Dear
Speculators,
Nigeria is one of the largest producers of oil in the world, that's a fact. NNPC estimates our oil reserves to be about 28 billion barrels, that's another fact. Our 2016 budget indicates daily oil production will reach 2.2million per day, which will be about 700 million barrels per year, representing 2.5% of our total oil reserves, that's a statistical fact. Oil production at this level will completely empty our oil wells within 30-40 years, that's an unspoken fact!
As oil wells continue to dry out all over the world, it has coincided with reckless drilling and the current oil glut we are experiencing. Oil prices have plummeted since the oil war began in mid-2014 after oil prices reached an all-time high. Demand has been growing marginally with population growth but excess supply has crashed oil prices below its cost of upstream production. The oil war will end, possibly this year but prices will rise slowly as the world battles to get rid of the excess supply of about 1 billion barrels.
Nevertheless prices will only go up as world population rises and emerging economies expand resulting to an upswing in the demand for energy. This provides an investment opportunity in oil companies who stand to profit from rising oil prices. The next two decades could see oil prices reach $400 per barrel.
It sounds ridiculous at the moment but the price surge is inevitable.
We advise long term investments in multinational oil companies but not excessive exposure in the oil sector. Stocks of the oil companies are currently selling at a record low representing a significant buying opportunity but investors should beware of companies that have business sustainability issues. Remember you make minimal returns if you take no risk and you can lose all your money if you take too much risk. Moderation is key and opportunity comes but once.
Signed:
Emeka Ucheaga,
Managing Partner,
Emeka Ucheaga Advisory
Nigeria is one of the largest producers of oil in the world, that's a fact. NNPC estimates our oil reserves to be about 28 billion barrels, that's another fact. Our 2016 budget indicates daily oil production will reach 2.2million per day, which will be about 700 million barrels per year, representing 2.5% of our total oil reserves, that's a statistical fact. Oil production at this level will completely empty our oil wells within 30-40 years, that's an unspoken fact!
As oil wells continue to dry out all over the world, it has coincided with reckless drilling and the current oil glut we are experiencing. Oil prices have plummeted since the oil war began in mid-2014 after oil prices reached an all-time high. Demand has been growing marginally with population growth but excess supply has crashed oil prices below its cost of upstream production. The oil war will end, possibly this year but prices will rise slowly as the world battles to get rid of the excess supply of about 1 billion barrels.
Nevertheless prices will only go up as world population rises and emerging economies expand resulting to an upswing in the demand for energy. This provides an investment opportunity in oil companies who stand to profit from rising oil prices. The next two decades could see oil prices reach $400 per barrel.
It sounds ridiculous at the moment but the price surge is inevitable.
We advise long term investments in multinational oil companies but not excessive exposure in the oil sector. Stocks of the oil companies are currently selling at a record low representing a significant buying opportunity but investors should beware of companies that have business sustainability issues. Remember you make minimal returns if you take no risk and you can lose all your money if you take too much risk. Moderation is key and opportunity comes but once.
Signed:
Emeka Ucheaga,
Managing Partner,
Emeka Ucheaga Advisory
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