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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (54054)	1/30/2019 9:26:55 AM
From: Goose94	Read Replies (1) of 203382

Crude Oil: Mackie Research The WTI crude oil price was highly volatile in 2018, averaging US$64.90/bbl and ranging from a high of $76.41/bbl on October 10, 2018, before falling back to a two year low of US$42.53/bbl on December 24, 2018. A 1.2 million barrel production cut pledge by OPEC and non-OPEC nations has helped to strengthen crude prices in early 2019 The big story in 2018 was the collapse of the price of oil in Canada as new additions from oilsands projects and conventional drilling pushed oil production above pipeline and rail export capacity. With oil storage near capacity and oil backing up in Alberta, the differential between the WTI crude oil price and Western Canada Select (“WCS”) hit a record high of US$50/bbl. To address the issue, the Alberta Government announced a temporary 325,000 bbl/d production curtailment for large producers, which immediately reduced the oil price differential. The fall in crude oil prices pushed the valuation of Canadian E&P companies to record lows as reflected by the S&P/TSX Oil & Gas E&P Index which fell by 46% in 2018. Despite the elimination of an abnormally large differential and the rebound of Canadian oil prices, the index has only shown a slight recovery. We believe this has created an incredible buying opportunity for value investors as most companies in our coverage universe are trading at a fraction to core NAV. At the current valuations we see very little downside and the potential for multi-bagger returns and we recommend buying a basket of undervalued oil and gas companies which are set to recover with the sector.

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