CANADIAN OILPATCH / ANALYST'S OUTLOOK BACK IN FEBRUARY
Here's an interesting article I thought would be interesting for your review.
This is one experts opinion (analyst with probably the best Canadian
investment institution) of how he saw 1996 for the oil and gas industry.
February 7, 1996
Oil investors expect slide in petroleum prices
ALAN BORAS, Calgary Herald
Oil and natural gas stocks may be in for a slide this year as petroleum prices weaken and hostile takeover activity shows little sign of slowing down, says a Calgary energy analyst.
"We think the best in 1996 may already be behind us," said Craig Langpap, an analyst at Peters and Co. of Calgary.
January cold across North America sent natural gas prices jumping in many markets, but those prices have settled back this week to about $1.50 per gigajoule as the weather warmed up.
Langpap says Peters is holding to a 1996 average wellhead gas price forecast of $1.30 per gigajoule, which is lower than several other forecasts that reach up to $1.60.
Contrary to plenty of industry opinion, Langpap said it is questionable whether additional export pipeline capacity, destined to open up in early 1998, will boost the price of gas in Canada.
"There doesn't seem to be a need for more Canadian gas," Langpap told about 170 delegates to the Canadian Energy Research Institute's North American Crude Oil and Liquids Conference Tuesday in Calgary.
Langpap said with most of the cold weather behind North America, the Toronto Stock Exchange oil and gas index could fall by eight per cent in 1996 from its current level of 4,857.92.
"I wouldn't be surprised if the TSE oil and gas index closes the year around 4,500," he said.
Many recent market forecasters have named the oil industry as a stock sector of promise, but Langpap says there's still plenty of restructuring to occur in 1996.
Canada's oil industry is coming out of a year of heavy merger activity, both in numbers of deals and in the total value of the consolidation.
Langpap expects more deals as the mid-sized companies are forced to find partners or launch hostile takeovers, but he's uncertain whether the total value of deals will top the 1995 mark of $7.9 billion.
The real test of companies' performance will come as winter drilling results arrive. The survivors will be "the guys who have done the best job of gas drilling this winter," Langpap said.
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Check out today's statistics regarding index status, oil and gas prices
and etc.. Nothing new has really developed since last February in
regards to commodity pricing which has climbed ever since. One
thing to note, winter conditions were not behind us last February.
Depletion of inventories did occur which was probably the main catylist
behind increased prices. What amazes me a little is the fact that no
one took measures to get inventories back to what can be considered
capacity or adequate inventory levels. At this point in time, inventories
in U.S. are considered at low low levels and we are now entering
winter conditions. Does anyone care to offer comments as to why we
are in this condition. |
