In my book Shale Boom, Shale Bust, I isolated three places one could reasonably invest for the long term to bet on the (I believe) inevitable boom cycle in oil that will reemerge in 2017. The first, the E+P ‘survivors’ of the long cheap oil ‘winter’, I’ve talked about almost exclusively and at length. The second, infrastructure and services, hasn’t yet fully revalued for the huge production shifts and decreases to come – and therefore remains an investment for the future.
Finally, there are the ‘vultures’ – Those cash-rich companies and private equity groups that can pick off the assets of the distressed, debt-laden producers being forced to delever. In my book, I mentioned two likely candidates for this: Exxon-Mobil (XOM), a possible buyer of a big shale player and Blackstone (BX), one of several PE firms who have established big independent funds that will concentrate on distressed energy assets.
But what if a true oil ‘landsman’ - who had already built a great shale company - wanted to reemerge at this moment in the bust cycle to build another company from scratch? This is precisely what Mark Papa, the ex-CEO of EOG Resources (EOG), is intending to do with his SPAC: Silver Run Acquisitions (SRAQU). I believe it represents a great long-term opportunity.
Recently, I was deeply considering the idea of a managing a focused energy fund. What an incredible advantage, I thought, to be able…