Energy Prospectus

If you want an interesting take on the global market, go the Plains All America Pipeline (PAA) and listen to their December 6 presentation. PAA is the #1 crude oil gathering, processing, transportation and storage company in North America. Therefore, they have a unique understanding of what's really happening in all of the major producing regions of the U.S. and Canada.

I have updated my forecast/valuation model for PAA and posted it to the EPG website.

Primarily because of their dominant position in the Permian Basin, I have raised my valuation to $36/unit, compared to First Call's price target of $32.83.

Venezuela said Tuesday that it plans to cut production by 95 MBOPD, or roughly 4% of its 2.4 MMBOPD of total production, as OPEC prepares to implement its production deal. Starting January 1, OPEC will cut back its output by 1.2 MMBOPD, while non-OPEC countries contribute an additional 0.6 MMBOPD to cuts, in order to raise crude prices to more profitable levels.

“Without prejudicing its international contractual obligations, from Jan. 1 2017, (state oil company) PDVSA and/or its subsidiaries will implement a reduction in the volumes of its main crude sale contracts, all in conformity with existing terms and conditions,” the Energy Ministry said.

Oil Minister Eulogio Del Pino said the output deal should lead to a re-balancing of inventories, after which he forecast Brent crude would settle at a price range of around $60-$70 a barrel and Venezuela’s crude basket between $45-$55 a barrel, reports Reuters.

Venezuelan President Nicolas Maduro said he plans to head out on a tour to solidify support for the new deal as well.

“I am proposing a new system, a new formula to fix markets and oil prices to enable stability, harmony, continuity,” he said on Monday, without giving further details of his itinerary or planned proposal to fellow producers.