WestStar Exploration Company



On a macroeconomic level, we expect several trends will have significant impact on the upstream oil and gas industry in the intermediate and longer term:
  • Global demand for oil will continue to grow, even in times of economic weakness, because large populations of people in developing countries are seeking to improve their living standards.  In Asia in particular, the growth of urban areas due to new construction of office buildings, factories and residential housing continues at high growth rates.

  • Concern about the environment and climate change will result in policy changes that will affect the way energy is used and the way we operate.
  • In North America, the natural gas market has been transformed by recent improvements in horizontal drilling and completion technology that have opened up production from low quality shale reservoirs.  This resource base has the potential to improve U.S. energy security, create jobs and help achieve environmental and climate-change goals.

WestStar Exploration Company
expects North American natural gas prices to be fairly static in the near and intermediate term.  As a result of the industry's success in natrual gas shale plays, our longer term view is that North American natural gas price growth will be less robust than that of crude oil.

In contrast, crude oil prices have been surprisingly strong during the second half of 2010 and the first half of 2011.  We anticipate that oil prices will remain robust during the remainder of 2011 and likely increase further over the next 10 years and beyond.  Global demographic trends suggest that total worldwide demand for crude oil is expected to significantly increase over the next 20 years as population growth and per capita utilization increase in the developing world.

That said, oil and gas price volatility is subject to vagaries such as weather, the impact from liquefied natural gas and Canadian imports, political conditions in major oil exporting countries and overall North American and global economic growth.  Factors such as these have historically caused extreme volatility in natural gas and oil prices.

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