Category: Oil & Gas Investing

3 posts

According to Steve Blackwell, CEO and Managing Partner of Invito Energy Partners, the energy industry  faced several challenges in 2022 including labor shortages, increased costs due to supply chain issues, a changing regulatory climate, declining refining capacity, and declining commodity prices in the second half of the year.  Blackwell notes that these issues are primarily a result of the COVID-19 pandemic with the associated shutdowns and supply chain disruptions  and uncertainty brought by ongoing international conflicts and domestic fed policy with interest rates.

The energy industry has been impacted by political tensions between Russia and Ukraine, with Russia using energy as a tool to erode support for Ukraine. Russian energy companies have limited the flow of natural gas to Europe, causing prices to rise and prompting countries to search for alternatives. This has led to increased oil and gas revenues for Russia as countries are willing to pay a premium for more Russian energy.

However, Russia’s reliance on the globalized energy market to support its economy has begun to have negative consequences. The Ukraine war and the West’s aversion to Russian energy imports could lead to the end of the international oil market, with a more regionalized version defined by politics taking its place. In response, the European Union and the Group of Seven nations have begun phasing out Russian oil imports and have approved an oil price cap for Russian imports, which could significantly impact Russia’s energy revenues.

Looking ahead to the first half of 2023, Blackwell expects commodity prices to remain range bound and relatively stable, but with the potential for higher prices as we approach the end of the second quarter as demand concerns subside and the market returns to a focus on supply. He also expects OPEC to continue its prioritization of higher oil prices over market share. He also sees the costs for drilling of wells to stabilize and decrease as we move through 2023.

“The biggest challenges facing the industry recently have been labor shortages, increased costs due primarily to supply chain issues, an ever-changing regulatory climate, refining capacity declines, and recent declines in commodity prices from the highs during the second and third quarters of 2022,” Blackwell explains.

Despite these increasing hurdles, Steve Blackwell remains optimistic about the future of the energy industry. He believes that with the right strategies in place, the industry can meet the challenges of the present and build a more sustainable and prosperous future.

Overall, the energy industry is facing a range of challenges, but there are also opportunities for growth and innovation as the industry adapts to changing market conditions. As Blackwell notes, the key will be to stay informed and stay nimble in order to navigate the shifting landscape and emerge stronger on the other side.

About Steve Blackwell

Steve Blackwell is the CEO and Managing Partner of Invito Energy Partners. With over 14 years of experience in the energy industry and more than 20 years of executive-level experience, Blackwell brings a wealth of knowledge and expertise to his role.

During his tenure as President of Petromax Operating, Blackwell oversaw the deployment of over $100 million in investor capital into three operated fields, where the company leased over 86,000 acres of mineral land and drilled 39 horizontal wells. He also oversaw the divestment of these assets for nearly $900 million, with an average rate of return of 370%.

As Chief Operating Officer of U.S. Energy Development Corporation, Blackwell oversaw the deployment of over $100 million in investor capital, resulting in the drilling of 29 wells in the company’s Eagle Ford shale asset. Under his leadership, the company was able to decrease costs per well by 25%, increase average EURs by 5%, and increase the return on investment. Blackwell holds a B.S. in Business Administration, Finance, and Accounting from Central Michigan University.

Opinions expressed by US Business News contributors are their own.

Today with Steve Blackwell, we cover some interesting shifts in the oil and gas market. The shale revolution changed the global dynamics as a commodity and its price. The ESG investing movement came after that and brought some good and bad things to the market.

The ESG investing movement accomplished two things. Limiting the capital for drilling programs and investors demanding returns in months rather than years. The United States industry listened, evident today with the many returns provided to investors. The world listened, and the activist and fear to invest in drilling programs have left the supply side short for the next decade, even with demand destruction.

Steve is an industry expert and has seen many different types of operations. We had fun and see what may be in store for investors and consumers.

Thanks, Steve, for stopping by the ENB podcast. – Stu

Please reach out to Steve Blackwell on his LinkedIn HERE. And the Invito Energy Partners website is HERE.


This news interview originally appeared on EnergyNewsBeat.com, and was hosted by Stu Turley, CEO, of Sandstone Group.

Another decade is in the books…and boy has 2020 been a knee slapper. The ability to predict the future could deliver infinite profits…so how is that going for you?

“History repeats itself, but in such cunning disguise that we never detect the resemblance until the damage is done.” –Sydney J Harris

“Those who cannot remember the past are condemned to repeat it.” –George Santayana

The 2010s took most of us by surprise. U.S. stocks rallied all decade long, emergency-era monetary policy persisted throughout the decade, and yet neither inflation nor a convincing economic recovery ever occurred. But boy, was there money to be made just by sitting in U.S. equities.

Interest rates peaked in August 1981, the result of Fed Chairman Paul Volker’s efforts to conquer inflation which reached as high as 14.5%. Since that time, interest rates have steadily fallen to where they are today. The rate of inflation has fallen but the value of money has also depreciated. The dollars you hold in your pockets today buy less goods and services every year. If we begin with $1,000,000, below is the annual income per year in each decade if invested in 10-year US Treasury bonds.

1980s: $140,000

1990s: $80,000

2000s: $50,000

2010s: $40,000

2020s: $7,000

That’s a 20x decrease in income. While inflation has fallen, the purchasing value of money and its return has also fallen dramatically. The federal reserve would not allow asset prices to fall and had the power to make sure it didn’t happen by implementing QE and other methods.

Why are they doing this? One word…debt.

As the economy heads into a retraction, credit spreads between treasury debt and corporate debt start to widen as the risk of default rises on lower-quality debt. So…the Fed intervenes with bond buying to keep the bond market from imploding, which is why they are expanding their balance sheet. Currently the Fed’s balance sheet will go from $4 trillion at the start of 2020 to $10 trillion by year end.

This is good news if you are a debtor…not so much as an investor. Cash yields next to nothing, money markets are at 0.0% and even short-term treasury yields are below inflation rates. Translation…you are losing money after taxes and inflation on cash investments.

This brings us to the devaluation of the US dollar. It will be sudden and come out of nowhere, but the only relief valve out of our mounting debt will be a devaluation. Overnight, tens of trillions of government debt will be wiped out and become worthless to those who hold this debt, be it foreign governments, pensions, companies, or individuals.

What trend should an investor do with inflation on the horizon? THINGS!

Investors have been following the deflationary trend of the last decade. This was a period when paper assets such as stocks and bonds did well. This led to the index bubble and the proliferation of passive investment strategies. It didn’t matter if you owned stocks or bonds, both made money over the last decade. Indexing led to extreme market valuations as the index favored large-cap stocks which drove the indexes higher. The result was most of the index returns were concentrated in a handful of stocks, giving the illusion of the overall index performance.

This new trend will take the place of depreciating paper money and into things: natural resources, hard assets, and businesses involved in both. This trend will be fueled by resource shortages and a tidal wave of money printing. But there are two things the markets aren’t ready for right now which are the return of high oil prices and inflation.

The markets have bought into the idea that we have reached peak oil demand as a result of COVID-19 and that we are entering a new green economy where electric cars will replace the gasoline combustion engine. This is utter nonsense and wishful thinking. Electric cars make up only 0.3% of the global car fleet. This is an opportunity that few investors will see coming, and it is why we started our Tax Advantaged Energy Fund (TAEF) which invests into direct energy investments. Its benefits are long-term hard assets that are immune to inflation, cash flow and substantial up front and ongoing tax benefits.