Energy IPOs

The world runs on oil and gas. The energy sector powers global trade, industry, and travel, and provides key inputs for power generation. That's why the energy sector is cyclical, and benefits from global economic growth. At a high level, consider both the cost that it takes to produce the fuel (or transport it, refine it, etc.), and how much it can be sold for. So in addition to a company's cost structure, oil & gas prices will be relevant.

Energy projects typically require large upfront investments, so IPOs are often used to pay for capex, debt repayments, and M&A. The energy sector includes ancillary services (drilling, equipment rental), as well as dividend-producing pipelines and land assets, but all of these tend to be tied to the broader energy cycle. Energy companies benefit from the same tailwinds, and there will often be waves of energy IPOs around the same time, followed by stretches of inactivity. Investors typically value energy companies using EV/EBITDA, P/E, and, when applicable, dividend yield, unlevered free cash flow, and EV/flowing BOE.

The sector includes oil and gas drillers, equipment and services providers, exploration and production companies (E&Ps), oil refiners, fuel storage and transportation companies such as pipelines, and coal companies. The sector generally does not include renewable energy companies developing solar, wind, and other clean power, which are often found in the utilities sector.