AJM Petroleum Consultants

AJM Petroleum Consultants

April 07, 2009 15:19 ET

AJM Petroleum Consultants: Commodity Price Recovery Anticipated Into 2010

Decreasing Capital Expenditures Has Silver Lining

CALGARY, ALBERTA--(Marketwire - April 7, 2009) - Recent declines in the capital expenditures required to develop oil and natural gas will help drive commodity market prices up predicts AJM Petroleum Consultants in their current oil and gas price forecast, established effective March 31, 2009.

"Some analysts believe world oil production peaked in 2008, but regardless of whether or not you agree, it is generally accepted that the world's supply of hydrocarbons is declining," said Ralph Glass, economist and Vice President of Operations at AJM Petroleum Consultants. "The current decrease in investment for oilsands projects and natural gas drilling projects will have the inevitable impact of less production coming on-stream. Less production will lower gas supply levels, and the resulting difference between supply and demand will force prices up."

Reduced drilling over the past two years in Canada's natural gas sector has caused approximately 1 Bcf/d of production to fall off the market and, with the first quarter of 2009 seeing an even higher drop in rig counts, Mr. Glass anticipates even sharper declines in drilling. While the United States saw a dramatic increase in gas supply levels in the latter part of 2008 due to high levels of drilling in shale gas plays, declines in drilling activity in 2009 will lead to just as dramatic production declines. This drop in supply will ultimately force natural gas prices to rise.

AJM's current price forecast shows crude oil prices in constant dollars based on a WTI forecast of US$55.00/bbl for 2009, rising to US$70.00/bbl in 2010, then reaching US$100.00/bbl by 2016 and holding at this level for the balance of the forecast. The AECO US NYMEX natural gas price in constant dollars is expected to average US$4.50/Mcf in 2009, rising with oil to a long-term price in 2016 of US$9.00/Mcf. The Canadian priced AECO forecast is expected to average Cdn$4.50/Mcf in 2009 rising to Cdn$8.50/Mcf in 2016, corresponding with the expected recovery of the Canadian dollar over the same period. When compared with the forecast prepared by AJM at December 31, 2008, this current forecast features natural gas price predictions that reflect a drop of $1 - $2/Mcf until 2016. Complete forecast tables, commentary and documentation for AJM's March 31 Price Forecast are available for download on the AJM Petroleum Consultants website at www.ajmpetroleumconsultants.com.

AJM Petroleum Consultants, a privately owned Calgary-based company, has extensive experience in exploration prospect reviews, basin evaluation studies, and reserve evaluations including evaluations of the unconventional reserves and resources of tight gas, shale gas, coalbed methane, bitumen and heavy oil. With a staff of more than 60 engineers, geologists and technicians, AJM consults for clients including active oil and gas exploration and production companies, natural gas transmission companies, regulatory bodies, financial houses, banks and investment analysts in Western Canada, North America and around the world.

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