Tamarack Valley Energy TVE-T Going to $2.35/share SEEKING ALPHA 40,000 LIGHT BARRELS OIL DAILY AT $70 / BARREL SOON Tamarack
Oil outlook of $62 in 2021 and $65 in 2022—in line with RBC Commodity Strategist Mike Tran’s recent update—combined with reset cost structures is driving abundant cash flow and free cash flow generation amongst energy producers. This dynamic opens the door to shareholder returns, but also a potential acceleration of ESG enhancements. Positioning-wise, we are somewhat agnostic between upstream/downstream-weighted companies given narrow regional oil differentials and a much improved refined product inventory picture following Texas mayhem earlier this year. Exhibits 2 and 3 outline our updated commodity price outlook, which also reflects a $5 increase in our long-term equilibrium Brent price to $60.
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Regional Oil Differentials—Narrow.Our updated Midland-Cushing differential of $0.48 in 2021 reflects minor mark-to-market adjustments, while our 2022 outlook is up modestly to $0.35 with sufficient in-basin export capacity and relative location to key export markets. Canada’s continued movement toward becoming sustainably long pipe into 2022 is reflected in our narrow WTI-WCS spread of $12.04 in 2021 and $11.17 in 2022.
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North American Natural Gas.We have boosted our Henry Hub outlook by 6% to $3.10/mmBtu in 2021 and by 7% to $2.95/mmBtu in 2022. Our long-term price forecast increases by 6% to $2.65/ mmBtu. The increase in our price forecast reflects continued producer discipline, strong LNG demand dynamics