I don't think the industry has the capacity to expand much beyond the rate at which it's expanding now. When you match a relatively constrained capacity to expand against the increasing growth rate of demand for crude oil, it sets the potential course for oil to ultimately go beyond $50 a barrel. |
The more that oil trades over $50, the group will be attractive to investors because of solid earnings and cash flow. |
This deal is going to prompt further consolidation. The continuing volatility in petroleum prices makes it imperative for these companies to find ways to reduce costs. |