Planks comments aren't doing APA shareholders much good today:
Apache expects decline in oil prices
Overseas political instability could destabilize market
By Lisa Sanders, CBS.MarketWatch.com
Last Update: 3:35 PM ET Nov 28, 2000
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HOUSTON (CBS.MW) -- Apache Corp. Chairman and CEO Raymond Plank, on his way to inspect his properties in Egypt, said Tuesday from Houston that he expects to see oil prices begin to decline in the first quarter of the calendar year.
However, having been in the business since the 1950s, Apache's (APA: news, msgs) Plank isn't betting the ranch on it.
"This could be altered by two things," said Plank. "One is a very unstable world situation exacerbated by a very weak and very inconsistent foreign policy throughout the world but particularly with respect to the Arab world and Israel. We have a remarkable propensity to offend the people of both of those nations."
Plank said he wouldn't be surprised to see further problems developing as far to the east as Afghanistan.
"The other thing I think is uncertain but probable is that although the build-up of inventory will go beyond what is necessary to meet actual oil requirements, OPEC is very likely in their next meeting to cut production levels," Plank said. "The pendulum always swings too far one way or the other, it doesn't stop in the middle."
Given the potential for extenuating circumstances, Plank said he doesn't expect oil prices to hold at a particular level. See Futures Movers.
"Really, drilling on a worldwide basis has not been at a particularly high level," he said. "I would think that the outlook for crude oil prices is one in which the prices may be higher over the next five years than they have been over the last five years."
Looking abroad
Plank also criticized the United States' failure to develop a comprehensive energy policy.
As a result, "the U.S. is looking for much smaller targets for gas at exactly the same time when natural gas is increasingly used as a fuel of choice and power generation. Power generation is cheaper to build today with gas-fired turbines, than it is with coal-fired turbines," he said.
"We're having a literal demand squeeze on the ability to produce gas in North America," Plank said. "The Prudhoe Bay pipeline should have been built years ago and it wasn't by a government that put environmental priorities higher than energy priorities."
The consumer will ultimately suffer, he said.
"Probably these markets will remain tight because there's not that much production coming on, and the situation has been exacerbated by a cold winter," Plank said.
Apache is a large-cap, Houston-based oil and gas company, which generates growth through acquisitions and exploitation of properties. It has interests in North America and abroad, including Egypt and Australia |
