By the OGJ Online Staff
HOUSTON, Feb. 18 -- For the second consecutive quarter, there is consensus on near and midterm expectations for oil and natural gas prices between Houston energy banks and the active middle market of those companies acquiring reserves.
Expectations between these groups for gas pricing in 2002 and beyond are nearly identical, while expectations for crude pricing are similarly close in 2002 and average within 5% of one another in 2003 and beyond, as shown by price projections in Oil & Gas Journal Exchange's quarterly oil and gas price forecast poll.
The continued consensus bodes well for increasing deal flow in the near future, said Bill Marko, vice-president and chief operating officer of OGJ Exchange. The longer this consensus lasts, he said, the stronger the deal flow will return. "Early indications of improving deal flow were apparent last quarter (OGJ, Dec. 3, 2001, p. 38) and there is a great deal of proof in the market now, he said.
"Companies such as Anadarko Petroleum Corp., Burlington Resources Inc., Conoco Inc., Devon Energy Corp., and El Paso Corp. are in various stages of divestment efforts," Marko explained. "These offerings alone in the upstream, US exploration and production market are worth about $2 billion," he added.
As is always the case, the asset market typically returns fast and strong following a period of relatively low asset deal flow. "With a lack of stability in oil and gas pricing during the first three quarters of 2001, there was a definitive lack of consensus on future pricing, causing below normal deal flow," Marko said. "Continued improvement in both the financial and commodities markets late in 2001 has yielded renewed confidence and consensus in the asset market," he added.
This building confidence should carry over into 2002. "With the exception of the current natural gas spot price, all other signposts signifying strong deal flow are occurring; attractive initial sales, consensus on long-term future pricing, strong availability of financing, and overall optimism about the oil and gas business," Marko said.
