Oil and gas businesses are poised to continue the consolidation wave trend into 2024.
Key takeaways
Energy companies are increasingly adopting analytical AI technologies, including machine learning.
The energy transition is driving investment and a variety of actions across the industry.
Energy sector trend #1: The top 5 renewable energy trends shaping the sector
The top 5 renewable energy trends shaping the sector
Here are the top five renewable energy trends shaping the sector.
Today’s energy landscape continues to evolve as countries around the world increase their focus on decarbonization and shift from fossil fuels to renewable energy sources. The energy transition is driving significant investment and a variety of actions across the industry, from wind and solar energy startups to legacy oil and gas companies and the manufacturing and technology companies supporting the ecosystem.
Energy transition investment is on the rise, with $303 billion invested in the U.S. in 2023, according to BloombergNEF, up 22% from the prior year. Still, that is a fraction of the $1.77 trillion that was invested globally. The business case for adopting renewable energy is making more sense for companies, even with today’s higher cost of capital.
Energy sector trend #2: Navigating oil and gas consolidation
The oil and gas sector has experienced a remarkable surge in merger and acquisition activity recently, with over $155 billion in deals in the fourth quarter of 2023, according to Bloomberg. That’s more than the prior five quarters combined. Faced with challenging market and economic conditions, oil and gas companies—particularly upstream, midstream and oil field services companies—are poised to continue this consolidation wave into 2024. Middle market companies are especially likely to be involved in this M&A activity, so it is crucial for them to proactively position themselves for strength in this cycle.
Deals that do occur will require special attention to valuation, as deal types and conditions in the oil and gas ecosystem vary widely. In the last couple of years, we saw companies with atypical spending and contract terms that companies—buyers and sellers alike—will need to analyze and model as part of the valuation for any deal.
Navigating oil and gas consolidation: Insights for middle market companies
As oil and gas sector consolidation surges, we share insights for middle market energy companies.
Energy sector trend #3: The rise of artificial intelligence
Artificial intelligence in energy: Use cases show potential
Artificial intelligence in the energy sector: A look at how middle market companies are adopting AI
Energy companies are increasingly turning to AI technologies, including machine learning, to address challenges and seize opportunities in the evolving energy sector. These AI solutions are being applied across various areas, from industrial operations and environmental monitoring to business process improvement and safety enhancements. Key use cases include optimizing production processes, monitoring emissions, enhancing safety, and improving customer experiences.
Companies are also investing in AI-focused training programs to upskill their workforce and using AI in customer service to provide personalized experiences. These AI solutions have become a strategic priority in the energy sector, with many companies exploring their use through pilots and full-scale adoption.
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