'Borrowed' this link from Løveg on the Hegnar forum...
http://www.whatinvestment.co.uk/funds/commodities/2134386/us-oil-boom-doesnt-change-fundamentals-says-damaskos.thtml
Increased production of oil in the US may drive down prices in the short term, but doesn’t change the sector’s attractiveness, according to Angelos Damaskos, CEO of Sector Investment Managers (SIM).
His comments follow forecasts from the International Energy Agency (IEA) that suggest the US is set to become the world’s largest oil producer in the second half of this decade and self-sufficient by 2035.
Damaskos said: ‘Extraction techniques [in the US] have unlocked huge hydrocarbon resources and have, this year, depressed gas prices close to 20-year lows.’
However, he maintained a bullish outlook for oil stocks, stating that increased consumption in emerging markets will offset lessening demand from the US. The expense involved in extracting US oil may also restrict the amount of oil being produced if domestic prices fall, he claims.
Damaskos proposed that the market had already ‘priced in’ the prospect of US energy independence: ‘While there is a potential for decline in US imports, Europe and Asia import levels are increasing again and show early signs of recovery.’
He identified the biggest potential in small cap oil stocks: ‘Shares in smaller oil companies are trading at near five-year lows and those of earlier stage development are ignored by investors.’
‘Markets may remain irrational and decoupled from fundamentals for a while longer, but fair value will be recognised resulting in a re-rating of small cap resources stocks.’
One of SIM’s largest holdings is Questerre Energy, which has a market capitalization of $157.7 million (£98.3 million) and a share price of $0.68. Questerre has interests in shale-gas projects along the Lowlands of the Saint-Lawrence River in Quebec.
