RE:drinking from the wellI agree Oilhound, I think we are now seeing the bottoming process for crude. Crude prices have always been equal parts supply and demand, and politics. Seems way too coincidental that within a few days of an Iranian agreement the Saudis have increased their price to Asia. IMHO the Saudi goals have been to (1) break Iran's nuclear ambitions (the last thing that the Sunni Saudi's want is for the Shia Iranians to become the region's central military power), (2) to dampen the fracking revolution, and (3) stop having to be the world's swing producer. The first two goals IMHO have been with the blessing of the Obama administration.
I had expected an emergency OPEC meeting to have been called in March but was wrong. The Saudis understandably want other OPEC members and Non-OPEC producing nations to get on board with them to make a concerted and meaningful production cut, but the process seems to be taking longer than expected for this to happen. We see that Obama has just recently introduced new fracking rules in the US that, in conjunction with low prices, will dampen this source of crude production, effectively resulting in a US cut in production under the banner and fanfare of environmentalism. I anticipate that before the June OPEC meeting all members of OPEC and a few non-OPEC countries will have experienced enough pain that they will be more amenable to coming together on a production cut. A cut of 1.5M barrels is relatively small, achievable, and will be sufficient to move Brent back up to $75+ in H2 IMHO.
With specific reference to IAE, a Brent price of $75+ post Stella should see a cfps of $1.25+. If we apply a modest 3X multiple to this we can make the case for a target $3.75 within 18 months.
Of course this assumes that IAE can execute Stella successfully going forward on-time and within budget. With their inconsistent track record and the recent Petrofac-up I am not entirely convinced and so will be carefully watching the NR's with an itchy sell trigger finger.