Sky-high oil prices means a brisk business in the selling of oil and gas properties. Last year $43.2 billion worth of assets changed hands, up from $34.1 billion in 2006, according to Merrill Lynch Petrie Divestiture Advisors and JS Herold. This year has seen deals worth $3.6 billion -- the same figure for all of 2001. Will 2008 be as busy? That was the big question at a Merrill Lynch Petrie breakfast marking the start of the NAPE Expo in Houston, which attracts tens of thousands of buyers and sellers of oil and gas properties from all over the country. Merrill Lynch Petrie, which makes a business out of it, obviously thinks it will continue -- as will high oil prices.
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Tom Petrie, the oft-quoted energy analyst who sold his eponymous energy firm Petrie Parkman to Merrill Lynch i& Co. in 2006, said while the industry faces a challenging period given the country's "economic funk," he doesn't think oil will slip much lower than $70 to $80 per barrel, versus some doomsayers' prediction of $50 to $60. He just got back from the Middle East and said while the ability of OPEC to set oil prices is limited, Saudi Arabia wants the floor to be no lower than $60.
Petrie also lends credence to the notion that world oil production has peaked, which would keep oil prices aloft. One proof: Even Middle Eastern countries are talking about investing in renewable energy, including biofuels, solar and wind.
But that won't be enough to quench the world's insatiable thirst for energy, and he urged his fellow oilmen to keep exploring. "Practical peak oil is becoming more broadly recognized as a real issue," he said. "Politicians talk about the panacea being sustainable energy, but it won't make a hill of beans." - Claire Poole
