Energy

4 6 CAPITAL CONSTRAINTS AND OPPORTUNITIES Despite projected oil and gas demand increases, in the US there is a seemingly hurried and disproportionate withdrawal of traditional investor interest in hydrocarbons. How much this retraction will stick if commodity prices remain strong is unclear, but at present some US E&P companies will be challenged to find traditional development capital. For US shale investments in particular, traditional bank lending, capital markets, and private equity are increasingly weary of (if not vowing to avoid) segments of the industry. This aversion by some investors likely means that many US E&P companies will become increasingly open-minded about other partnership opportunities and sources of capital. This open-mindedness may create space for new investors, particularly those with a different tolerance for the ESG-related pressures. Five to ten years ago, non-US E&P companies looked for strategic partnerships with US shale E&P companies but were often met with premium pricing, stiff competition from traditional investors, and a philosophical reluctance to provide the type of information-sharing and secondments so valued by many foreign investors interested in shale development. Some foreign investors did find partners in US shale projects, but many more were sidelined by the pricing and US- based competition presented by the "boom." Does the current US shale- market environment provide for better match-making with foreign inbound US investors? The current environment could certainly encourage a greater willingness by US E&P companies to consider partnership opportunities with foreign investors. As US shale companies focus on ways to improve their ESG profiles and efficiency technologies, some foreign investors may eventually bring to the table relevant technologies and skill sets from other jurisdictions further ahead on the "net-zero" curve. INSIGHTS 08 Energy Transition: Opportunities and Impacts on Unconventional Oil and Gas Development in the United States

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