Investor Beware: Oil Companies May Be Over-Investing in High-Risk Projects

Unsteady oil prices, declining oil demand, and serious controls on carbon pollution could all spell danger for oil and gas investors who don’t pay careful attention to the risky new projects that many companies are taking on, Reid Capalino suggests in this post on The Energy Collective. “To protect investment portfolios from the risks associated with high-cost oil production, asset owners and fund managers must scrutinize company capex budgets more thoroughly than they have in the past,” he writes. “Diligent investors should take particular note of high-cost reserves that will take longer to monetize and hence be subject to more uncertainty about future demand, capital cost, and commodity price conditions.”