With $100 per barrel oil prices a very real possibility again this year despite the end of the summer driving season, there’s every reason to get excited by investing in oil and gas. Oil hit $100 before, in 2014, but the difference now is there are less than half the rigs producing compared to then. Add in relatively low service costs and the oil production economics are the best in years, according to many in the industry.
And it looks like it will stay that way for a long time. While politicians, drivers, and businesses around the world are hoping for a break in gas prices, some analysts expect oil will stay around $100 a barrel for some time. There’s a shortage of refinery capacity, exports of oil from Russia are low, and demand for oil has once again exceeded 100 million barrels a day, a level last seen in 2019, driven by demand from Europe and Asia.
Do high oil and gas prices mean more production?
It’s clear that closely held oil and gas producers see expensive (profitable) oil and gas to continue for a long time.
As a result, they’ve been spending more on production: capital spending budgets among independent producers are up 13% over a year ago, according to Cowen, a consulting firm. Many oil and gas producers, public and private, are aiming to boost their outputs over the near term and are doing so in leaner and more efficient ways with better exploration technology and more efficient wells. To do so, many private players are looking to cash in on higher prices by boosting production with acquisitions because their internal drilling capacities and rig count might be insufficient.
While publicly traded oil and gas producers are increasing investments in oil and gas, private companies are doing it more quickly, and with the winter coming and Russia choking off European supplies, the prospects for profitable gas production and exploration are especially rosy. European countries are looking to U.S. LNG producers to make up for lost supply. This means that more private investment deals are in the cards for late 2022 and 2023 as companies try to boost their capacity to produce.
Oil and gas prices will likely remain high even if there’s a recession.
Even if there’s a recession, downturns rarely cause fuel demand to decline substantially. With aging infrastructure and a lack of investment in refineries downstream, even a substantial increase in production upstream might not make a dent in prices because of these bottlenecks. Add to that the sanctions against Russia because of their invasion of Ukraine, which appears to have no end in sight, and the prospect of long-term high oil and gas prices is likely.
North America is the best region for private investment in oil and gas.
Regardless of current events affecting oil and gas worldwide, North America remains the most active and attractive exploration and production market in the oil and gas industry, especially for those seeking to invest in private oil and gas firms. America’s economic strength, rich resource base, and low geographic risk profile make it ideal for investment, in good times and not-so-good times. American oil and gas supplies are secure and reliable, and the world isn’t likely to stop looking to the US any time soon for this.
Investing with Swan Energy: A Private Company Offering Joint-Venture Partnerships in Oil and Gas
With higher prices caused by geopolitical uncertainty, OPEC+ production cuts, supply chain issues, and demand that’s caught up to pre-pandemic levels, it’s no wonder the oil and gas industry remains an excellent investment. Private deals and investment are driving the increased production and deal-making to ride this long wave of profitability in oil and gas. And we at Swan Energy believe the best way to invest privately in exploration and production is through joint-venture partnerships.
Now is an excellent opportunity to climb aboard with Swan. Sign up to learn more and get started investing with Swan!
Source:
https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Jump-5-As-Bullish-Catalysts-Mount.html
https://www.pwc.com/us/en/industries/energy-utilities-resources/library/energy-deals-outlook.html
In October 2022, OPEC+ considered a historic cut in oil production, https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Jump-5-As-Bullish-Catalysts-Mount.html