What are the key issues confronting the energy sector today that investors – particularly private equity investors – need to be aware of as they look for energy investment opportunities?

A: We see increasing signs of “seller capitulation” – e.g., increased bankruptcy filings, increased concerns about liquidity and access to capital, increased pricing pressure – that are motivating potential sellers to sell assets or businesses in order to pay down debt and increase liquidity. That’s the good news for potential buyers of companies. The challenge for buyers, as always in these situations, is deciphering whether they are buying a “falling knife,” or instead are buying quality companies or assets at attractive prices, with the opportunity to generate a significant upside. Adding to that challenge is the fact that downturns tend to result in more litigation risk, more employment-related claims and more counterparty credit-risk. Careful due diligence by buyers can help mitigate that risk, as can strong indemnities and – increasingly – rep and warranty insurance products.