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Oil & Gas Atlas
Markets volatile in wake of Japanese
catastrophe
Energy Market Indices WoW Changes
⇒ S&P/TSX Energy Index: +2.3%
⇒ S&P 500 E&P Index: +2.7%
⇒ Oil Service Sector Index: 0.0%
⇒ UK FTSE Oil & Gas Producers Index: +0.5%
⇒ Asia Pacific Oil & Gas Producers Index: -0.8%
Weekly Market Recap
WTI crude oil futures experienced another volatile week, closing on Friday at
US$101.22/bbl, essentially flat WoW. On Monday, oil prices dropped below
US$100/bbl over concerns demand from Japan would decline in the wake of the
earthquake. Geopolitical tensions in the Middle East pushed oil back above
US$104/bbl later in the week before Libya declared a cease fire on Friday. Henry
Hub gas futures rose more than 7% over the previous week after government
storage data showed a larger-than-expected weekly draw of 56bcf versus consensus
of 49bcf from winter inventories. Analysts also expected continued support from
stronger crude futures and increased imports of liquefied natural gas by Japan.
Last week we published a revised oil price forecast. We believe recent political unrest
in Egypt, Libya and other (MENA) countries has increased the supply risk for global
crude production. Forecasted Brent prices were increased to US$117/bbl for 2011
(from $97) and US$120/bbl in 2012 (from $116) and lowered to US$119.00/bbl for
2013 (from $120). The revision did not translate directly for WTI, reflecting high crude
inventories at Cushing, which has seen WTI at a deep discount to Brent. Our 2011
WTI price revised to US$110/bbl (from $95), though 2012 was largely unchanged at
US$115/bbl (from $114) and 2013 dropped marginally to US$117/bbl (from $119).
In our European space, we published two reports on the back of our price deck
update, identifying Marathon, Repsol, Royal Dutch Shell and Statoil as the biggest
winners in 2011 EPS estimates, while in our European E&P universe we moved
Valiant Petroleum and Faroe Petroleum to Outperform (from Neutral), maintaining all
other ratings unchanged. In the midst of the unfortunate Japanese disaster, we
identified Royal Dutch Shell, along with BG Group and ExxonMobil to benefit the
most from a tightening LNG market (Statoil from an overall world gas market
tightening). Following Chevron’s Analyst Day, we retain our Outperform rating,
acknowledging limited near-term catalysts. In the middle of the week, ENI called on
Europe to abandon sanction’s against the Gaddafi regime in Libya.
We initiated coverage on two companies last week, PetroFrontier (PFC CN) and Strad
Energy Services (SDY CN). PetroFrontier is an exploration-stage oil and gas company
with a core operational focus in Australia’s onshore Georgina Basin, where it
controls an average 64% working interest in 13.6m contiguous acres of oil and gas
exploration permits. We rate the stock as Outperform with a C$10.00 target price
marked at 0.5x our RENAV of $20.00/sh; the stock closed on Friday at $3.56/sh.
Strad Energy Services is a North American oilfield services company that generates
most of its revenue through rentals. We initiated with an Outperform rating and a
C$7.50 price target, which is based on 4.7X 2012 EV/EBITDA.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Oil & Gas Atlas
Markets volatile in wake of Japanese
catastrophe
Energy Market Indices WoW Changes
⇒ S&P/TSX Energy Index: +2.3%
⇒ S&P 500 E&P Index: +2.7%
⇒ Oil Service Sector Index: 0.0%
⇒ UK FTSE Oil & Gas Producers Index: +0.5%
⇒ Asia Pacific Oil & Gas Producers Index: -0.8%
Weekly Market Recap
WTI crude oil futures experienced another volatile week, closing on Friday at
US$101.22/bbl, essentially flat WoW. On Monday, oil prices dropped below
US$100/bbl over concerns demand from Japan would decline in the wake of the
earthquake. Geopolitical tensions in the Middle East pushed oil back above
US$104/bbl later in the week before Libya declared a cease fire on Friday. Henry
Hub gas futures rose more than 7% over the previous week after government
storage data showed a larger-than-expected weekly draw of 56bcf versus consensus
of 49bcf from winter inventories. Analysts also expected continued support from
stronger crude futures and increased imports of liquefied natural gas by Japan.
Last week we published a revised oil price forecast. We believe recent political unrest
in Egypt, Libya and other (MENA) countries has increased the supply risk for global
crude production. Forecasted Brent prices were increased to US$117/bbl for 2011
(from $97) and US$120/bbl in 2012 (from $116) and lowered to US$119.00/bbl for
2013 (from $120). The revision did not translate directly for WTI, reflecting high crude
inventories at Cushing, which has seen WTI at a deep discount to Brent. Our 2011
WTI price revised to US$110/bbl (from $95), though 2012 was largely unchanged at
US$115/bbl (from $114) and 2013 dropped marginally to US$117/bbl (from $119).
In our European space, we published two reports on the back of our price deck
update, identifying Marathon, Repsol, Royal Dutch Shell and Statoil as the biggest
winners in 2011 EPS estimates, while in our European E&P universe we moved
Valiant Petroleum and Faroe Petroleum to Outperform (from Neutral), maintaining all
other ratings unchanged. In the midst of the unfortunate Japanese disaster, we
identified Royal Dutch Shell, along with BG Group and ExxonMobil to benefit the
most from a tightening LNG market (Statoil from an overall world gas market
tightening). Following Chevron’s Analyst Day, we retain our Outperform rating,
acknowledging limited near-term catalysts. In the middle of the week, ENI called on
Europe to abandon sanction’s against the Gaddafi regime in Libya.
We initiated coverage on two companies last week, PetroFrontier (PFC CN) and Strad
Energy Services (SDY CN). PetroFrontier is an exploration-stage oil and gas company
with a core operational focus in Australia’s onshore Georgina Basin, where it
controls an average 64% working interest in 13.6m contiguous acres of oil and gas
exploration permits. We rate the stock as Outperform with a C$10.00 target price
marked at 0.5x our RENAV of $20.00/sh; the stock closed on Friday at $3.56/sh.
Strad Energy Services is a North American oilfield services company that generates
most of its revenue through rentals. We initiated with an Outperform rating and a
C$7.50 price target, which is based on 4.7X 2012 EV/EBITDA.
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