John Goodgame Quoted in Oil and Gas Investor on State of Energy IPOs

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Akin Gump oil and gas partner John Goodgame has been quoted in the Oil and Gas Investor article “Energy IPOs Continue Backlog,” which looks at how fewer energy companies are filing for initial public offerings amid investor caution.
According to Goodgame, the energy IPO market has been slow because investor appetite for them is way down. Prior to 2015, many MLPs and traditional E&Ps went public via IPOs, as investors were generally eager to invest in them. Once oil prices began to slide in late 2014 and into 2015, however, those companies’ stock prices fell, the MLPs’ distributions were cut or stopped entirely and the once eager investors were “burned badly” and lost a lot of money, he said.
Since public equity capital is less available for the upstream, midstream and downstream businesses, these companies are seeking ways to increase efficiencies, noted Goodgame: “These type of market conditions always lead to industry consolidation.” At the moment, however, he said, “The investor sentiment is just not there yet and that is why you’re not seeing the volume of upstream and midstream IPOs that we had become used to.”
With investors focused on return metrics as opposed to growth, this usually bodes poorly for the IPO market.
Goodgame added, “Production and volume growth metrics were really good from 2010 to 2014, but investors lost money the three years after that. Now E&P companies are trying to be more efficient by not drilling every last well and midstream companies are retaining more cash by reducing distributions or dividends because investors won’t blindly finance growth anymore.”