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January 2025 Exclusive Story

Trump Presidency Spells Big Changes for Oil Industry

On his first day in office, President Trump signed several executive orders related to energy. In one, he instructs the heads of all agencies “to identify those agency actions that impose an undue burden on the identification, development, or use of domestic energy resources—with particular attention to oil, natural gas, coal, hydropower, biofuels, critical mineral and nuclear energy resources.”

The same order also aims to “facilitate the permitting and construction of interstate energy transportation and other critical energy infrastructure, including, but not limited to, pipelines, particularly in regions of the nation that have lacked such development in recent years” and “provide greater certainty in the federal permitting process, including, but not limited to, streamlining the judicial review of the application of (the National Environmental Policy Act).”

Among other changes, the order ends the freeze on permitting for LNG exports to countries with which the United States does not share a free trade agreement. Other orders promote development of Alaska’s natural resources and withdraw the United States from the Paris Climate Agreement.

A report that the lobbying firm Akin Gump published before Trump’s inauguration suggests that the initial salvo of executive orders is only the beginning. “We expect the second Trump presidency to see the repeal of many of (Biden’s) actions on climate change and the environment,” the firm writes.

Akin Gump also predicts that Trump’s plan to “drill, baby, drill”—coupled with Republican majorities in the House and Senate and ongoing geopolitical conflict in Ukraine and the Middle East—will help fuel growing access to capital in the oil and gas industry.

First 100 Days and Beyond

As his second term begins and his plans are set in motion, Trump will have plenty of help from lawmakers, Akin Gump writes. He and a Republican-controlled Congress have expressed plans to repeal portions of the Inflation Reduction Act, including rolling back many of the tax provisions for the use of clean energy technologies, and to renew tax provisions passed in the 2017 Tax Cuts and Jobs Act that are scheduled to expire at the end of 2025.

The IRA expanded federal tax credits related to clean energy, creating or enhancing credits for energy storage, carbon capture, hydrogen, clean fuels, and the manufacturing of qualifying solar, wind, and battery components, Akin Gump notes. It also established a right to transfer or sell tax credits for cash.

“We anticipate Congress will act on the IRA tax credits in the first 100 days of the new session and the Trump administration will likely revise Treasury guidance for certain credits left in place,” Akin Gump writes. For example, the guidance for the Clean Hydrogen Production Tax Credit (45V) could be altered to allow natural gas-derived hydrogen to qualify.

The firm says the electric vehicle industry is most at risk, while tax credits tied to hydrocarbons, including one for carbon capture, utilization and storage, are most likely to remain.

But significant changes to the IRA will likely be met with pushback from some Republicans, Akin Gump assesses. In some red-leaning districts, the IRA has helped job growth and attracted multibillion-dollar investments, the firm points out.

“We think it unlikely that a full repeal of the IRA will occur and that significant elements will survive,” Akin Gump writes. “We could also see Congress add domestic content rules similar to the section 30D provision rules to other IRA provisions.”

The new administration is also expected to attempt to repeal the Environmental Protection Agency’s new source performance standards for oil and gas, emission standards for greenhouses gases and criteria pollutants from mobile sources, and recent power plant rule, the firm continues. “Open questions remain as to what would be proposed in their place,” it writes.

The power plant rule, which was issued by the Biden administration in April 2024, mandates that coal-fired power plants and new gas-fired plants install equipment cutting the bulk of their greenhouse gas emissions by 2032. Trump made it a campaign promise to revoke that rule, calling it “regulatory jihad.”

Return to “Traditional Antitrust”

Trump’s administration likely will bring big changes to antitrust enforcement, Akin Gump writes. Trump and the Republican-led Federal Trade Commission are expected to bring a return to what Akin Gump calls “a traditional antitrust approach.”

“(Previous) FTC Chair Lina Khan has taken an aggressive approach toward antitrust issues in the sector since her appointment in 2021,” Akin Gump states. “Her Republican successor will change that dynamic, likely returning to traditional antitrust enforcement principles, thereby reducing the uncertainty regarding M&A in the sector and spurring further consolidation in the wake of Exxon/Pioneer and Chevron/Hess.”

Under Khan’s leadership, the FTC obtained consent decrees on ancillary issues in three oil and gas mergers, despite concluding that the deals did not raise competitive concerns, Akin Gump relates. The firm suggests that Trump and the new FTC will take a less hands-on approach, particularly with respect to exploration and production transactions. However, there will still be oversight, especially in cases where transactions raise core antitrust issues.

