Soros to Slim: Plowing Money Into US Shale Oil as Private Equity Retreats

As private equity firms retreat from the US shale oil sector, two prominent investors, George Soros and Carlos Slim, are stepping in to capitalize on the opportunities presented by the market. Their investment strategies and motivations differ, but both see attractive prospects in the sector.

George Soros' Investment Strategy

Soros' family office added more than $30 million in new energy-company stakes during the third quarter of 2023, including Magnolia Oil & Gas Corp. and Hess Midstream LP. His investments focus on energy companies rather than specific projects or refineries. Soros' family office is one of many family offices increasing their investments in the US shale oil market, attracted by the stable returns and the sector's more stable returns after years of boom-and-bust cycles.

Carlos Slim's Investment Strategy

Carlos Slim, through his family investment office Control Empresarial de Capitales, invested $1 billion in 2024. He allocated $602 million to US refiner PBF Energy Inc. and $326 million to Houston-based oil producer Talos Energy Inc. Slim's investments focus on both oil production and refining, with a significant stake in PBF Energy and a substantial investment in Talos Energy. His unique opportunity lies in his ability to control a significant portion of the supply chain, from production to refining, which can provide him with a competitive advantage and better risk management.

Potential Risks and Challenges

Both Soros and Slim face potential risks and challenges in their investments, including market volatility, regulatory risks, geopolitical risks, technological disruptions, and reputation risks. To mitigate these issues, they can diversify their portfolios, invest in hedging strategies, stay informed about regulatory developments, engage with stakeholders, and develop clean technologies.

In conclusion, Soros and Slim are investing in the US shale oil sector as private equity firms retreat, driven by the stable returns, attractive risk-return characteristics, and demand for sustainable investments. Their investment strategies differ, with Soros focusing on energy companies and Slim on controlling a significant portion of the supply chain. By addressing potential risks and challenges proactively, these investors can enhance the long-term success of their investments in the oil and gas industry.