Oil and gas companies will get bold in 2022. Formidable cash flow generation, increasing new energy opportunities and the development of a carbon market are a powerful force for change. Does a truly transformational year lie ahead?
It’s certainly clear is that sitting on the decarbonisation sidelines isn’t an option. As stakeholder pressure intensifies, it’s time for big strategic decisions. Those choices will set trajectories for the energy transition that will only gather momentum. Expect an action-packed 12 months.
Our corporate analysts picked their top five themes to watch in the corporate oil and gas sector in 2022. Read on for an introduction, and fill in the form for a complimentary copy of the full report.
1. The stakeholder snowball effect
Large publicly-listed companies will be bracing themselves for more regulatory, legal and investor challenges. The interconnected web of stakeholders creates an amplifying effect – stakeholders have stakeholders, and everyone is under growing pressure to decarbonise. The relative success of COP26 adds further urgency to act on carbon.
How will the Majors, Independents and NOCs respond to this pressure? What are the implications for decarbonisation laggards? And what are the wildcards that could really force radical change? Read our take in the full report.
2. How to spend the cash windfall
Cash-rich companies can do it all in 2022 if today’s prices hold – build balance sheet resilience, invest for modest upstream growth, increase low-carbon spend and return capital to shareholders. Increasing shareholder distributions while repositioning the business for the energy transition will be key to rebuilding the investment story.
For more on relative corporate positioning on our financial health metrics and how we expect companies to deploy surplus cash read the full report.
3. Going beyond wind and solar
Oil and gas companies will invest in low carbon at record levels. Wind and solar will still capture the lion’s share of the capital. But in the coming year, we expect the strategic narrative to broaden out as CCUS and hydrogen hit the mainstream.
Who will be the first movers as oil and gas companies take a leap of faith in CCS and hydrogen? Where are the key battlegrounds? And what’s the potential for cross-sectoral tie-ups? Read more in the full report.
4. Shifting legacy priorities: harvest, decarbonise, re-imagine
More companies will seize the opportunity to future-proof oil and gas portfolios. Even oil and gas pure-plays will need to align growth aspirations with increasing stakeholder pressure for Paris alignment. Emissions reduction and portfolio repositioning will dominate the strategic agenda.
Read the full report for more on decarbonisation, downstream portfolio re-imagining and new business models for legacy assets.
5. M&A – expect the unexpected
High commodity prices, improving equity valuations and stronger balance sheets mean more deals. Throw in the pressure to adapt portfolios for the energy transition and 2022 has all the ingredients for some action-packed M&A.
Where will the epicentre of corporate consolidation be? Will cash-based asset deals make a comeback?
To find out more, read this insight in full. Fill in the form at the top of the page for a complimentary copy.