| O&G Sector Level Broker/analyst/media Coverage

9th Jul '09 by AnonymousUser858

22 comments 3038 reads

This thread is a place to record and discuss broker/analyst research and media/editorial comment at the level of the sector rather than individual stocks. This is not restricted to whole sector comment but should include research/comment which covers multiple stocks.

The idea is that a piece of research or editorial comment which refers to half a dozen stocks should not end up being posted 6 times on 6 different boards. better to post it once here and, if necessary make cross references on the individual boards.

More detailed comment can be posted on the boards/threads for the individual stocks.

I'm inserting a quick and dirty table here to summarise recommendations. I will update it to reflect any postings made on this thread and will tweak the format as we go along.

The table below contains all of the analyst recommendations of which I am aware - if you want me to add anything into it , please post details on the thread below.

most recent update 14/08/09

source

date

AFR

AEX

CNE

DNX

EO.

FPM

GKP

HDY

HOIL

MEL

NPM

PCI

PMO

RDS

REP

SIA

STL

TLW

TOT

VPC

VPP

analysts/brokers

Cannacord

10/8?

buy

…

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Oil prices hit almost $74 last week – a high for this year. Crude has risen no less than 120pc in six months, posing a major headache for the world's oil importing nations and spawning all kinds of theories about what's causing this latest price surge.......

.....While the slowdown has curtailed Western oil use, on a global level talk of "demand destruction" is nonsense. Even in a worldwide recession, new data shows Chinese crude imports in June were 25pc up on the same month last year.

On the supply side, the reasons for high oil prices are even more obvious. The world's wells are depleting fast. The oil majors haven't found a big new field in more than 30 years. More immediately, the credit crunch means numerous existing drilling projects have been mothballed. The resulting lack of supply over the next two years is making oil markets nervous.

Politicians can point the finger at "speculators" as long as they like. They can't reinvent the laws of demand and supply.

AnonymousUser858

9th Jul '09

Reuters 8/7 reports that

Numis retains its "hold" rating for Tullow with an 871 pence price target and prefers Premier Oil (PMO.L) and Dana Petroleum (DNX.L) on valuation grounds.

source:http://uk.reuters.com/article/idUKL825744420090708

kyu66

Hi tournesol,

Not sure if the header can accommodate price target changes, but UBS issued the following today:

cuts Cairn Energy PLC price target to 2145P from 2360P; rating neutral

cuts Dana Petroleum PLC price target to 1465P from 1580P; rating buy

cuts Premier Oil PLC price target to 1025P from 1090P; rating neutral

cuts Soco International PLC price target to 1550P from 1700P; rating buy

Hi Kyu66

I need to do a more considered tabulation off-line in Excel then I can post it in various formats - the online Spede table facility is rather primitive at present

I will get round to it as soon as time permits but don't hold your breath

Meanwhile I'll add your data into the header in the same format as previously

regards

10th Jul '09

A little more info on UBS

www.financial24.org/economy/ubs-upgrades-statoilhydro-revises-targets-on-7-others/

I've added the analyst recs for dana from http://www.stockopedia.com/forum/view/29834/analyst-coverage-and-related-media-comment

What I'll do is set up a comprehensive excel tabulation of all this stuff, post the full table here (in the thread header) perhaps in multiple formats - one for the rec, another for the target price, or perhaps sorted by date rather than source.....

and then post an extract onto individual co threads if that seems useful....

but can't do today or indeed for another week or so.......so pls bear with me

6/7 Tristone Capital published a review of the sector which runs to 127 pages and is an excellent reference manual for the sector. It is unfortunately not in the public domain, so I can't provide a link.

I have included their recommendations for the stocks which seem to me most likely to be of interest to Stockopedes, but there are lots more I have excluded.

When I get the table redone in Excel I'll try and extend it to provide full coverage.

PS as is so often the case, the entire edifice of the Tristone analysis/valuation is built on the flimsy and unstable foundation of their "forecast" for the oil price. Change the assumption of the future price and everything changes. Worse still, since companies have different cost structures and different amoounts of leverage, they do not move in formation and do not move proprtionately with the oil price. Change the assumption by 20% and a different group of favourites will move into the lead. So this kind of analysis is inevitably more indicative than definitive and should be used as a trigger for research and as a starting point rather than an end point.

ohisay

Couple of Broker comments here on two I see you dont have.

BP - Buy up to 550p

http://www.intermarketstocks.com/imsmembers/imsnewsdetails.php?id=1055

BG -Buy up to 1350p

http://www.intermarketstocks.com/imsmembers/imsnewsdetails.php?id=1052

Rgds

JPGH

Hey RG..........Any chance of a few vertical lines between the companies? Excuse the tone, a few beers too many at lunchtime!!!!.

