Veteran Oil Investors Are Seizing Opportunity Amid Market Volatility
In a market climate where oil prices have slumped to their lowest levels since the pandemic, seasoned investors in the oil and gas sector are seeing opportunity—not panic. Despite a recent dip that pushed U.S. crude prices to around $64 per barrel, many energy-focused investors are staying the course, confident that the fundamentals of supply and demand still favor long-term growth.
Much of the recent volatility stems from President Donald Trump’s push for “energy dominance,” coupled with a global economic slowdown triggered by ongoing trade disputes. Simultaneously, OPEC countries are increasing their production quotas, under pressure to keep gasoline prices low for American consumers.
As a result, oil and gas stocks have taken a hit. The S&P oil and gas index dropped 14% this quarter—nearly double the broader S&P 500’s decline. Shares of Liberty Energy, once led by U.S. Energy Secretary Chris Wright, have fallen by 43%.
Still, experienced investors aren’t heading for the exits. Dan Pickering, Chief Investment Officer at Pickering Energy Partners, points out that lower prices are starting to reveal attractive opportunities. “The assets are starting to look attractive,” Pickering says. While caution remains, many experts believe the current market weakness won’t last long.
Navigating the Downturn
By pushing prices closer to or even below breakeven points for many producers, current conditions are testing the oil industry’s resilience. But as history has shown time and again, underinvestment during low-price periods often leads to future supply shortages—and inevitably, higher prices.
Adam Ferrari, CEO of Phoenix Energy, emphasized that the recent drop hasn’t disrupted his company’s investment plans. According to Ferrari, it would take several months of prices in the low $50s before producers would start meaningfully shutting down rigs or freezing capital expenditures.
Importantly, compared to the pandemic era, today’s environment is different. During 2020, investor enthusiasm was dampened by the growing momentum of ESG (Environmental, Social, and Governance) initiatives and the uncertainty around the future of fossil fuels. Today, confidence in the long-term necessity of oil and gas remains much stronger.
Pickering offers simple advice: find solid, valuable assets, invest, and be patient. “Own stuff you think has good value, turn off your screen, and wait,” he says.
Differing Views on Timing
Still, not everyone agrees that now is the time to dive in. Some analysts expect the market to remain oversupplied well into next year. Pickering himself cautions that “it’s going to get worse before it gets better.” Ferrari also notes that accessing capital is becoming harder as Wall Street becomes more cautious toward the sector.
Simon Wong, research analyst at Gabelli Mutual Funds, advises against putting new money into oil investments just yet, citing supply-demand imbalances. However, Wong suggests that natural gas-focused companies might present better near-term opportunities, given the skyrocketing demand for electricity from data centers.
Meanwhile, global energy markets remain vulnerable to unexpected disruptions, according to International Energy Agency chief Faith Birol, who reminded governments this week of the ongoing lessons from the Ukraine conflict.
Why This Matters for Direct Participation Investors
For those involved—or considering involvement—in direct participation programs (DPPs) within the oil and gas sector, understanding these market dynamics is critical. DPP investors typically participate directly in the cash flow generated from drilling projects, meaning timing and pricing of oil have a direct impact on returns.
Right now, we are witnessing a classic cycle where low prices temporarily slow drilling activity, but ultimately set the stage for future supply shortages—and higher prices. For DPP investors, this could present a prime window to enter into quality oil and gas projects at favorable valuations, with the potential for outsized returns once prices rebound.
Moreover, because direct participation often involves longer investment horizons, investors who are positioned today can benefit from the recovery that many seasoned experts expect in the not-too-distant future.
The key is aligning with experienced operators who understand how to weather downturns and capitalize when the market turns—just as Greg Hillman has helped investors do successfully for decades.
Summary
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Oil prices have fallen to their lowest point since the pandemic, around $64 per barrel.
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Despite falling prices and oil stock selloffs, experienced investors see buying opportunities.
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Experts expect low prices to be temporary, with eventual shortages pushing prices higher again.
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Direct participation investors should recognize this market as a strategic entry point for future gains.
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Timing, patience, and partnering with seasoned operators are essential for success in today’s environment.
