High level thesis, - 24 month production increasing - 12 - 24...

High level thesis,

- 24 month production increasing
- 12 - 24 month oil price of (85 - 115)
- Takeover by a large cap O&G producer

There is little risk of oil going below $85 over the short term 12-16 months many analysts have argued a $110 - $130 range by the end of the year driven by the following catalysts,
- China reopening
- Global tourism reopening
- Short term shift from natural gas to oil due to deficits
- Supply deficits
- High demand for oil

Financial markets are forward looking and are concerned about the demand destruction that will occur from a pending global recession. This logic is at odds with the physical market which shows significant supply deficits. This is only made worse from a 5 year period of low production capex across the industry. Total supply is only going to get worse over the short term. The only way for price to come down in a meaningful way over the next 6-12 months is from demand destruction. My view is the estimated demand destruction assuming a relatively shallow recession isn't sufficient enough to fill the supply gap. Therefor price remains high.

Moreover the global economy is exhibiting stagflation characteristics. The fed will get things wrong and will start cutting the cash rate mid way through 2023 to re-stimulate the economy after a period of monetary tightening. This will be inflationary and support a higher oil & coal price for an extended period of time.

Downside is,
- Taiwan China war
- Deep global recession
- KAR failing to increase production

Expect a significant amount of volatility over the coming 12 months

12 month price target is $2.70