Resource World Magazine

F E B R U A R Y / M A R C H 2 0 1 7 www.resourceworld.com 79 OIL & GAS T he oil and gas sector has not been the same since the dra- matic drop in crude prices from the +US $100 level to the current prices in the low fifties. Yet, the world still needs oil and natural gas – lots of it. Many oil & gas companies have suffered with the price decline; however, some have found ways to prosper. In an exclusive interview, PI Financial's Brian Purdy offers some insights into the current oil & gas sector and has chosen a few companies worth watching. RESOURCE WORLD: While there was a spike in oil prices when OPEC recently announced a modest cutback in oil produc - tion, to me, it seems that a 1.8 million barrel per day cutback is not a great deal. With oil prices now stabilizing in the low 50's, what do you see for oil prices in the near future? BRIAN PURDY: I think we're going to see a gradual increase in oil prices. It's not going to be a sharp climb back to the $80 dollar level on WTI that we saw a few years ago. I think it's going to be more gradual and probably take us into the 60s by 2018. I'm not putting too much into the OPEC cut; there is a lot of produc - tion declines going on in many countries around the world due to the low prices including the US and even some OPEC members like Venezuela that are running into a lot of problems. I think there are some supply declines that are coming if OPEC manages to stick to the production cuts that they're talking about. Certainly that could accelerate a climb back into the mid-60s but I think people are believing that OPEC would like to see higher prices which is probably the key. In 2014, when the Saudis came out and said that, instead of cutting back to balance the market, "we're going to increase production." That was definitely a sign that they were willing to push prices lower, and I think what you're seeing now is generally a consen - sus around OPEC that they would like to try and push prices a little bit higher. So, I suspect that there is still going to be some cheating on those targets that they mentioned and, as you say, the cutback compared to what they've added over the last few years is not exceptionally large, but it's probably a change in attitude, espe - cially from Saudi Arabia, from where they were a few years ago. RW: Do you think a modest increase in oil prices, into the 60s, will spur new oil exploration or encourage companies with shut- in wells to place them into production? BP: Yes, certainly you're going to see a bit of that. You see some recovery already in North America in particular, but that doesn't mean we're going to get back to production growth in North America. It's probably going to just get us back to more flat production levels and balancing out the declines that we've been seeing because drilling was so slow. Brian Purdy, Research Analyst, Energy, at PI Financial in Calgary, takes a look at the oil & gas sector and provides some promising stock picks by Ellsworth Dickson Finding good oil & gas stock picks

• Cover