Congratulations. You made it to December 1st.
As we think back on this challenging year, we’re also looking ahead. And we’ve got a question for you: What are your predictions for 2021? Join the conversation on our ALLY platform to share your expectations, hopes, wishes, etc.
To get us started, we’ve asked two of the most insightful voices in energy to weigh in with their predictions for the new year: Hillary H. Holmes, partner and co-chair of the Capital Markets Practice at Gibson, Dunn, and Crutcher LLP, and Dan Pickering, chief investment officer at Pickering Energy Partners.
“ESG will become even more relevant to companies’ access to capital,” Holmes predicts. “Even more so than in the last few years, responsiveness to investor standards will be critical to make oil and gas industry companies eligible for broad investment and shareholder support.”
This will be pushed along by investors and the government, she says. “The SEC will likely propose or adopt rules that require public and IPO companies to make prescriptive line item ESG disclosures, particularly around diversity, human capital management and climate change risk. An Executive Order, or perhaps federal legislation, could mandate climate change related disclosures by publicly traded companies. Although some of these requirements might not be effective until 2022, they will present challenges for companies which do not currently track, or have the technology to track, certain potentially required climate data.”
The energy transition will continue to gain traction “as public sentiment remains supportive, U.S. corporations make further commitments toward a lower carbon future and the Biden administration and states begin to clarify their advocacy for green energy and renewables,” says Pickering.
He expects conventional auto companies and “new EV players” will “bring to market various new models of electric passenger cars, SUVs, pickup trucks, long-haul trucks, delivery vans and buses.” Still, “mass market EV adoption will remain slow given relatively high price points and limited battery range.”
In 2021 Pickering foresees, “for conventional energy, OPEC discipline continues, U.S. production moderates and oil markets begin to balance as a COVID vaccine and stimulus reinvigorate oil demand growth toward year end. Thoughts of $50+ WTI in 2022 become consensus as the year progresses. For the U.S. oil and gas industry, another slog of a year with additional bankruptcies, continued focus on costs, lower capital spending and time spent on regaining investor trust and confidence. Despite this gloom, we’ll look back and see 2021 as the bottom of the current downcycle.”
“Companies will continue to focus on balance sheet management,” Holmes adds. She expects they’ll look to refinance debt, reduce interest expense and access liquidity. Also, “to reduce G&A costs, among other things, some publicly traded companies will go private or voluntarily delist and terminate their SEC reporting.”
There’s no doubt we’ve got a year ahead filled with its own challenges -- and potential. As a community, we’ll forge a path. I believe we’ll come through it stronger than ever!
We’re proud to partner with SWLA Texas Relief Warriors, Crowdsource Rescue, and 50 STAR SAR to help families impacted by Hurricane Laura and Hurricane Delta. And anyone who donates will get a bonus ALLY care package.
See you at today’s celebration!