Private equity firms get ready to invest further in oil and gas sector
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. It also reveals that, globally, private equity firms have nearly $1tn sitting on the sidelines waiting for an opportunity to scoop up companies in the energy sector. 

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.