Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
OIL & GAS
Key highlights
The performance of oil and gas companies in Q3FY12 is expected to be
mixed.
Upstream companies are expected to benefit from higher crude oil prices
and weaker rupee. The upstream oil majors will see higher realizations as
the average rupee-dollar rate was 50.88 for the Dec'11 quarter, down 13.5%
compared with the year-ago period. Cairn India remains our top pick.
However, we can see some more one-time impact on its profitability in
Q3FY12.
In Q3FY12, Brent crude oil touched a high of USD$116/bbls but later settled
to USD$ 108.68/bbls (30th Dec '11), which is 2.23% higher from the end of
Q2FY12. However, due to various geo-political issues the crude oil again
surged and is currently trading ~USD$113/bbls (spot). Brent crude
throughout the quarter was trading above USD$103/bbls and averaged to
$110/bbls in Q3FY12 which is positive for private oil exploration companies
like Cairn India, etc. Further, if Iran closes the Strait of Hormuz partly or
fully it will lead to a major spike in crude oil prices.
On the other hand, downstream companies i.e. refining and petrochemicals
are expected to witness margin pressure due to lower global demand and
higher raw material prices. Further, OMCs fate depends on how much the
government compensates for the under-recoveries. OMCs are currently
(effective 1st January, 2012) incurring daily under-recovery of about Rs. 3880
Mn on the sale of Diesel, PDS Kerosene and Domestic LPG.
The natural gas industry is expected to continue its steady pace as domestic
availability of gas remains tight. Due to limited natural gas availability in
India we can see volume pressure on gas utility companies such as GSPL,
IGL, etc. However, PLNG is expected to benefit from fall in the KG-D6 natural
gas supply. It is also expected that around Feb'12 the global LNG prices
should cool off partly to seasonality factor and partly due to higher global
supply.
The domestic natural gas supply was lower due to decline in natural gas
production from KG-D6. This will not only negatively impact the
performance of RIL but will also impact gas-utility companies such as GSPL,
GAIL, Gujarat Gas, etc. However, part of the gas volume loss was
compensated by higher import of LNG by PLNG.
Finally, we expect upstream companies to report strong growth in revenues
in Q1FY12 mainly on account of rise in crude oil prices. Gas utility
companies can see some volume pressure on account of lower domestic
natural gas supply. At the same time, the raw material cost will be higher as
part of the gas supplied was costly imported LNG which will have negative
impact on the profitability margins.
Companies
n Indraprastha Gas (IGL). We expect IGL to show decent volume growth YoY
basis mainly due to major conversion of vehicles to CNG. However on QoQ basis
the volume performance will be flat and the margins are expected to be under
pressure due to sourcing of costlier natural gas, weak rupee and increase in operating
cost. Recently, IGL has raised prices of CNG by Rs.1.75/kg in Delhi (Rs.2/
kg in Noida). CNG will now cost Rs.33.75/kg in Delhi and Rs.37.9/kg in Noida,
Greater Noida and Ghaziabad.
n Petronet LNG (PLNG). We expect the Company to show decent volume growth
on QoQ basis mainly on account of higher gas demand and lower KG-6 gas production.
The Company filled the supply-demand gap by importing higher LNG.
Currently, refining sector is the biggest consumer of RLNG. Recently, the price of
RLNG has fallen. In the west-cost of India, around Q2FY12, RLNG prices were at
$16-17/bbls which has fallen to ~$14/mmbtu, going forward the same is expected
to soften further. In Q4FY12, we expect PLNG to close with LNG deal
with RasGas Qatar. The Board has approved Dahej expansion plan.
n GSPL. We expect there will be gas volume concern for GSPL in Q3FY12 due to
fall in natural gas supply from KG-D6. At the same time we expect operating
margin to be under pressure. On the other hand, we expect it to soon achieve financial
closure for the 1,670 km Mehsana (Gujarat)-Bhatinda (Punjab) gas grid.
The estimated project cost is ~Rs 35 Bn, is being implemented by a special purpose
vehicle, with 52% holding of GSPL. However, we have not considered the
same in our valuations as it will take three years to commission the pipeline.
n Castrol. We expect some pressure on the margins of the Company due to
higher raw material cost as a result of higher crude oil price and weeker rupee.
The sales realization is expected to be better on QoQ basis. However, third
quarter is the one of the best quarters for Castrol India on account of seasonality.
n Cairn India Ltd. We expect, CIL to report strong top line growth on QoQ and
YoY basis both on account of volume and realization growth. Cairn India is a
private exploration company so it will reap full benefits of rising crude oil prices.
However, due to delay in getting approvals from GOI for additional production
from Rajasthan block the production will be suppressed to that extent. ONGC
and DGH have given approval to Cairn India for commencement of production
from the Bhagyam oilfield, final approval from GOI is pending.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
OIL & GAS
Key highlights
The performance of oil and gas companies in Q3FY12 is expected to be
mixed.
