From the desk of Troy W. Eckard
The perfect storm is brewing. Rising in country demand, global demand for US petroleum products, and geopolitical limitations based upon production from various countries like Venezuela and of course expected restrictions on countries such as Iran. Short term expectations (Troy’s opinion) would have to lean heavily towards oil crossing over $80 a barrel by December 31, 2018 market close. Long term, oil could settle back to mid $60s, if and only if, disruption is solved or massive quantities of new production volumes are added within the US. This new production volumes is highly due to the increasing and continuous infusion of investment capital into the US exploration (upstream) market continues.
Link and article from Oil and Gas Journey here.
Short answer, great place to invest. Long-term answer, buying reserves makes sense but know it is a 3-5 year hold based upon the high likelihood of two such changes in my opinion. Sharp short term rise followed by 2020 short term retraction. Five year plan, drill, produce and then liquidate in 60 months.
Take away: service companies will do well in 2020 through 2025. Drillers will do well now through about mid-2020. Drilling costs will rise through the end of 2019 and into 2020. The market is becoming quickly oversaturated with money and deals are being traded at unreasonable trade terms for leases and production acquisitions. Stay focused and stay engaged.
DISCLAIMER: This post is intended for information purposes only and is not, and should not be construed as investment advice to any individual.