BTW this has the makings of a very good thread/reference point. Will add to this as much as I can.

So in summary

Big Caps: Buy BP, BG

Mid Caps: Buy TLW, DNX, SIA, PMO

Buy All basically.

Small Caps: Buyers beware ...etc??

Hi JPGH

I'm afraid the formatting capabilities are very limited at the mo

I don't think gridlines can be done - and nor can other formatting things one is used to with excel/word

the good news is that Spedia is working on it

PS as stated above at the mo the table is on Spedia so not as easy to manage as one mightlike. I'll migrate to excel so it is easier to manipulate and then paste it back - if I can host the spreadsheet somewhere with web access for all that might make sense - but never done that before so don't hold breath.....

uncommon13

19th Jul '09

Hi RG

You could make use on the online spreadsheets from google:
http://docs.google.com/

It works very similar to excel in many ways. Once done, just alter the sharing properties:
Share->Get the link to Share->
Tick the box: Allow anyone with the link to view (no sign-in required).
Untick the box: Also allow them to edit

Post the URL link on your header post. If you need help, let me know and I can do it for you if you send me your excel spreadsheet.

Best Regards

emptyend

8th Aug '09

Prominent piece in The Economist this week on Ugandan oil, though it seems to be a bit of a Tullow puff-piece containing some dubious assertions:

http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=14177583&subjectID=381586&fsrc=nwl

TULLOW OIL, an Anglo-Irish exploration firm, announced on August 4th that it had struck oil while drilling in Uganda near the shores of Lake Albert. It was the tenth discovery in the area. Indeed, oil firms do not seem able to drill a well in Western Uganda without hitting the stuff.

....cue hollow laughter from holders of GBP and TRP!

Tullow and Heritage, an Anglo-Canadian firm, own the most promising drilling rights in Uganda. The pair also hold rights on the Congolese side of Lake Albert, but these have been the subject of much dispute with the government in Kinshasa......

....cue raised eyebrows from others interested in Blocks 1 and 2 [a decision having been promised as a matter of urgency some weeks ago now]

Meanwhile, in Kenya, which has long lorded it over its poorer neighbour, exploration firms keep drilling dry holes, to Ugandans’ delight.

.....cue some confusion. IIRC there hasn't been a single well drilled in Kenya for the last two and a half years.

9th Aug '09

One of the more sensible pieces on oil prices that I've seen in the mainstream media...from The Telegraph:

http://www.telegraph.co.uk/finance/comment/liamhalligan/5994800/Hike-in-oil-prices-raises-too-many-questions-for-comfort.html

Hike in oil prices raises too many questions for comfort

Oil prices hit almost $74 last week – a high for this year. Crude has risen no less than 120pc in six months, posing a major headache for the world's oil importing nations and spawning all kinds of theories about what's causing this latest price surge.......

.....While the slowdown has curtailed Western oil use, on a global level talk of "demand destruction" is nonsense. Even in a worldwide recession, new data shows Chinese crude imports in June were 25pc up on the same month last year.

On the supply side, the reasons for high oil prices are even more obvious. The world's wells are depleting fast. The oil majors haven't found a big new field in more than 30 years. More immediately, the credit crunch means numerous existing drilling projects have been mothballed. The resulting lack of supply over the next two years is making oil markets nervous.

Politicians can point the finger at "speculators" as long as they like. They can't reinvent the laws of demand and supply.

Quite so! Well said Liam Halligan.

11th Aug '09

Citwire round-up summarises broker/analyst recommendations:

Morgan Stanley positive on Afren, Dana, Tullow, neutral on Cairn and Soco

Cannacord says BUY Valiant with target = 845p

source: www.citywire.co.uk/Adviser/-/news/market-and-shares/content.aspx?ID=353120&Page=2

14th Aug '09

I've added recs for Dana and Soco from Deutsche and UBS respectively

by co-incidence targets of 1640p have been set in each case

----------------------------------------------------------------------------------------------------------------

I no longer receive analysts stuff on an automatic basis, so no doubt miss a lot of material. If you are aware of any analyst work missing from the table in the thread header just tell me and I'll add it in. If you don't want to post here publically, then e-mail me via Spedia or TMF.

doverbeach

Citi have Tullow and Dana as their top picks, with Buy recommendations and targets of £11.90 and £15.80 respectively.

RedTedsRoadshow

2nd Dec '09

Think this is the right place to post this...

