been a hot topic at this week's SuperReturn conference of private equity execs in Berlin, with a number saying the price fall has led to new investment opportunities.

"There is an opportunity in energy. We tend to resist raising funds that do a single narrow thing, but are clearly dedicating capital from our opportunistic funds into the energy space," Jonathan Lavine, Managing Partner and CIO at Sankaty Advisors, told CNBC on Wednesday.

"The real question is how long does oil stay down; what will OPEC's next move be?" he added, referring to the Organization of the Petroleum Exporting Countries.

Oil prices slid 60 percent between June and January, when they fell close to $45 a barrel, amid a weak recovery in the global economy and reluctance by OPEC to cut production.

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Prices have since recovered some ground, with Brent crude prices trading near $60 a barrel on Wednesday, but they remain some 42 percent below levels traded a year ago.

And this has had a marked impact on the sector – slashing the values of firms, triggering job cuts and putting billions of dollars' worth of oil and gas exploration projects at risk.

Karen Bleier | AFP | Getty Images

For the private equity industry, this presents buyout opportunities.

The private equity industry invested $31 billion into the oil and gas sector last year, according to Reuters -- well above the $8 billion in investments buyout groups had invested in the sector over the previous five years.

"One of the biggest themes for us and also at this conference is energy; the energy correction is providing lots of opportunities, especially on the debt side where there's been a retrenchment from the banks to finance some of these companies going forward," Robert Tomei, chairman of Advanced Capital Group, told CNBC.

"And there are a lot of good companies with great findings and low-cost production that are compelling opportunities even if oil prices continue to fall."

Others in the private equity industry are not convinced about the outlook for the oil sector, however.

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"I think it's very dangerous to think that oil is going to recover a lot and it's worth investing in carbon technology," Terra Firma Founder and Chairman, Guy Hands, told CNBC.

"Once the storage issue with renewables is solved - and I do think there will be a breakthrough on this front in the next five to 10 years - the carbon industry goes," he added.

"The carbon industry won't finish because we run out of oil it will finish because we've moved onto a new technology."

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