Oil and Gas 2015 Outlook: Can Asia Oils Drill Through An Oil Price Plunge

Transcription

1 Oil and Gas 2015 Outlook: Can Asia Oils Drill Through An Oil Price Plunge 15 Jan 2015 Grace Lee Asia Oil and Gas Analyst (BI EXPRA) Bloomberg Intelligence

2 Agenda A Recap of 2014 Oil 2015: Will Prices Fall Further? China: Performance and Valuations India Outlook: Performance and Valuations

3 Agenda A Recap of 2014 Oil 2015: Will Prices Fall Further? China: Performance and Valuations India Outlook: Performance and Valuations

4 Recap 2014 Stock Performance Correlations R = 0.62, Rsq = MSCI Asia Pacific Index BI Asia Pacific Oil and Gas Index Brent 1 st Month Price Note: Prices are normalized

5 Recap 2014 A 2008 Style Collapse? Brent 1 st Month Price $ per BBL 46 Source: Bloomberg Intelligence

6 Recap 2014 Demand, OPEC drove oil prices U.S shale story no longer new Political uncertainty affecting output abates Growing demand offsets supply Money managers cut long positions OPEC leaves output target unchanged, Saudi lowers OSP Brent 1 st Month Price $ per BBL Growing OPEC output Demand cut on Japan Eurozone growth IEA cut 2014 demand Saudi lowers OSP Strengthening USD Source: Bloomberg Intelligence

7 Agenda A Recap of 2014 Oil 2015: Finding the Floor? China: Performance and Valuations India Outlook: Performance and Valuations

8 Oil 2015: Will Prices Fall Further? Short-Term Signals

9 Oil 2015: Will Prices Fall Further? China s Underlying Oil Demand Slowing 30,000 25,000 LPG Demand Growth (k tons) Fuel Oil Demand Growth (k tons) Diesel Demand Growth (ktons) Naphtha Demand Growth (k tons) Kerosene Demand Growth (k tons) Gasoline Demand Growth (k tons) 20,000 15,000 10,000 5,000 - (5,000) (Oct YTD) (Oct YTD) (Oct YTD) (Oct YTD) (Oct YTD)

10 Oil 2015: Will Prices Fall Further? China s Underlying Oil Demand Slowing

11 Green River oil Vt Briscoe Rance vol oil (Eagle Ford) San Juan oil (Mancos Shale) Wattenberg Hz oil Uteland Butte Uintah Wasatch Hz Briscoe Ranch condy (Eagle Ford) Permian Wolfcamp Hz Permian Yeso Vt Bakken Pembina oily Bakken Antelope Red Wash + Green River stacked Vt Eagleville vol oil (Eagle Ford) PRB Sussex/Shannon Hz Permian Del Basin Vt (Wolfbone) Permian Central Basin Platform Vt Kaybob Duvernay oily Permian Del Basin Hz (Bone Spring) Permian Central Basin Platform Hz Brown Dense Permian Yeso Hz Permian Cline Shale Hz Miss Lime Core SCOOP Core Oil Tuscaloosa Marine Shale Eagleville condy (Eagle Ford) Wattenberg Hz Tier 2 Eaglebine Permian Del Basin Hz (Avalon) Marmaton (Shelf) Permian Spraberry Vt Permian Midland stacked Vt Tonkawa STACK Pembina gassy Cana Core Oil Miss Lime Tier 2 SCOOP Non-Core Oil Oil 2015: Will Prices Fall Further? OPEC Inaction, U.S. sets the price floor (15) US Shale Play Breakevens (US$ per Barrel) US Shale Play Break-evens (US$ Per Barrel) Source: BNEF

12 Oil 2015: Will Prices Fall Further? All About Economic Growth Global growth may accelerate in 2015, unlike the recession which accompanied falling oil prices in 2008.

13 Agenda A Recap of 2014 Oil 2015: Will Prices Fall Further? China: Performance and Valuations India Outlook: Performance and Valuations

14 Oil: Will Prices Fall Further? Success factors in the last oil drop Strong production growth Crude Importers / Processors Government Reforms No production growth

15 Agenda A Recap of 2014 Oil 2015: Will Prices Fall Further? China: Performance and Valuations India Outlook: Performance and Valuations

16 China 2015 Outlook Reforms and Moderating Capex

17 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 China 2015 Outlook Growing Upstream Focus 100% 90% 80% 70% 60% 50% 40% 30% 20% Note: PetroChina and Sinopec Capex % Upstream Capex % Downstream Capex

18 China 2015 Outlook Cleaner Fuel, Lower Oil Aids Refiners

19 China 2015 Outlook P/E Valuations more resilient today

20 Agenda A Recap of 2014 Oil 2015: Will Prices Fall Further? China: Performance and Valuations India Outlook: Performance and Valuations

21 India 2015 Outlook Reform Optimism

22 India 2015 Outlook India: More Deregulation?

23 India 2015 Outlook India: More Deregulation?

24 India 2015 Outlook India: More Deregulation? Note: 2013 refer to FY14 fiscal year and so forth

25 Price to Book (x) India 2015 Outlook Forward P/B valuations Santos Inpex Beach Energy Japex Senex Oil Search Woodside PTTEP CNOOC Drillsearch Cairn India ONGC Oil India 0.2 y = x R² = Return On Equity (%)itle

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