Each Wall Street Firm has a "price deck" that their analysts use to value upstream oil & gas companies. It is important to understand that their "price deck" is not a true forecast. I know the analysts at Stifel think oil is going higher than the prices below.
Stifel's new Price Deck:
"Based on recent strip prices, we are raising our 2021/2022/2023 WTI oil forecasts by 3%/6%/6% to ~$62.50/$61/$57.50.
Our 2021 oil price forecast is 6% above Street consensus while our 2022/2023 estimates are 1%/10% below (Figure 8).
We are also raising our 2021/2022/2023 Henry Hub natural gas forecasts 3%/3%/1%, to $3.01/$2.90/$2.70.
Our 2021 forecast is 5% above Street consensus while our 2022/2023 estimates are 5%/12% below.
Our long-term price deck for 2024 and beyond remains unchanged at $55/$2.75, 11%/10% below 2024 Street consensus."
I believe we will see WTI over $70/bbl in the 3rd quarter.
Here is the price deck that I use in all of my upstream valuations shown here and in the newsletter.
2021 WTI / HH gas
Q1 $58.00 / $2.60
Q2 $62.00 / $2.80
Q3 $65.00 / $3.00
Q4 $65.00 / $3.10
2022 $65.00 / 2.75
Stifel is raising their oil & gas price decks - May 28
Stifel is raising their oil & gas price decks - May 28
Last edited by dan_s on Fri May 28, 2021 12:42 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Stifel is raising their oil & gas price decks - May 28
Stifel: Oil & Gas Exploration and Production - 1Q21 Review:
E&P Delivering on Promise to Return Capital - Michael S. Scialla
Many E&P companies are beginning to redirect FCF from debt repayment to increased dividends as balance sheets have strengthened more quickly than anticipated amid strong oil prices. We are raising our 2021-2023 oil and gas price forecasts to reflect recent NYMEX strip prices and raising our E&P and Minerals target prices by averages of 10% and 1%, respectively. Our favorites include DVN, EOG, BCEI, and OAS.
E&P Delivering on Promise to Return Capital - Michael S. Scialla
Many E&P companies are beginning to redirect FCF from debt repayment to increased dividends as balance sheets have strengthened more quickly than anticipated amid strong oil prices. We are raising our 2021-2023 oil and gas price forecasts to reflect recent NYMEX strip prices and raising our E&P and Minerals target prices by averages of 10% and 1%, respectively. Our favorites include DVN, EOG, BCEI, and OAS.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Stifel is raising their oil & gas price decks - May 28
Investing.com -- Crude oil prices pushed higher Friday, extending the week’s gains on growing confidence over the U.S. economic recovery even as concerns over additional Iranian supply remain.
By 9:20 AM ET (1420 GMT), U.S. crude futures traded 0.6% higher at $67.26 a barrel, after settling at its highest finish since October 2018, while the international benchmark Brent contract rose 0.5% to $69.55.
U.S. Gasoline RBOB Futures were up 0.4% at $2.1635 a gallon.
Recent economic data have pointed toward a relatively robust economic recovery in the U.S., the world's biggest oil consumer. Initial jobless claims, released on Thursday, fell to a post-pandemic low, while consumer prices accelerated in the year to April, reflecting pent-up demand as the economy reopens.
“The demand outlook for the U.S. remains supportive, with the economy continuing to reopen, whilst we are also about to officially enter the summer driving season, which should provide a further boost to gasoline demand,” said analysts at ING, in a note.
Adding to the optimism were reports indicating that President Joe Biden is set to announce a $6 trillion budget for the 2022 fiscal year, offering further support to the commodities complex. < Get ready for Hyper-Inflation. Crude oil is one of the best hedges against inflation and a falling U.S. dollar.
That said, the demand outlook isn’t the only factor potentially affecting the oil market as talks continue in Vienna over reviving a nuclear agreement with Iran. A deal could pave the way for the lifting of sanctions allowing the Persian Gulf country to export its oil reserves, potentially adding an extra 1 million barrels a day of crude into the global market.
The additional supply will be a major issue for the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, to discuss when they get together next week.
The group is currently scheduled to increase output by 700,000 barrels a day in June, and then by a further 840,000 barrels a day in July. < The market is going to need every drop of OPEC's oil this summer.
“The question though, is if the group needs to reconsider its July output increase, given the prospect of additional Iranian supply coming onto the market. Our balance sheet shows that the market should be able to absorb this additional supply from OPEC+, along with a gradual increase in Iranian output,” ING added.
Traders will focus on the latest weekly update from Baker Hughes of the number of oil rigs later Friday, while the CFTC also will release its weekly commitments of traders report.
By 9:20 AM ET (1420 GMT), U.S. crude futures traded 0.6% higher at $67.26 a barrel, after settling at its highest finish since October 2018, while the international benchmark Brent contract rose 0.5% to $69.55.
U.S. Gasoline RBOB Futures were up 0.4% at $2.1635 a gallon.
Recent economic data have pointed toward a relatively robust economic recovery in the U.S., the world's biggest oil consumer. Initial jobless claims, released on Thursday, fell to a post-pandemic low, while consumer prices accelerated in the year to April, reflecting pent-up demand as the economy reopens.
“The demand outlook for the U.S. remains supportive, with the economy continuing to reopen, whilst we are also about to officially enter the summer driving season, which should provide a further boost to gasoline demand,” said analysts at ING, in a note.
Adding to the optimism were reports indicating that President Joe Biden is set to announce a $6 trillion budget for the 2022 fiscal year, offering further support to the commodities complex. < Get ready for Hyper-Inflation. Crude oil is one of the best hedges against inflation and a falling U.S. dollar.
That said, the demand outlook isn’t the only factor potentially affecting the oil market as talks continue in Vienna over reviving a nuclear agreement with Iran. A deal could pave the way for the lifting of sanctions allowing the Persian Gulf country to export its oil reserves, potentially adding an extra 1 million barrels a day of crude into the global market.
The additional supply will be a major issue for the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, to discuss when they get together next week.
The group is currently scheduled to increase output by 700,000 barrels a day in June, and then by a further 840,000 barrels a day in July. < The market is going to need every drop of OPEC's oil this summer.
“The question though, is if the group needs to reconsider its July output increase, given the prospect of additional Iranian supply coming onto the market. Our balance sheet shows that the market should be able to absorb this additional supply from OPEC+, along with a gradual increase in Iranian output,” ING added.
Traders will focus on the latest weekly update from Baker Hughes of the number of oil rigs later Friday, while the CFTC also will release its weekly commitments of traders report.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group