KPMG’s new lead energy consultant Angie Gildea started her career in health care, but was quickly drawn to oil and gas.
The sixth-generation Texan and longtime Houstonian studied biomedical science at Texas A&M and landed her first job at an MD Anderson lung cancer clinic. She soon found her calling, however, as an adviser to oil exploration and production companies.
“I’ve been around oil and gas my entire life,” Gildea said. “We had oil and gas leases on our ranch and family in the industry.”
Gildea — who was recently named KPMG’s national sector leader of energy, chemicals and natural resources — has witnessed several oil boom and bust cycles in her more than 20 years in the industry. The Chronicle sat down with Gildea over video chat to discuss the industry’s prospects for recovery from the coronavirus-driven downturn. This interview has been edited for brevity and clarity.
Oil hit $50 a barrel this week for the first time since the pandemic started. Is the worst behind us?
Hopefully, the worst is behind us, but there's still some uncertainty about when and how this recovery is going to happen. We’re seeing incremental lockdowns in the United Kingdom and parts of the U.S. The rollout of the vaccine is going to drive a lot of this recovery. KMPG economists say it will take two years for the gross domestic product (a key measure of economic output) to return to pre-pandemic levels.
How do your clients in the oil and gas industry view the $50 oil milestone?
Of course, everybody would like higher prices, but $50 seems to be the number that is sort of the new normal. There is definitely a viewpoint that you’ve got to be able to operate and maintain resilience at $50, but be prepared to survive at $40 to weather these storms. What’s different this time around is companies’ mindset around low oil prices. It’s not just lower for longer, but potentially lower prices forever.
We’ve been working remotely, online learning and avoiding travel for the better part of a year. Do you think some of these habits will continue even after the pandemic ends, and what implications will that have on the oil and gas industry?
Some of the trends we’re seeing in the pandemic are going to stick. Companies are rethinking work-from-home and business travel. We’re not going to go back to the rate of business travel we had in the past. But we’ve also seen trends go the other way. There’s been a pivot more to personal car ownership than public transit, because people feel safer commuting that way. All of those things are going to impact energy demand.
Saudi Arabia this week announced plans to cut its crude production by 1 million barrels a day in February, citing a fragile recovery as coronavirus cases continue to climb globally. Should U.S. producers be more cautious as they ramp up domestic production?
The Saudis stepped up and took a voluntary production cut. What that says to me is they’re concerned about the recovery and the uncertainties around the recovery. It’s another signal around potentially how fast the recovery is going to happen. In the U.S., we have so many companies and aspects at play, I don’t necessarily see that caution here.
Devon Energy this week completed its $5.8 billion acquisition of WPX Energy. We’ve seen other mergers and acquisitions, including Chevron and Noble Energy as well as ConocoPhillips and Concho Resources. Will we see more consolidation in 2021?
Yes, we’re going to continue to see consolidation in the upstream exploration and production sector. It’s really going to be a survival of the fittest. In fact, KPMG has seen an uptick in the deal market across the board, not just in energy. The thinking behind mergers and acquisitions used to be to buy as many leases as you can and hold it, but companies have really become strategic about optimizing their portfolio and shedding assets they can’t put capital toward. We’re also starting to see more deals around the renewable space.
Last year saw several major oil and gas companies make commitments to lowering their greenhouse gas emissions. Will that continue this year, and how will that impact jobs in Houston?
The investor community has been really forcing oil and gas companies to start looking at their business models and take steps around lowering their carbon footprint. That’s going to have a lot of impact in the Houston area and how we as a city and the energy capital of the world are going to handle that. We’re transitioning to a lower carbon footprint, but that doesn’t mean that energy is going away. The demand for plastics and petrochemicals is not going away. We’ve seen a lot of energy companies reduce headcount due to the pandemic, but at this point, I haven’t seen a lot of companies reduce their headcount because of the energy transition. The energy transition is going to create some job opportunities and there will be more hiring in this space.
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