RE:RE:RE:RE:Average price $3.50Hmmm. Maybe your model is skewed up (pun intended) because you are mixing math with psychology? An investment sentiment generator sounds an awful lot like a gut feel. Try the model with math only. Or run a back test for 2004-2014 period. You will pick up the mini depression but also the raging bull market. Your human factors will always bewilder the algorithm .
zenith9 wrote: I have several skews for 'weak hand' factors and investor sentiment generators. Historical price action is also considered. This scales back the exponential aspect significantly.
Maxmoe wrote: Being a bit of a math geek I question your model. The operating leverage from 50 to 60 to 70 should not be a curve with a declining slope. Ie the rate of change per $10 change in WTI should grow exponentially, not decline per your model. Free cash flow grows exponentially and the NAV of the oil in the ground grows exponentially. Without the benefit of being able to pick apart the model directly, I would revise your target at 60 to $2.50 and for wti70 to $6.00. For what it's worth, that's my 2 cents .
zenith9 wrote: According to my proprietary modelling and analysis the price should play out as follows:
WTI $50 BTE $1.06 CAD
WTI $60 BTE $1.91 CAD
WTI $70 BTE $2.75 CAD
WTI $75+ BTE $3+ CAD
So yes, we need WTI to be well over $75 to get to your break-even. Gulf countries need their soverign wealth funds to be built back up so price stimulation may come quicker than we expect. I think a reasonable time frame is 2 yrs give or take. So the answer to your question would be no.
I hope this is helpful.