Overview. Largest Firms Size of Sector Industries Performance

Transcription

1 ENERGY SECTOR

2 Overview Largest Firms Size of Sector Industries Performance

3 Worldwide Largest Firms Depends on Market Capital

4 Sector Weightings Third Largest Sector by weighting

5 Sector Makeup Main Industries Oil & Gas Integrated (Largest ) Oil & Gas Drilling Oil & Gas Exploration and Production Oil & Gas Services & Equipment Oil & Gas Storage Oil & Gas Refining and Marketing Coal & Consumed Fuels

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7 /30/ /31/ /01/ /02/ /03/ /04/ /05/ /06/ /07/ /08/ /09/ /10/ /11/ /12/ /13/ /14/ /15/ /16/ /17/ /18/ /19/ /20/ /21/ /22/ /23/ /24/ /25/ /26/ /27/ /28/ /29/ /30/ /31/ /01/ /02/ /03/ /04/ /05/ /06/ /07/2012 Energy Performance

8 Business Analysis Life Cycle Business Cycle Macro-Economy Influences Demand & Supply Porter s Five Forces

9 Life Cycle Currently Energy sector is in this stage of its Life Cycle Introduction Growth Maturity Saturation

10 Business Cycle Growth Currently, the Energy Sector is recovering from the decline brought by Financial Crisis in Recovery Peak Through Recession

11 Energy Economic Indicators High Correlation between Rig Count and Sector Performance 700 Bakers Rig count and Energy r= Energy Sector Baker Hughs Rig Count 0 0

12 8/1/01 2/1/02 8/1/02 2/1/03 8/1/03 2/1/04 8/1/04 2/1/05 8/1/05 2/1/06 8/1/06 2/1/07 8/1/07 2/1/08 8/1/08 2/1/09 8/1/09 2/1/10 8/1/10 2/1/11 8/1/11 Economic Indicators 700 Energy vs Crude Inventory r= Energy U.S. Crude Oil Inventory

13 8/1/01 2/1/02 8/1/02 2/1/03 8/1/03 2/1/04 8/1/04 2/1/05 8/1/05 2/1/06 8/1/06 2/1/07 8/1/07 2/1/08 8/1/08 2/1/09 8/1/09 2/1/10 8/1/10 2/1/11 8/1/11 Economic Indicators Negative Correlation WTI Price vs. Inventory r= Crude Oil Price: WTI U.S. Crude Oil Inventory

14 Macro-Economy US GDP US GDP is anticipated to grow at 1.9% From historical perspective, US GDP has not been a strong indicator of Energy sector s performance. Correlation is only -0.34

15 Real US GDP vs. Energy Sector

16 Macro-Economy Relative to SPX Historically, in last 20 years, the correlation was 0.72 In past two years, after the crisis, the correlation was 0.96

17 S&P 500 vs. Energy Sector 700 Energy vs S&P 500 r=0.72 1, ,600 1,400 1, , SPENS S&P500 Price Index

18 Macro-Economy Foreign Influences Emerging markets BRIC (Brazil, Russia, India, and China) OECD (Organization for Economic Cooperation and Development)

19 BRICs

20 Energy Crude Oil Price Performance dependent upon Crude Oil Prices 700 WTI Crude vs Energy r = Energy Crude Oil Price: WTI

21 Other Factors Situation in Middle-East New Energy substitutes Renewables

22 Demand & Supply Generally, No apparent surpluses or shortages.

23 Porter s Five Forces Low, Nearly Impossible Large Low High, Oligopoly Low

24 Financial Analysis Earnings Growth Profit Margin ROE Cash Flow EBITDA

25 Earnings Growth

26 Profit Margin Absolute Vs. SP 500

27 Return on Equity Absolute Vs. SP 500

28 Cash Flow Per Share

29 EBITDA Absolute Vs. SP 500

30 Valuation Analysis Energy Oil Integrated Oil & Gas Exploration/Production Oil & Gas Drilling Oil & Gas Refining/Marketing Oil & Gas Equip/ Service Coal & Consumer Fuels Oil & Gas Storage

31 P/E Ptice/Book Valuation Ratios Yr P/E 4.00 Price to Book/Sales Forward P/E Trailing P/E Price/Book Price/Sales Trading near the low end of the range for all ratios

32 Ratio Oil Integrated Trading near Median Cheap Relative to S&P Relative to SP500 High Low Median Current S&P Oil Integrated P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P Low

33 Oil & Gas Exploration/Production Trading near S&P levels 2.50 Oil & Gas Exploration/Production Relative to SP500 High Low Median Current S&P 2.00 P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P Low -

34 Oil & Gas Drilling Fairly valued relative to S&P 2.50 Oil & Gas Drilling Relative to SP500 High Low Median Current S&P 2.00 P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P -

35 Oil & Gas Equipment/Service High Crude Prices supporting investment in equipment and service companies Oil & Gas Equipment/Service Relative to SP500 High Low Median Current S&P P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P -

36 Oil & Gas Refining/Marketing Consistently discounted vs S&P 500 Relative to SP500 High Low Median Current S&P Oil & Gas - Refining/Marketing P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P

37 Coal & Consumer Fuels Speculation of decreased Coal Demand in China causing investor fears Coal & Consumer fuels Relative to SP500 High Low Median Current S&P P/Trailing E P/Forward E P/B P/S P/CF Median Current S&P -

38 Oil & Gas - Storage Trading near Highs Oil & Gas - Storage 2.50 Relative to SP500 High Low Median Current S&P 2.00 P/Trailing E P/Forward E P/B P/S P/CF High Median Current S&P -

39 Recommendation Buy Sell Hold