This clip aired on aired December 15, 2014 on Bloomberg.
Rocky Mountain Resources CEO Chad Brownstein discusses investing in oil and global prices. He speaks on “Market Makers.”
I think we’ve had an overreaction that’s a function of a global margin call.
When we gapped down from $100 to $75, it really was a supply and demand issue related to the OPEC strategy of not further reducing cuts.
The latest gap down is a function of the financial markets coming to grips with eighteen times leverage for every barrel of oil produced. And to give you a perspective on that, in 2008 it was
thirteen times, in 1997 it was three times.
So we’re basically unwinding the $500 billion dollars raised right now. Investors can’t understand and can’t price risk on either side of the balance sheet so I think we’re going to settle in the mid 70s over time.
I do believe we could gap down further than where we’re at today but all of my underwriting is being done on the concept that oil is going to be somewhere in the mid 60s to mid 70s over the next 36 months.