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<blockquote data-quote="Dheepa" data-source="post: 49860" data-attributes="member: 1572"><p>Hi Lauren,</p><p></p><p>I think the most important trend you should focus on is the overall transition to green energy. Some of the other points you mention actually feed into this overall trend and I think that no matter what news article you read about the energy industry, it's good to keep the green energy movement at the back of your mind and think of the implications to that. I've summarised my thoughts below, hopefully they give you some pointers.</p><p></p><p>The price wars and the overall reduction in oil prices due to COVID have had the most significant impact on energy companies ability to a) pay off their debts (remember that this is one of the most heavily leveraged sectors) b) borrow more for the necessary diversification into renewables c) pay dividends and complete share buybacks that were promised to investors. The flipside to point c) is that while some investors are upset that they didn't see returns, you have other investors that equally feel like these companies are not doing enough to cope with the energy transition and so are choosing to reduce their shareholdings. You can think about this from the perspective of institutional investors as well (pension funds, sovereign wealth funds etc.) that are increasingly pressured by new ESG regulation (see the EU Sustainable Finance Action Plan) and public perception (think of the Extinction Rebellion protests which aimed to force governments to take climate action seriously and see how Blackrock's chairman's letter to shareholders clearly shows how climate action has tangibly affected the investment community). In my opinion, this just means energy companies are caught in a catch 22 situation. On one hand they're being forced to diversify into an area with lower returns or risk becoming redundant, on the other hand they no longer have as much liquidity to do so and while governments do have subsidies for green investment projects, these will run out sooner or later. On the Internet of Energy point, this again points to why energy companies are trying to move into power generation, electricity and utilities because its again being necessitated by the green energy transition.</p><p></p><p>I've mentioned quite a bit there that you can read into further and try to unpack. This article on TCLA is extremely detailed and helpful <a href="https://www.thecorporatelawacademy.com/a-green-light-at-the-end-of-an-oil-pipe-covid-19s-impact-on-the-energy-industry/" target="_blank">https://www.thecorporatelawacademy.com/a-green-light-at-the-end-of-an-oil-pipe-covid-19s-impact-on-the-energy-industry/</a></p><p></p><p>Hope that helps! <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /></p></blockquote><p></p>
[QUOTE="Dheepa, post: 49860, member: 1572"] Hi Lauren, I think the most important trend you should focus on is the overall transition to green energy. Some of the other points you mention actually feed into this overall trend and I think that no matter what news article you read about the energy industry, it's good to keep the green energy movement at the back of your mind and think of the implications to that. I've summarised my thoughts below, hopefully they give you some pointers. The price wars and the overall reduction in oil prices due to COVID have had the most significant impact on energy companies ability to a) pay off their debts (remember that this is one of the most heavily leveraged sectors) b) borrow more for the necessary diversification into renewables c) pay dividends and complete share buybacks that were promised to investors. The flipside to point c) is that while some investors are upset that they didn't see returns, you have other investors that equally feel like these companies are not doing enough to cope with the energy transition and so are choosing to reduce their shareholdings. You can think about this from the perspective of institutional investors as well (pension funds, sovereign wealth funds etc.) that are increasingly pressured by new ESG regulation (see the EU Sustainable Finance Action Plan) and public perception (think of the Extinction Rebellion protests which aimed to force governments to take climate action seriously and see how Blackrock's chairman's letter to shareholders clearly shows how climate action has tangibly affected the investment community). In my opinion, this just means energy companies are caught in a catch 22 situation. On one hand they're being forced to diversify into an area with lower returns or risk becoming redundant, on the other hand they no longer have as much liquidity to do so and while governments do have subsidies for green investment projects, these will run out sooner or later. On the Internet of Energy point, this again points to why energy companies are trying to move into power generation, electricity and utilities because its again being necessitated by the green energy transition. I've mentioned quite a bit there that you can read into further and try to unpack. This article on TCLA is extremely detailed and helpful [URL]https://www.thecorporatelawacademy.com/a-green-light-at-the-end-of-an-oil-pipe-covid-19s-impact-on-the-energy-industry/[/URL] Hope that helps! :) [/QUOTE]
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