The bear market is back and investment bulls are going into hiding. However, energy is up and we are hearing from operators that those that get cleaner and leaner will come out ahead.
Word Count: 630; a 4.6 minute read
The Big Picture: So far, the oil and gas industry has been mostly immune to the broader market slowdown. That said, both debt and equity providers are looking to see discipline and improvement across all performance measures - including carbon emissions - since commodities can experience swings and downturns are always around the corner. This means that operators who focus on capital, operational and carbon discipline will be rewarded by capital allocators and those operators that can communicate carbon performance and future carbon reductions will have a leg up in a tighter capital market.
“If you want access to capital availability, you need to have a plan in place and show [ESG] progress,” - Rusty Hutson, CEO, Diversified Energy
Going Deeper: Even with high energy prices and public market exuberance, E&Ps have been hesitant to increase capex to boomtime levels and this trend is expected to continue into 2023, where capex growth is likely to be no more than 10% - 15% for most operators.
Why it Matters: The industry has seen this shift before. In the late 1990’s / early 2000’s, a number of safety and process-related metrics were being captured and reported. Good safety is good business, and companies that had above average safety programs tended to perform better. Driving the energy industries push for ESG performance, specifically carbon, are demands from banks and financial institutions.
The Solution: Oil and gas operators need to start thinking of how to stay ahead of the pack, especially with a likely downturn coming in the energy markets. This means learning from financial and process safety practices to improve how E&Ps measure, manage, and communicate carbon performance.
Make sure your company is:
Transparent with data and data management. Have the controls in place to know who, what, when and how regarding your data. Be able to communicate the methodology and scope you are using with your emission reporting. Leverage knowledgeable, experienced 3rd-party auditors who can combine GHG expertise with non-financial verification.
We're excited to show you how Iconic Air can help your company mitigate climate risk and ensure access to capital.Schedule a Demo