Energy Sector Set to Outperform – A Small Oil E&P Company That Could Soar In A Rising Oil Price Environment

posted in: crude oil, Jericho Oil | 0

Bank of America/Merrill Lynch (BAML) is out with a powerfully convincing bullish call on the energy sector encompassing more than 20 charts. Here are some of the key highlights:


  • BAML calls for oil prices (WTI) to rally to $54/barrel by the end of the year and $69/barrel by next June:


  • BAML sees oil production continuing to fall and the global oil supply/demand dynamic move into a deficit that will last at least through the end of 2017:



  • Meanwhile, the energy sector’s weighting in the S&P 500 is near a decade low at roughly 7%; there has never been a time when the Energy sector’s weight dropped below 7% and the sector did not outperform the market over the subsequent three years:


BAML goes as far as to forecast that the oil market will remain in deficit through 2020 unless oil prices move back above $80/barrel. $80 seems like a tall order considering we are sitting at $46/barrel today, however, several years of the market being in deficit could create a sizable move higher in prices.

In summary, the Energy sector’s price/book value remains near a 30-year low despite the improvement in the oil price and the oil price outlook. Moreover, if oil prices continue to trend higher we should see a substantial improvement in earnings and fewer asset impairments than the market has factored in. BAML’s Energy sector overweight call is compelling, especially for smaller oil companies that have little or no debt to weigh them down.

Energy & Gold sponsor, Jericho Oil (JCO.V), is a small cap mid-continent oil E&P story that would benefit tremendously in the event that BAML’s Energy sector thesis plays out over the next couple of years. Jericho is uniquely positioned with ample cash flow and liquidity to take advantage of this market. With a growing portfolio of low cost oil production, JCO is set to reward shareholders in a $50+ oil price environment. JCO Director of Corporate Development Ryan Breen recently had the following to say about the company’s strategy and execution:

“We continue to take advantage of the current depressed marketplace in order to set up Jericho Oil’s platform to be ‘the’ rate of change story as oil prices recover over the next 12-24 months. Current A&D market valuations for assets in out-of-favor basins are largely underpinned by current low-oil price driven cash flows allowing the Company to acquire free development upside optionality which, over time, should drive a step change in cash flow growth”

We look forward to presenting an interview with Jericho’s Ryan Breen in the next couple of weeks in order to update investors on the company’s latest activities and strategy.




The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Jericho Oil Corp. is a high-risk venture stock and not suitable for most investors.. Consult Jericho Oil Corp’s SEDAR profile for important risk disclosures.

EnergyandGold has been paid C$18,000 to cover Jericho Oil Corp. and so some information may be biased., EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.

This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGoldwebsite do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles for important risk disclosures. It’s your money and your responsibility.