The mood at EnerCom's oil and gas conference in Denver has been positive, if slightly frustrated, says Jeb Armstrong, analyst at Calyon Securities (USA). With gas prices over $8.00 per million Btu and oil still in triple digits, producers are pulling record profits and unprecedented rates of return. But the energy stock price index has risen only 5% this year and many E&Ps are in negative territory, he says. Undervalued stocks are a bargain, but the timing of recovery is uncertain. "There continues to be some disagreement over whether oil and gas prices have reached a near-term floor. Opinions vary from the current level of slightly above $8.00 per million Btu down to $7.00. Widening basis differentials, primarily in the Rockies and to a lesser extent in the Midcontinent, is already impacting the economics of more marginal plays," he says. Also, industrial demand for gas, which appeared to evaporate when gas surged to $13.50, may be coming back. The price of gas in the U.S. is 25% to 40% lower than in much of Asia and Europe, providing the domestic petrochemicals industry a competitive advantage while at same time keeping liquified natural gas imports away. Meanwhile, Armstrong reports that capital spending plans for this year are not threatened by $8.00 gas and $115 oil. Companies generally stress test the economics of their drilling programs down to $7 to $7.50 gas and $70 to $80 oil. Mid-year increases in capital budgets are mostly the result of exploration success, rising steel costs and the acceleration of existing and highly economic drilling programs.
2023-11-27 - U.S. natural gas futures fell to a two-month low on Nov. 27, weighed down by record output while mild weather limited heating demand.
2023-11-27 - Prices tumbled midweek when OPEC+ postponed to Nov. 30 a ministerial meeting to iron out differences on production targets for African producers.
2023-11-27 - As Hart Energy commemorates its 50th anniversary in the December issue of Oil and Gas Investor, Hart looks back on what truly drives the oil industry—the romance and thrill of the business.
2023-11-22 - Tens of millions of Americans are expected to hit the roads this Thanksgiving. But they’ll be paying less at the pump than they did a year ago, according to Energy Information Administration figures.