Private equity firms are again looking to invest in the oil and gas sector, with 25% of firm executives indicating they plan to invest in the sector in the next six months and 45% expecting capital will be invested in the first half of 2017, said an Ernst & Young global survey of executives at 100 private equity firms active in the sector, released Tuesday. There is about $971.4 billion of dry powder amassed to make oil and gas private equity investments, the report noted. Some 5% of executives expect the capital to be invested in the coming three months, while 20% don't expect the dry powder to be invested until the second half of 2017 and 5% said beyond 2017. Some 64% of survey respondents said they expect declining company valuations to provide good buyout opportunities in the oil and gas sector. Meanwhile, 64% said fundraising will increase over the next 12 months. While 64% of the private equity executives surveyed indicated that selling to an oil and gas company was their main exit for their investments, 88% indicated the valuation gap between buyers and sellers has increased over the past 12 months, making it more difficult to reach a deal. Fifty-nine percent of firms have not delayed an exit. Of the 41% of executives that indicated their firms have delayed an exit, 59% said the reason was an unexpectedly low valuation of the investment.
Private equity firms are gearing up to invest in the oil and gas sector, according to a survey by Ernst & Young, as they sense an opportunity after low crude prices eroded the industries' profitability. The survey shows 5% will be invested in the next three months, 25% in the next six months and 45% in the first half of 2017. In addition, private equity firm KKR is planning on investing $350 million into energy companies over the next two years, with plans for another $100 billion investment coming later this year.