Stagflation Appears to be Here and Now Says Energy Expert
(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)
In this week’s prognosticator article, one of Rigzone’s regular market watchers looks at the issue of stagflation, oil and gas prices, first quarter results and more. Read on for more detail.
Rigzone: What were some market expectations that actually occurred during the past week – and which expectations did not?
Michael Osina, Grant Thornton National Partner in Charge of Energy – Tax: Stagflation appears to be here and now. Inflation is running rampant. Interest rates are going up. The market is down. While oil and gas prices have dipped slightly, prices at the pump remain high. It appears that supply has been stymied a bit even though capital expenditures by oil and gas companies are increasing. Some of this is likely caused by delays in infrastructure as well as the war for talent and finding an adequate workforce to ramp up operations.
Rigzone: What were some market surprises?
Osina: Don’t be surprised if the Q1 results aren’t as strong as some may expect. Many companies were hedged at prices below where the market went and are thus carrying unrealized hedging losses. Expect that to turn around before yearend with strong earnings forecasts and increased capital expenditures.
Rigzone: What developments/trends will you be on the lookout for this week?
Osina: I would expect companies releasing earnings to paint a much rosier picture for the industry with increased capital expenditures and likely more transactions to increase their footprints. As cash on hand continues to increase, some companies are reinstating dividends or implementing dividends for the first time in their history.
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