In a recent poll, institutional investors and senior industry executives indicated optimism about crude oil and natural gas prices. RBC Capital Markets conducted the survey at its 2014 Global Energy and Power Conference in New York, according to a press release. A total of 80 professionals in the oil, gas and energy sectors were polled, the press release said. The number of investors polled was not indicated, but 550 institutional investors were at the conference, according to the release.
Of the investors and professionals polled, 76% said that the price of crude oil would stay at or above $100, while 74% of investors said that natural gas prices would either stay at their current level or increase over the next year.
Respondents’ views on commodity prices “translates into a bullish view” on exploration and production (E&P) company stocks, as well as oilfield service company stocks, according to the press release. Of respondents in the industry’s subsectors, 61% said that E&P and service companies would have “the most investment upside” by the end of the year.
“Given the optimism relating to crude oil and natural gas, it naturally follows that investors view the oilfield services and E&P sectors as outperformers through 2014,” said Kurt Hallead, the co-head of Global Energy Research for RBC Capital Markets.
“Our global energy team expects North American onshore shale drilling to be the primary driver for revenue and earnings growth for oilfield services and E&P companies into 2015,” he added.
The ways in which investors will approach the energy sector might depend on the “resolution of issues,” including the Keystone XL Pipeline and the debate over exporting crude oil, according to the release. Of those polled, about 45% said Keystone would be approved post-2017, while 41% said it would be approved between 2015 and 2016.
Regarding the export issue, 74% said crude oil exports would “eventually be permitted.” A total of 31% expected this between 2015 and 2016, while 43% expected it no earlier than 2017.
“The economic benefits for crude oil exports make sense, whether it be GDP growth, jobs, trade balances or federal or state revenue streams,” Hallead said.
“The template is in place given the approval of LNG exports, and we ultimately think that crude exports will be permitted,” he added.
Toronto-based investment bank RBC Capital Markets is part of the Royal Bank of Canada.
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