Survey: Investors optimistic on upside potential of natural gas, crude oil pricing

Posted on 05 June 2014

In an energy sector poll, RBC Capital Markets found that 76% of investors and executives believe that the current $100-plus price levels for crude oil will be sustained or increased, while 74% of investors expect natural gas prices to be sustained or increased over the next 12 months. The survey encompassed 80 institutional investors and senior energy executives attending RBC’s 2014 Global Energy and Power Conference that was held this week in New York City.

Among the industry’s subsectors, 61% of respondents viewed either oilfield services or E&P as having the most investment upside between now and the end of 2014.

“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,” Kurt Hallead, Co-Head of Global Energy Research for RBC, said. “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.”

Resolution of issues, including the potential approval of the Keystone XL pipeline and crude oil exports from US shale basins, could have a significant impact on how investors approach the US energy sector. Approximately 45% of industry executives and investors expect approval of Keystone after 2017, with 41% expecting approval between 2015 and 2016.

Meanwhile, 74% of respondents believe crude exports will eventually be permitted, with 31% expecting the change between 2015 and 2016 and 43% expecting the current ban to be lifted in 2017 or later.

“The economic benefits for crude oil exports make sense, whether it be GDP growth, jobs, trade balances, or federal or state revenue streams,” Mr Hallead said. “The template is in place, given the approval of LNG exports, and we ultimately think that crude exports will be permitted.”

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