Sep 29, 2016
Oil 'CEOs are lying to us' on being able to withstand low prices: Money manager
A leading Canadian money manager took aim on Friday at overly optimistic oil and gas industry executives.
“It’s a complete joke,” said Eric Nuttall, a portfolio manager at Sprott Asset Management, in an interview with BNN. “CEOs are lying to us when they tell us that [with oil] at US$40 to US$45 per barrel, everything is wonderful.”
Nuttall, whose Sprott Energy Fund has risen roughly 44 per cent year to date, was referring to any company that claims their business has made improvements to withstand a world where crude prices remain well below US$50 a barrel.
“At the current oil price, the U.S. industry is still bankrupt,” according to Nuttall. “You cannot extrapolate today’s oil and service price into next year and talk about what a wonderful business it is.”
Nuttall has been a busy buyer of energy stocks this week, as OPEC signaled its first major move toward a production cut in eight years. Prior to the news, his fund had 35 per cent of its assets in cash; now, it’s just under 20 per cent. The buying spree is based on his view that OPEC’s action could boost oil prices anywhere from US$7 to US$13 per barrel.
