Fueling the Growth of the U.S. Energy Sector
NEW YORK--(BUSINESS WIRE)--For middle market companies in the energy sector, opportunities for growth are abundant due to an increase in U.S. gas and oil production. Companies providing supporting services, such as technology and equipment to more economically and efficiently extract gas and oil, as well as to process and transport the fuel, are also benefitting. As a result, middle market energy companies looking to grow are finding easier access to lending and finance. These are some of the views expressed by Mike Lorusso, Group Head and Managing Director, CIT Corporate Finance, Energy, a division of CIT Group Inc. (NYSE:CIT) cit.com, a leading provider of commercial lending and leasing services, in “Fueling the Growth of the U.S. Energy Sector” (cit.com/lorusso), the latest piece of market intelligence in the award-winning CIT Executive Insights video series (cit.com/executiveinsights).
“Private equity firms are also showing more interest in the energy sector, further driving the growth and investment capital that is needed to continue expanding the U.S. energy industry,” said Lorusso. “With the explosion of mid-continent fuel production, especially the Bakken Shale, companies are looking for financing to build pipelines, terminals and processing facilities quickly to meet growing production capacity needs.”
Adding to the growth of the U.S. energy landscape is the expansion of fracking, growing renewable energy sources and liquefied natural gas (LNG). From production and processing to delivery and storage, companies are looking for partners to help them finance all aspects of the energy production and delivery chain.
Lorusso offers several takeaways on the state of the U.S. energy sector:
- Fracking Is the Growth Engine behind Oil and Gas Production: Nearly two-thirds of the wells being drilled in the U.S. utilize fracking. It’s an important growing part of the industry. Growth in new states will be done in a controlled, safe manner. Mexico is also exploring fracking opportunities.
- M&A Activity Is Growing with the Energy Industry: M&A activity has been commensurate with the growth of oil and gas production within the U.S. market. Assets, such as power plants, gas and oil reserves, equipment and rigs are changing hands, as well as companies.
- Renewable Energy Will Grow from Solar, Not Wind: With the end of government tax credits, the wind market has matured. Solar energy will grow as technology scales down to residential use, increases in efficiency and incorporates battery storage technology. Although renewables are a small part of the overall electric power supply, it’s the fastest growing part right now.
- Capital Investment Is Needed to Finance LNG Facilities: With about 10% of production coming from LNG in the next few years, a good deal of capital investment and several big firms are getting behind the LNG market with equity.
- The Lack of Skilled Labor Is Impacting the Industry: One of the near term concerns within the energy sector, specifically within oil and gas, is the lack of skilled labor to keep up with the pace of growth. Middle market energy companies are actually being limited in their expansion plans due to the lack of skilled labor available, especially in the remote regions where many of the shale plays are occurring.
- Fuel Supplements Key to Energy Independence: As the country gets closer to nearing peak production, the U.S. will need to supplement other fuels for oil, such as natural gas for vehicles and electric cars.
- Business Expansion Could Include Mexico: One of the growth opportunities for U.S. middle market energy firms is to take their knowledge and experience to Mexico where the government has opened the sector to privatization and private investment.
- The Outlook for the U.S. Energy Sector Is Positive: Growth in the production of oil and gas and improving technologies to extract and transport oil and gas will continue to propel the industry into the next year. There are no disruptive technologies or any big innovative advances on the horizon, with an expectation for incremental advances and continued growth within the U.S. energy sector.
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About CIT Corporate Finance, Energy
CIT Corporate Finance, Energy provides value-added financing products and services to growth-oriented companies throughout the energy sector, including oil and gas, and power. By combining extensive industry experience, structuring expertise and underwriting capacity, it creates comprehensive solutions to its clients’ most critical strategic and funding needs. CIT Corporate Finance, Energy currently manages a large, diverse portfolio, which includes investments in all asset classes across the energy sector. cit.com/energy
About CIT Bank
Founded in 2000, CIT Bank (Member FDIC, Equal Housing Lender) is the U.S. commercial bank subsidiary of CIT Group Inc. (NYSE: CIT). It provides lending and leasing to the small business, middle market and transportation sectors. CIT Bank (BankOnCIT.com) offers a variety of savings options designed to help customers achieve their financial goals. As of June 30, 2014, it had approximately $14 billion of deposits and more than $18 billion of assets. cit.com/CITBank
Founded in 1908, CIT (NYSE:CIT) is a financial holding company with more than $35 billion in financing and leasing assets. It provides financing, leasing and advisory services to its clients and their customers across more than 30 industries. CIT maintains leadership positions in middle market lending, factoring, retail and equipment finance, as well as aerospace, equipment and rail leasing. CIT’s U.S. bank subsidiary CIT Bank (Member FDIC), BankOnCIT.com, offers a variety of savings options designed to help customers achieve their financial goals. cit.com
Matt Klein, 973-597-2020
Vice President, Media Relations