The construction or provision of oil rigs, drilling equipment and other energy related service and equipment, including seismic data collection. Engaged in the exploration, production, marketing, refining i and/or transportation of oil and gas products, coal and other consumable fuels.
Telecommunicati on Services 4% Materials 3% Utilities 3% Cash 4% Dividend Receivables 0% Consumer Discretionary Consumer 9% Staples 12% Tech 22% Energy 12% Industrials 9% Health Care 12% Financials 10%
COAL AND CONSUMER FUELS OIL & GAS DRILLING OIL & GAS EQUIPMENT AND SERVICES OIL & GAS EXPLORATION AND PRODUCTION OIL & GAS INTEGRATION OIL & GAS REFINING AND MARKETING OIL & GAS STORAGE
Market Capitalizationation 3% 1% 0% 7% 6% 15% 68% Major Integrated Oil & Gas Oil & Gas Refining & Marketing Oil & Gas Drilling & Exploration Independent Oil & Gas Oil & Gas Equipment & Services Oil & Gas Pipelines Nonmetallic Mineral Mining
Industry P/E ROE % Div. Yield % Price to Book Net Profit Margin (mrq) Price To Free Cash Flow Major Integrated Oil & Gas 10.2 18.1 3.389 1.94 7.9 177.6 Oil & Gas Refining & Marketing 14.1 15.3 2.527 2.08 3 97 Oil & Gas Drilling & Exploration 13.4 11.2 2496 2.496 189 1.89 13.6-42.4 4 Independent Oil & Gas 16.8 11.4 1.89 2.28 8.2-83 Oil & Gas Equipment & Services 27.5 9.7 1.077 5.29 8.5-114 Oil & Gas Pipelines 38.4 11.3 4.876 4.02 6.1-23.4 Nonmetallic Mineral Mining 12.7 5.1 4.54 2.72 5.9-130.4
PRICE RETURNS BY SECTOR Index Name Adjusted Market Cap ($Million) Index Level 1 Day MTD QTD YTD Utilities 427,824.10 178.8 1.38% 1.15% 4.71% 12.22% Health Care 1,331,027.77 393.4 1.69% 1.30% 6.98% 7.84% Cons Staples 1,276,079.58 323.5 1.13% 1.13% 5.48% 6.57% Energy 1,447,333.01 534.9 184% 1.84% 329% 3.29% 20.80% 5.55% 55% Cons Disc 1,228,300.39 311.4 2.51% 1.07% 13% 5.36% Info Tech 2,254,426.91 423.1 2.11% 0.36% 11.87% 4.58% Telecom Svc 349,971.44 126.1 0.98% 1.58% 3.37% -2.03% Industrials 1,213,902.76 291 2.37% 1.12% 15.19% -3.36% Materials 414,133.89 220.9 2.36% 1.79% 19.71% -7.80% Financials 1,565,316.31 177.8 2.22% -2.09% 11.77% -17.23%
Barriers to Entry HIGH Buyer Power Moderate Rivalry Moderate Supplier Power Moderate Threat of Substitutes LOW
Start Up Growth Expansion Maturity Decline The Energy Sector is currently in the Mature Phase of the Business Life Cycle. Somewhat stable profits thought healthy competition is present. Currently Energy companies are searching for new opportunities to sustain cash flow.
United States t 18,690,000 000 China 8,200,000 Japan 4,363,000 India 2,980,000 Russia 2,740,000 Brazil 2,460,000 000 Germany 2,437,000 Saudi Arabia 2,430,000 Korea, South 2,185,000 Canada 2,151,000 * total oil consumed in barrels per day (bbl/day)
-Energy Consumption driven by Non-OECD Countries
-Coal Consumption driven by Non-OECD Asian Countries
-Transportation leads liquid consumption due to Globalization
Venezuela 296,500,000,000 Saudi Arabia 264,600,000,000 Canada 154,700,000,000 Iran 154,700,000,000 Iraq 115,000,000,000,, Kuwait 104,000,000,000 United Arab Emirates 97,800,000,000 000 000 Russia 74,200,000,000 Libya 47,000,000,000 Nigeria 37,500,000,000 *BBL
-Electricity Generation by Fuel Type, Doubling by 2035
Middle Expansion CAPITAL GOODS Early Expansion TRANSPORTATION ENERGY Late Expansion TECHNOLOGY CONSUMER CYCLICALS FINANCIALS CONSUMER STAPLES UTILITIES Late Contraction Early Contraction
EU DEBT CRISIS ARAB SPRING EMERGING MARKETS CHINA AND INDIA NON OECD COUNTRY GROWTH
Algeria Angola Ecuador Iran Iraq Kuwait Libya Nigeria Qatar Saudi Arabia United Arab Emirates Venezuela Global organization dedicated to stability in and shared control of the petroleum markets -Collectively hold 79% of world crude oil reserves and 44% of the world s crude oil production -Worldwide consumption will increase by 5.3 percent to 92.9 million barrels a day in the next four years -Control diminished due to discovery and development in Alaska, North Sea, Canada, Gulf of Mexico and Russia
US DEBT CEILING CRISIS GOVERNMENT REGULATIONS INVESTMENT IN SHALE PLAYS MOVEMENT TOWARDS RENEWABLE ENERGY
BAKKEN- 225k Barrels a day $25 Billion invested in 2011 Undiscoverd Vol 3.65 Billion Barrels
Energy Sector stocks have a high correlation with oil prices GDP lacks a correlation with Energy Sector Stock price movement CAPEX investments in Mining and Oil appear to precede an increase in Energy Sector stock prices.
Cash intensive industry Healthy revenue and earnings Higher than market Return on Equity
Absolute Basis High Low Median Current P/Trailing E 21.3 6.1 13.3 12.5 P/Forward E 23.9 7.8 12.5 10.7 P/B 3.8 1.4 2.5 2.0 P/S 14 1.4 05 0.5 10 1.0 10 1.0 P/CF 10.1 5.0 7.3 6.9 vs. SP500 High Low Median Current P/Trailing E 1.1 0.5 0.7 0.9 P/Forward E 1.2 0.5 0.8 0.9 P/B 1.4 0.7 1.0 1.0 P/S 1.0 0.6 0.8 0.8 P/CF 0.9 0.6 0.7 0.8
Oil&Gas Equipment/Services vs. SP500 Median Current P/Trailing E 1.5 1.5 P/Forward d E 13 1.3 11 1.1 P/B 1.5 1.3 P/S 1.6 1.9 P/CF 1.3 1.3 Oil and Gas Refining vs. SP500 Median P/Trailing E 0.7 0.8 P/Forward E 0.6 0.4 P/B 0.5 0.6 P/S 0.2 0.1 P/CF 0.6 0.6 Current Oil&Gas Integrated vs. SP500 Median P/Trailing E 1.2 1.5 P/Forward E 1.0 1.0 P/B 0.7 0.7 P/S 2.4 1.5 P/CF 1.1 0.9 Current Oil&Gas Exploration and Production vs. SP500 Median P/Trailing E 0.7 1.4 P/Forward E 0.8 1.2 P/B 0.8 0.9 P/S 2.1 2.8 P/CF 0.6 0.8 Current
Increase the weight by 50 bps. Attractive sector and currently only 14 bps overweight. Factors Recent quarters performance Oil prices continue to rise ROE has always been above the S&P 500 Future demand for crude will increase greater than supply