Upstream companies are expected to benefit from higher crude oil prices
and weaker rupee. The upstream oil majors will see higher realizations as
the average rupee-dollar rate was 50.88 for the Dec'11 quarter, down 13.5%
compared with the year-ago period. Cairn India remains our top pick.
However, we can see some more one-time impact on its profitability in
Q3FY12.
In Q3FY12, Brent crude oil touched a high of USD$116/bbls but later settled
to USD$ 108.68/bbls (30th Dec '11), which is 2.23% higher from the end of
Q2FY12. However, due to various geo-political issues the crude oil again
surged and is currently trading ~USD$113/bbls (spot). Brent crude
throughout the quarter was trading above USD$103/bbls and averaged to
$110/bbls in Q3FY12 which is positive for private oil exploration companies
like Cairn India, etc. Further, if Iran closes the Strait of Hormuz partly or
fully it will lead to a major spike in crude oil prices.
On the other hand, downstream companies i.e. refining and petrochemicals
are expected to witness margin pressure due to lower global demand and
higher raw material prices. Further, OMCs fate depends on how much the
government compensates for the under-recoveries. OMCs are currently
(effective 1st January, 2012) incurring daily under-recovery of about Rs. 3880
Mn on the sale of Diesel, PDS Kerosene and Domestic LPG.
The natural gas industry is expected to continue its steady pace as domestic
availability of gas remains tight. Due to limited natural gas availability in
India we can see volume pressure on gas utility companies such as GSPL,
IGL, etc. However, PLNG is expected to benefit from fall in the KG-D6 natural
gas supply. It is also expected that around Feb'12 the global LNG prices
should cool off partly to seasonality factor and partly due to higher global
supply.
The domestic natural gas supply was lower due to decline in natural gas
production from KG-D6. This will not only negatively impact the
performance of RIL but will also impact gas-utility companies such as GSPL,
GAIL, Gujarat Gas, etc. However, part of the gas volume loss was
compensated by higher import of LNG by PLNG.
Finally, we expect upstream companies to report strong growth in revenues
in Q1FY12 mainly on account of rise in crude oil prices. Gas utility
companies can see some volume pressure on account of lower domestic
natural gas supply. At the same time, the raw material cost will be higher as
part of the gas supplied was costly imported LNG which will have negative
impact on the profitability margins.
Companies
n Indraprastha Gas (IGL). We expect IGL to show decent volume growth YoY
basis mainly due to major conversion of vehicles to CNG. However on QoQ basis
the volume performance will be flat and the margins are expected to be under
pressure due to sourcing of costlier natural gas, weak rupee and increase in operating
cost. Recently, IGL has raised prices of CNG by Rs.1.75/kg in Delhi (Rs.2/
kg in Noida). CNG will now cost Rs.33.75/kg in Delhi and Rs.37.9/kg in Noida,
Greater Noida and Ghaziabad.
n Petronet LNG (PLNG). We expect the Company to show decent volume growth
on QoQ basis mainly on account of higher gas demand and lower KG-6 gas production.
The Company filled the supply-demand gap by importing higher LNG.
Currently, refining sector is the biggest consumer of RLNG. Recently, the price of
RLNG has fallen. In the west-cost of India, around Q2FY12, RLNG prices were at
$16-17/bbls which has fallen to ~$14/mmbtu, going forward the same is expected
to soften further. In Q4FY12, we expect PLNG to close with LNG deal
with RasGas Qatar. The Board has approved Dahej expansion plan.
n GSPL. We expect there will be gas volume concern for GSPL in Q3FY12 due to
fall in natural gas supply from KG-D6. At the same time we expect operating
margin to be under pressure. On the other hand, we expect it to soon achieve financial
closure for the 1,670 km Mehsana (Gujarat)-Bhatinda (Punjab) gas grid.
The estimated project cost is ~Rs 35 Bn, is being implemented by a special purpose
vehicle, with 52% holding of GSPL. However, we have not considered the
same in our valuations as it will take three years to commission the pipeline.
n Castrol. We expect some pressure on the margins of the Company due to
higher raw material cost as a result of higher crude oil price and weeker rupee.
The sales realization is expected to be better on QoQ basis. However, third
quarter is the one of the best quarters for Castrol India on account of seasonality.
n Cairn India Ltd. We expect, CIL to report strong top line growth on QoQ and
YoY basis both on account of volume and realization growth. Cairn India is a
private exploration company so it will reap full benefits of rising crude oil prices.
However, due to delay in getting approvals from GOI for additional production
from Rajasthan block the production will be suppressed to that extent. ONGC
and DGH have given approval to Cairn India for commencement of production
from the Bhagyam oilfield, final approval from GOI is pending.
No comments:
Post a Comment