I work with a the majors and I think it will go to $33. The small operators will become targets in the U.S., just as they were before. BG bought up many small operators in the Midwest and in the Northwest as examples, Oxy bought out Thumbs in California and invested heavy in enhanced recovery when prices were low, banking on a much higher return. West Texas and older Oklahoma fields cashed in big, along with Montana and Wyoming fields. The key will be how gas maintains its price.
On the global front, Western Europe is struggling to get gas bcs Russia is struggling; india is investing BILLIONS in gasification projects to deliver product (see Reliance J3) and between the Saudis and Kuwait, they are almost to the point of controlling the O&G labor market bcs they are the only ones investing in new projects.
Kazakhstan, Azerbaijan, Malaysia, Australia and many others are struggling to keep balance in both O&G with crude prices dropping.
Again, this is not sustainable. Refineries enjoy good prices, but lack in expansion. Chevron is spending big on Lake Charles Louisiana but California is dead, as are the Bahamas, which projected $5bb in project expansions. BP has all but abandoned its expansion projects in Indiana, which are at about 45% complete and in production.
All this means uncertainty in the market, but!!! For frugal investors, I'm betting on a buyout soon for smaller operators, bcs they cannot compete in operating costs. Contracted services are still at a premium, lifting costs are still high, and are at risk on PSM regulatory matters so they have to stay below certain production targets.
So buyout is highly probable which means potential stock divs like I've enjoyed before.
I've worked with guys who, all they do is set up buys for small operators. I made bank on BG and Oxy pickups.
I'm in the game small on this one to start. If the pps stays under .002, I'll be getting ore and more invested.
Glta
