Oil companies are priced in terms of their reserve life
and long term oil price. Simply put,
it's something like:
company stock price = reserve life X long term oil price
nobody dares to use the current $130 as long term oil
price. According to some analysts, $70-80 is used.
This is significantly higher than the previous price
that has been used a year ago, which was about $40-50.
That is why you see some oil companies have appreciated
80-90% over last year. CNQ, for example.
It takes time for people to get used to $100 plus oil,
along the way you'll see energy company prices going
up and up. Hold a few energy companies, you'll be
very happy about it.
Happy trading.
and long term oil price. Simply put,
it's something like:
company stock price = reserve life X long term oil price
nobody dares to use the current $130 as long term oil
price. According to some analysts, $70-80 is used.
This is significantly higher than the previous price
that has been used a year ago, which was about $40-50.
That is why you see some oil companies have appreciated
80-90% over last year. CNQ, for example.
It takes time for people to get used to $100 plus oil,
along the way you'll see energy company prices going
up and up. Hold a few energy companies, you'll be
very happy about it.
Happy trading.
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