Dec 10 (Reuters) - CIBC World Markets lowered its forecast
for West Texas Intermediate (WTI) crude oil prices for 2009 and
2010, citing near-tern demand concerns, and cut its price
targets on several oil and gas companies and trusts, including
TriStar Oil & Gas and Enerplus Resources.
"It is our opinion that oil prices are unlikely to make a
significant recovery in the face of a deep recession," CIBC
said, in a note to clients.
CIBC cut its WTI crude oil price forecast for 2009 to $50
per barrel from $70 per barrel, and for 2010 to $65 per barrel
from $80 per barrel.
However, it is unlikely that oil prices will continue to
fall at the pace witnessed over the last few months as they
will eventually approach the marginal cost of production -- a
point at which higher cost producers would have an incentive to
shut-in and/or curtail production, CIBC said.
"We estimate that oil prices would find a trough near the
variable cost of oil sands production, which we estimate at
about $25 to $30 per barrel," CIBC wrote in a research note.
Signs of a milder global recession, a short-term supply
shock or a supply cut by the Organization of the Petroleum
Exporting Countries would stabilize falling oil prices, it
added.
CIBC said it expected almost every royalty trust to cut
distribution through early 2009 and most junior oil producers
to restrict 2009 spending to cash flow budgets.
CIBC named Bonavista Energy (BNP_u.TO), Crescent Point
Energy CPG_u.TO, NuVista Energy (NVA.TO), Orleans Energy
(OEX.TO) and Zargon Energy ZAR_.TO as its top picks and said
they remained defensively positioned against the slowdown in
growth.
The following table lists the some of the price target
changes made by CIBC :
COMPANY NAME PRICE TARGET
(in Canadian dollars)
New Old
ARC Energy ARC_u.TO $24 $27.75
Baytex Energy (BTE_u.TO) $24 $31
Crescent Point Energy CPG_u.TO $31 $42.75
Enerplus Resources (ERF_u.TO) $36 $44
Pengrowth Energy (PGF_u.TO) $13 $18
Penn West Energy (PWT_u.TO) $21 $27.50
Harvest Energy (HTE_u.TO) $12 $17.50
Birchcliff Energy (BIR.TO) $6 $9
Compton Petroleum (CMT.TO) $2.25 $3.50
Crew Energy (CR.TO) $7 $11
Fairborne Energy (FEL.TO) $9 $11.75
Grey Wolf Exploration GWE.TO $1.25 $2
Iteration Energy (ITX.TO) $2.75 $5
(Reporting by Vidya L Nathan in Bangalore; Editing by Himani
Sarkar)
