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Oil & Gas Atlas
Energy equities up WoW
Energy Market Indices WoW Changes
⇒ S&P/TSX Energy Index: +0.2%
⇒ S&P 500 E&P Index: -1.2%
⇒ Oil Service Sector Index: -0.3%
⇒ UK FTSE Oil & Gas Producers Index: +3.4%
⇒ Asia Pacific Oil & Gas Producers Index: +1.2%
Weekly Equities Recap
WTI crude oil traded above US$90/bbl to two-year highs last week. The IEA noted in
its December OMR that OECD consumption was stronger than expected, especially
gasoline demand in the US. Its revised global demand forecast is 87.4mmbbl/d (up
by 130mbbl/d) in 2010 and 88.8mmbbl/d (up by 260mbbl/d) in 2011. NYMEX gas
gained 2% WoW on cold weather and storage draw of -89bcf vs -85bcf consensus.
In the Canadian E&P space, Corridor Resources (CDH CN) closed down 33% last
Monday on news that its first two Frederick Brook horizontal pilot wells, which were
drilled by its partner Apache Canada, flowed back negligible amounts of gas upon
completion. We lowered our target price (TP) to C$6.00 (from C$6.75) as we view
the stock is fairly valued on a risked basis, and downgraded it to Neutral (from OP).
US independent refiners continued their ascent, gaining another +3.1% for the week.
QTD, refiners are +33.3%. Gasoline crack spreads were -2.8% last week to
US$8.81/bbl while distillate cracks were -0.6% to US$12.82/bbl.
BG Group’s update on Tupi & Guara fields last Thursday brought material
development costs estimates to these pre-salt projects. We raised BG to a 1640p TP
(from 1475p) reflecting the value of capital efficiency increases. These effects will be
felt by its partner Galp Energia, and we raised its TP to €17.40 (from €15.80).
Elsewhere in the Euro E&P space, the week started with drilling disappointments for
Desire Petroleum (DES LN)/Rockhopper Exploration (RKH LN) with the Falklands
Rachel North well fluid samples proving the target wet and sending DES down 51%
WoW. Also last Monday, Valiant Petroleum’s (VPP LN) appraisal of the UK North
Sea, Don SW came in dry. We moved VPP’s rating to UP, 500p TP, following this
result seeing reserves replacement as a key issue if further panels disappoint.
Another point of interest last Monday, the North Sea welcomed back former Oilexco
CEO Art Millholland as his new venture, Canadian Overseas Petroleum, farmed into
50% of Faroe Petroleum’s Fulla exploration licence P1161 West of Shetlands.
Poland has been in focus for balance sheet building as San Leon Energy (SLE LN)
raised £59.6m (at 18p/sh) on Tuesday, and on Thursday, we lifted Aurelian Oil &
Gas’ (AUL LN) TP to 95p (from 75p) following recent its €100m raise (at 57.5p). Last
Friday, ENI announced its entry into the Poland Baltic Basin Shale gas play by
buying Minsk Energy, who holds three licences in the ar
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