Good Article regarding oil prices

[dan_s]

Full article here:
http://seekingalpha.com/article/1109231 ... urce=yahoo

2013 should be an interesting year for oil and gas in the United States. 2012 was disappointing, as results lagged expectations. There were several reasons for underperformance, but the main issue was differentials. Bakken differentials were the widest, as pipeline capacity was strained.

In 2013, Oil transportation issues should decrease. Additional pipeline capacity coupled with increased usage of the rails. EOG Resources (EOG) was the first to rail the majority of its Bakken crude. It was shipped to St. James for LLS pricing. Other Bakken producers sold its oil below WTI in 2012. EOG received an average of $10 more year over year.

There are a wide range of oil price estimates for 2013. Raymond James believes WTI will average $65/Bbl. It estimates a hard landing in China, continued macroeconomic issues in Europe, and weak demand in the United States. In response, OPEC will cut production. While these variables are possible $65/Bbl is unlikely. My estimate is $88/Bbl. Bakken differentials to WTI will tighten to $8/Bbl. Expectations are for significant volatility. WTI's low for 2013 will be short lived and bottom around $75/Bbl. This will be a buying opportunity.
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I am in basic agreement with the article. I believe OPEC will cut production if Brent falls below $100/bbl. - Dan

[k1f]

Speaking of the changing picture for Bakken differentials: any theories about why Petrobakken has been taking it on the chin lately? CC prescribes conservative fiscal mgt and growth, w/ no change to the div. One downgrade (to "perform") today. Valuation seems illogically low, no? Dan's suggestion that 4thQ production gains will catch some attention makes sense. Any idea how the larger Bakken pricing problems will affect the picture as they moderate?

[dan_s]

I just think PetroBakken is down because of confusion related to the spinout from PetroBank. It may take awhile for the smoke to clear. I am expecting very strong 4th quarter results to draw some buyers.

They have a lot of upside in the Cardium and several new areas.

I've talked to the company and they intend to keep paying the monthly dividends.