“For example, we expect the FTC to continue to scrutinize midstream transactions that increase concentration or create bottlenecks in the supply chain,” Akin Gump clarifies. “Likewise, oil field services and equipment and retail fuel outlets are also areas that both Democrat and Republican administrations have consistently scrutinized in the past. So, while we expect to see reduced interest in the oil and gas industry overall, parties to transactions that may raise antitrust concerns can still expect scrutiny.”

Increasing Capital Availability

According to Akin Gump, the friendlier regulatory climate may come alongside more ready access to capital. “We expect 2025 to see a further strengthening of capital availability for, as well as raising a deployment by, the industry from both traditional and alternative sources of funding,” the firm says.

Private equity oil and gas deal activity dropped from $48 billion in 2019 to $17 billion in 2023, the firm reports. However, the country’s private equity market is seeing a resurgence of interest in energy. “The trend, driven by consolidation and strategic divestitures among majors, has spurred an uptick in institutional fundraising for energy-focused private equity funds, as investors recognize the potential for attractive returns in a sector poised for growth,” Akin Gump relates.

“While we are not seeing a great deal of sponsor appetite for new management team funding, sponsors appear to be bullish on backing established teams with strong and proven track records,” Akin Gump says. The firm adds that private equity is “prioritizing companies with strong free cash flow generation and a clear path to profitability, seeking investments that can deliver returns without relying solely on exit events.”

Akin Gump predicts that across the industry, transaction volumes will increase, private equity exits will accelerate, and joint ventures will become more prominent.

“The universe of investors putting money into oil and gas funds has undoubtedly shrunk from the previous ‘boom’ period, with a number of pension funds and university endowments pulling out completely,” Akin Gump acknowledges. “However, we see some Silicon Valley foundations, tech giants and family offices expressing more interest in hydrocarbons and supporting co-investment opportunities, and a lot of money continues to flow into the industry from the Middle East.”

With traditional banks moving away from reserve-based loans, private credit will continue to grow as an essential financial force in the industry, the firm says. “The pullback of traditional lenders, coupled with the energy sector’s inherent capital intensity, has created a significant demand for alternative financing solutions,” Akin Gump observes.

“Private credit has been increasingly moving into and increasing its market share in the specialty finance space (including the oil and gas sector) and is expected to further solidify its position as a key player in the energy finance landscape,” the firm continues.

Today, Akin Gump says, private creditors are looking to finance acquisitions, support private equity-backed acquisitions of oil and gas assets, and lend capital to asset- or project-based opportunities.

“(Private credit) sometimes comes at a higher cost than traditional bank financing,” Akin Gump allows. “However, private credit funds often offer faster execution and greater flexibility in terms of deal structuring and covenants, making them an attractive option for companies seeking customized financing solutions. In addition, given the amount of new private credit funds that have launched, and the massive amounts of capital raised by private credit funds over the past several years, check sizes have increased to levels that, in many cases, exceed what traditional banks have been able to provide.”

International Relations

While the changing political mood has many in the oil and gas industry more optimistic, Akin Gump points out that the industry won’t do a full reset. “We do not expect the largest oil and gas companies to change course on their efforts to reduce their carbon footprints and invest in new energy technologies, so there will be much to watch in the months and years ahead,” the firm illustrates.

Trump’s efforts to reduce the United States’ trade deficits by renegotiating trade deals and increasing tariffs could have a detrimental effect on oil and gas economics. “Tariffs under the new administration will likely hit steel, aluminum, concrete and other products critical to energy infrastructure and hydrocarbon production,” Akin Gump explains.

Regarding Russia, Akin Gump notes that Trump signals less enthusiasm for supporting Ukraine’s military than his predecessor. However, “it seems unlikely that the new government will seek to lift or substantially ease the current sanctions on Russia without first negotiating something significant in return through Russia-Ukraine peace treaty negotiations,” the firm finds. “In other words, the Trump administration may seek to use the sanctions as bargaining chips in furtherance of the president’s stated goal of bringing a swift end to the war.”

Turning to Iran, Akin Gump predicts that the Trump administration will resume its pressure campaign on Iran and its proxies. However, the firm says the extensive sanctions already in place limit how much impact new sanctions can have.

“The bigger question will be the extent to which the Trump administration will impose sanctions on Chinese companies that support Iran’s oil trade, which could have a broader impact on global energy markets,” Akin Gump assesses. “Congress overwhelmingly supports such sanctions, increasing the likelihood that they will go ahead.”

You can read Akin Gump’s full report—including more details on regulatory and policy issues and capital availability, as well as sections on M&A/joint venture activity and energy transition opportunities—by visiting Oil & Gas in 2025: Emerging Trends & Predictions.

For other great articles about exploration, drilling, completions and production, subscribe to The American Oil & Gas Reporter and bookmark www.aogr.com.