Strong oil prices resulted in the oil and gas industry remaining buoyant during 2011.
In the first quarter of 2012, there remains uncertainty in the market, due to the threat of a double-dip recession, the current European debt crisis and the corresponding potential impact on oil and gas supply-and-demand fundamentals.
However, oil and gas industry analysts are predicting strong growth of between 10% and 22% in global exploration and production (E&P) spend in 2012.
The increase in E&P spend represents a significant opportunity for UK-based energy companies.
Already this year, Energy Ventures has completed three investment deals worth around £31.5million and has a further £189.5million of additional funds available to Aberdeen-based upstream oil and gas organisations with high growth rate potential.
The predicted rise in E&P spending signifies increased confidence in the market outlook.
This presents a real opportunity for innovative businesses to grow internationally. However, with growth comes the challenges of higher working capital requirements to put in place the necessary resources in people, plant and infrastructure to be successful in new markets.
Global fundraising was particularly challenging for many firms in 2011, with some figures showing a 45% dip in capital raised during the year.
The current debt crisis has led to a general reluctance by the banks to lend to SME organisations and this is restricting companies’ abilities to realise this growth opportunity.
In this climate, companies seeking to access capital will increasingly have to demonstrate that they are investor ready.
Greg Herrera, above, is a partner with oil and gas venture capital firm Energy Ventures.
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