Equity valuations and implied oil prices

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Report summary

Lower 48 focused operators have issued billions of dollars in new shares and development is continuing in key plays despite the fact that most new wells are uneconomic at futures strip pricing. We explain operator behaviour based on the long term oil price implied from equity valuations. The futures curve is simply spot price adjusted for time and storage cost . We calculate the long term oil price implied by equity valuations and run all Lower 48 onshore and Gulf of Mexico Shelf assets at the equity implied price deck. It's clear the equity market is pricing a substantial recovery in price into current valuations . We analyse the implications for activity levels and benchmark operators and regions. If equity valuations continue to include a substantial premium to strip pricing it could support additional share issuances and more development activity than futures strip prices would otherwise suggest .

What's included

This report contains

  • Document

    WM Equity Implied Insight FINAL.pdf

    PDF 1.36 MB

  • Document

    Equity Implied Price Insight Charts and Tables

    ZIP 849.70 KB

  • Document

    Equity valuations and implied oil prices

    ZIP 2.09 MB

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