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We start off with A&D news this week. While Permian deals provided uplift to many stocks last year, 2017 hasn’t received the same treatment. Recently at Hart Energy’s DUG Midcontinent conference, Robert Clarke of Wood Mackenzie said there seems to be a mood change. Some share prices are falling the day after a deal is announced, sometimes dramatically and that isn’t setting well with investors. There is speculation the market may be suffering a case of “Permian fatigue.”
Harold Hamm’s Continental Resources believes over projections of U.S. crude production by the EIA is a factor in continued depressed oil prices. Blu Hulsey, the company’s Senior Vice President of Government and Regulatory Affairs, told Hart Energy the EIA is over-projecting U.S. production by 400,000 barrels per day this year. Hulsey said such over projections have factored into what Continental believes is an impact on the price of WTI. “That 9.8 exit rate when we're 9 million barrels a day was just a dramatic jump in the end of the year production forecast. We don't believe we are going to get there. We do have some increase in our end of the year forecast. We are around 9.3 at an exit rate. That's a 400,000 barrel a day difference. That's a huge impact when it comes to WTI prices. We've seen that in the spread, you've got a $6 spread WTI,” said Blu Hulsey of Continental Resources.
The IEA raised its forecast for renewable energy over the next five years. That’s following a record 2016. The projected growth is 12% more bullish than the IEA’s forecast last year but the report says natural gas will continue to grow but move toward the industrial and heating sectors, while LNG will still be a key source of power generation, especially in Asia.
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