The oil and gas sector has been most disliked sector for a long period of time. Back in 2020 when I attended the CERA week conference, there was a lot of talk about returning a reasonable rate of return to investors. Shale companies spent capital on digging oil wells at places which never became cash flow positive. This has changed completely in 2022 with industry generating record returns for its investors. This made me think if this is sustainable? Do we have a long term bull market case for Oil and Gas?

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Investment in the Sector:

Investment is measured as the ongoing capital expenditures in fuel production and power generation capacity, as well as infrastructure. Global investment in O&G has saw a significant decline from 2014 to 2020. This resulted

Global investments in oil and gas upstream in nominal terms and percentage change from previous year, 2010-2020

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Now, after a decade of financial losses in the sector along with rising ESG mandates to restrict capital to the sector, there isn’t much funding for oil and gas companies or pipelines.