Investment in U.S. shale gas and oil is becoming more selective due to not-so-high gas and oil prices, abundance of supply, and investors' changing behavior, according to industry insiders.
"I think the U.S. shale sector is attractive for the people, but you need scale and a real specialist. There is so much competition and you need to be good at what you do," Nathan Strik, energy utilities sector leader with Fidelity Management and Research Company, said on Monday.
Investment in the shale sector should not totally depend on oil prices and people should have the right teams and the right shale resources, Strik told Xinhua on the sidelines of the ongoing CERAWeek conference.
CERAWeek is an annual energy meeting held by the London-based information company IHS Markit featuring prominent speakers from energy, technology and the financial sectors. This year's meeting was attended by more than 4,500 guests from over 70 countries and regions.
Still, U.S. shale companies plan to trim 5 percent of capital expenditure in 2019 prioritizing discipline over aggressive growth, industry research firm Rystad Energy said on the basis of 45 U.S. shale gas operators.
Investment in conventional assets could increase faster than in the shale industry for the first time since the 2015 downturn, said an annual oil report by the International Energy Agency issued on Monday.
The attractiveness of shale oil and gas assets comes down to individual companies as they have good assets while others have more challenges, said Marcel van Poecke, head of Carlyle International Energy Partners (CIEP). Van Poecke added that the CIEP is not moving away from investing in the energy sector, but is just adjusting its strategies.
Investors have to adjust to the reality of low investment return from the energy sector overall, and some investors are sticking with the energy sector while others will rotate out of it, Strik said, adding that investment in the U.S. main shale gas and oil producing area, the Permian basin, could be profitable given the current oil prices.
Huge investment in shale gas and oil has driven impressive output expansion in the United States in recent years, and allowed the U.S. shale oil industry to adjust quickly to changing oil prices.
