At the recent 1640 Family Office Conference in the Hamptons, PRAGMA partnered with Breakwall Capital and Carnegie Corporation of New York to host a panel titled “The Energy Opportunity: Placing Energy at the Heart ofYour Wealth Strategy.”
The discussion centered on how family offices and institutional investors can view energy not as a peripheral bet, but as a core portfolio allocation in today’s shifting global landscape.
The Flight of Capital; and Why It Matters
Over the past decade, traditional energy has experienced a historic outflow of capital. In 2014, the sector raised nearly $60 billion; by2022, that figure had collapsed to just $2–3 billion. Underperformance, management missteps, and ESG pressures pushed investors toward unproven transition assets like hydrogen, nuclear, and recycling technologies, most not yet commercially viable for private equity.
Today, however, discipline has returned. Balance sheets are stronger, debt levels are lower, and distributions are higher. Yet with fewer funds active, and at smaller scale, scarcity itself has created opportunity for investors prepared to step back into the space.
At the same time, global energy demand continues to rise.The “lucky one billion” in developed economies consume around 13 barrels of oil per person annually, compared to just three barrels across the rest of the world. As emerging markets industrialize, and as AI and data centres drive power demand in the U.S., the reality is clear: energy demand is not peaking any time soon. Meeting it will require all forms of energy.
Where the Opportunities Lie
The macro environment is defined by volatility and shifting capital flows between traditional oil and gas and newer transition assets. Yet relative to alternatives, energy continues to deliver attractive risk-adjusted returns. Strengthened fundamentals underpin stability, while the capital stack itself offers multiple entry points. Debt and preferred equity are proving particularly appealing for limited partners seeking downside protection, while private markets still offer diversification advantages over public equities and hedge funds. Oil and gas can also play a valuable role in an inflation-hedging strategy, as commodity prices, along with producer revenues, royalty streams, and many midstream contracts, typically rise in tandem with broader price levels.
U.S. natural gas is highlighted as one of the most compelling opportunities in today’s energy landscape. Global coal-to-gas switching, particularly popular in China and India, is set to accelerate, and as the world’s largest producer and exporter, the U.S. is primed to capture that growth.
With LNG export capacity on track to more than double by the end of the decade, underpinned by cost advantages, scale, and favorable tax treatment, natural gas offers investors a durable, scalable, and highly attractive entry point into the sector.
At the regional level, Georgia was highlighted as a standout case study in energy-driven growth. The state has paired a supportive regulatory environment and strong infrastructure to attract both domestic and international capital. The state has leverages a diversified energy mix spanning nuclear, natural gas, solar and storage allowing for the supply of low-cost, stable power that is drawing major data centres, manufacturing, and supply chain projects. With new nuclear capacity online and additional natural gas and renewable projects advancing, Georgia is increasingly seen as a blueprint for stable, business-friendly energy development in the U.S.
Policy Shifts — and What They Mean for Family Offices
The policy landscape itself is becoming an investment driver. The One Big Beautiful Bill Act (P.L. 119-21), signed in July 2025,marked a decisive pivot in U.S. energy policy. It accelerated the phase-out of several clean-energy tax credits introduced under the Inflation Reduction Act(IRA), imposing earlier “start construction” and in-service deadlines while adding stricter supply-chain restrictions. These changes reduce the long-term value of many renewable incentives and create new uncertainty around transition project economics, which many projects depend on to be commercially viable
At the same time, the law reversed provisions that had weighed on oil and gas. It restored the federal onshore royalty rate to 12.5% (from the IRA’s 16.67%), delayed or removed methane-fee and leasing constraints, and preserved long-standing rules on intangible drilling costs and equipment expensing. The result is improved near-term economics for fossil producers and, crucially, for owners of mineral and royalty interests.
For family offices, this creates a clearer opening:
· Improved after tax returns: Lower federal royalty rates mean producers pay less to the government on every barrel produced. For mineral and royalty owners, that translates directly into higher cash flows from their holdings, and higher return of capital to investors.
· Tax efficiency preserved: Key tax provisions remain intact. Intangible drilling costs (IDC) can still be expensed immediately, reducing taxable income in the year incurred, while equipment depreciation continues to provide ongoing deductions. In addition, perpetual mineral and royalty interests, assets that can generate income across generations, may still qualify for 1031 like kind exchanges, allowing families to defer capital gains tax when reinvesting proceeds into new energy assets with the right structuring and advice.
· Market validation: The impact is already visible. Producers such as Permian Resources have publicly indicated that the law reduces their near term tax liabilities. For investors, that is an early signal of tangible benefits flowing through the system, showing that these policy shifts are not just theoretical but directly improving bottom line economics.
In short, while clean-energy incentives face headwinds, traditional energy investments are emerging as one of the most attractive structures for family offices seeking stable, tax-advantaged energy exposure.
Private Market Shifts
Beyond sector fundamentals, the conference also addressed wider private equity dynamics. While firms have been highly effective at raising and deploying capital, returning capital has lagged, creating liquidity pressures across the market. Secondary transactions are accelerating as LP sseek relief, secondary buyers gain access to discounted assets, and general partners engineer exits.
At the same time, the rise of retail capital in private equity is reshaping competitive dynamics, raising important questions about cost of capital and long-term value creation.
The Strategic View
Energy remains central to both economic prosperity and social development. For family offices, it is not simply a tactical play but a strategic allocation. With disciplined capital management, stronger fundamentals, and rising global demand, energy offers one of the most compelling opportunities available today.
At PRAGMA, we believe energy must sit at the heart of long-term wealth strategies — not only to deliver returns, but to secure prosperity for generations to come.
For more information on family office strategies, please contact Ben West on ben.west@pragma-energy.com
