Deloitte’s oil and gas price forecast
September 30, 2019
Deloitte's oil and gas price forecast takes into account many factors, including futures market trading and historical data. Consideration is also given to global supply and demand as well as the economic outlook of world markets. This information is collected from several sources, including industry publications, exchange markets, and government agencies.
The US-to-Canadian currency exchange rate is based on a review of various financial institutions’ forecasts as well as foreign exchange futures from the Chicago Mercantile Exchange (CME).
After the current effective year, the inflation rate of forecasted prices is set at two percent, based on historical Consumer Price Index data from the Bank of Canada.
Canadian domestic prices are forecast in Canadian dollars, while international prices are forecast in US dollars.
West Texas Intermediate (WTI) crude oil prices are forecast using futures data from the New York Mercantile Exchange (NYMEX), extending eight years into the future. Other US crude prices, such as Gulf Coast ASCI, Louisiana Light, and Alaskan North Slope are based on historical differentials to WTI.
Light oil prices at Edmonton are forecast using the most recent pipeline tariffs and exchange rates. Consideration is also given to the current differential futures, as traded on the Chicago Mercantile Exchange (CME). This price is used as the basis to arrive at the remaining domestic crude reference points, using price offsets based on long-term historical data.
Brent crude oil prices are forecast using futures data from the International Commodities Exchange (ICE), which extends seven years into the future. Other International crude oil prices—such as the OPEC Basket, Venezuelan, Nigerian, Mexican, Russian, and Indonesian crudes—are based on historical differentials to Brent crude oil.
Henry Hub natural gas prices are forecast using futures data from the New York Mercantile Exchange (NYMEX), extending twelve years into the future. Other US natural gas prices, such as Permian Waha and Louisiana East Texas, are based on historical differentials to Henry Hub.
The Canadian AECO-C price is forecast using the historical differential to Henry Hub. Consideration is also given to AECO-C futures as traded on the Natural Gas Exchange (NGX).
UK National Balancing Point (NBP) natural gas pricing has been forecast separately from Henry Hub based on futures data from ICE.
Natural gas liquids (NGLs)
Canadian NGL prices are based on delivery to Edmonton. Adjustments for transportation back to specific plant sales points are required to arrive at the property product price.
Condensate, propane, and butane are tied directly to light oil prices at Edmonton and are forecast based on historical trends. Similarly, ethane is tied to AECO-C gas prices.
North American sulphur prices are obtained from select sulphur producers that submit statements to the Alberta Energy Regulator (AER). Given the volatility of the sulphur market, prices are based on recent historical data and are forecast as a constant price in real dollars.
The referenced price deck was created for information purposes only as a possible forward view of future oil and gas prices. It is not for dissemination in the United States or for distribution to United States' wire services. The price deck is based in part on estimates of market prices, currency exchange rates, inflation, market supply and demand, and government policy as at the price deck’s effective date. Oil and gas prices have historically been subject to significant commodity price volatility. As such, there can be no certainty that any price forecasts will actually materialize.
This price deck was developed independently of any Deloitte client relationship and does not represent the firm’s view as a financial statement auditor to any legal business entity and should not be used for that purpose. The price deck is not an examination or compilation of, or the performance of agreed-upon procedures with respect to, prospective financial information in accordance with standards or rules established by any professional accounting body. There will usually be differences between forward-looking information and actual results because events and circumstances frequently do not occur as expected, and those differences may be material.
Any user of this forecast for any purpose accepts full responsibility for the reasonableness of the prices being forecast as required by NI 51-101 and Canadian Oil and Gas Evaluation Handbook (COGEH). The Society of Petroleum Evaluation Engineers (Calgary Chapter) and Canadian Institute of Mining, Metallurgy and Petroleum (Petroleum Society) recommend in the COGEH that price forecasts used at a particular point in time represent a consensus of buyers and sellers who, through their purchase and sale transactions, are establishing value in the marketplace. Please consult with an Independent Qualified Reserves Evaluator or Auditor to learn more about oil and gas evaluation practices and procedures.
While every effort has been made to ensure the quality of the information provided, no representation or warranty of any kind (whether expressed or implied) is given by Deloitte LLP as to the accuracy, completeness, currency, or fitness for any purpose of this document. As such, this document does not constitute the giving of investment advice, nor a part of any advice on investment decisions. Accordingly, regardless of the form of action, whether in contract, tort, or otherwise, and to the extent permitted by applicable law, Deloitte LLP accepts no liability of any kind and disclaims all responsibility for the consequences of any person acting or refraining from acting in reliance on this price forecast in whole or in part.