Prosdocimi-Omni initiates coverage of seven UK exploration and production companies. "Having taken a fresh look at each company, examining valuations within the context of the broader economy and their positioning within the sector, we acknowledge there is still momentum behind a number of stocks despite our neutral stance overall on the sector."

BUY:

Afren (AFR.LN) -130p target

Premier Oil (PMO.LN) - 1450p target

SELL:

Cairn Energy (CNE.LN) - 900p target

Dana Petroleum (DNX.LN) - 1450p target

HOLD:

Heritage Oil (HOIL.LN) - 430p target

Soco International (SIA.LN) - 1540p target

Tullow Oil (TLW.LN) - 1120p target

SELL:

Cairn Energy (CNE.LN) - 900p target

Dana Petroleum (DNX.LN) - 1450p target

HOLD:

Heritage Oil (HOIL.LN) - 430p target

....ermm....I think must be at least one typo in that lot!!

3rd Dec '09

UK Analyst comment yesterday.
Arbuthnot Securities reiterated its stance of 'strong buy' on Xcite Energy (XEL) with a target price of 133p. The shares rose 7.5p to 47p. A recent report on the company's field in the UK Continental Shelf (UKCS) said that recoverable resources were in the range of 72 to 166 million barrels of viscous oil. Arbuthnot based its valuation on the lower net present value of 181 million dollars. A development well is expected to be drilled next year, in a field which the broker views as a "pre-development play", not an exploration story. Development at the field will take place via an early-production system which is expected to come on-stream in mid-2011. The broker is confident that Xcite will be able to raise the funds for the development, as "the appetite to fund oil companies has returned to the market in recent months ... highlighted by the recent fundraisings by the various Falkland oil companies".

5th Dec '09

Good write up on Faroe in the Mail today.

http://www.dailymail.co.uk/money/article-1233363/Faroe-Petroleum-slick-pick-choppy-waters.html

"It's a simple and cost-effective strategy, but oddly not one that has been adopted by too many of its rivals. So why is Faroe of interest? Well first it has cash on the balance sheet - around £37m, or the equivalent of 35.5p a share.
This alone is enough to bankroll 12-18 months of exploration.
Add to this £25m of largely undrawn borrowings, a £47m debt facility and a £30m tax rebate from Norway due at the end of the year and you realise this is a particularly well funded oil explorer.
But as I said, next year is when things get really interesting.
Not only are we expecting more news on the potential of Glenlivet and Tornado, but we will also see work begin on three Atlantic Margin fields - Anne-Marie, Cardhu and Lagavulin.
Together the trio are targeting1.5bn barrels of oil, 150m of which are Faroe's.
From the outset I must stress that these are high risk prospects - and the company ascribes a success ratio of 25pc for Anne-Marie and Cardhu and just 10pc for Lagavulin.
So the maths says the chance of success with all three are remote.
However if just one of these highly speculative drills hits pay-dirt then it could be transformational for the group.
Meanwhile, Faroe will continue to add to its resource base.
The highly rated Canaccord analyst Finlay Thomson reckons the shares are worth 217p each, which leaves plenty of upside from current "

18th Jun '10

Nomura - Merger activity to pick up in oil sector

Nomura Securities has picked up on increased mergers and acquisitions activity in the oil sector in recent weeks, with Africa-focused oil and gas company Afren and UK independent oil company Dana both announcing deals this month.

"Stronger cash flow generation, owing to the higher oil price environment, a narrowing of expectations between buyers and sellers, and better availability of financing, should see this uplift in deal activity sustained into 2H 2010 [second half of 2010], in our view," Nomura analyst Michael Alsford predicts.

"We also believe one of the implications from the BP oil spill will be a shift in focus from the deepwater GoM [Gulf of Mexico] to international opportunities, and therefore it increases the value and appetite for exposure to regions where the UK E&P [exploration and production] sector remains focused (Africa and Asia)," Alsford claims.

Nomura thinks valuations in the sector remain attractive, with "the sector drilling for prospects that could be worth up to 100% of market valuations over the next six to nine months." Cairn, in Greenland, and Tullow, in west Africa, remain the most active, Nomura notes, though Soco is also preparing for some drilling in the third quarter.

On the macro level the broker sees oil prices well supported around current levels and expect a strengthening in the macro environment heading into the second half of the year, based on its expectation of improving global oil demand. "The UK E&Ps will also benefit from the continued strength of US dollar versus UK sterling," Nomura notes.

The broker has made some slight modification to its price targets for Cairn (up from 479p to 488p), Premier (up from 1649p to 1671p) and Soco (up from 460p to 466p).

Its preferred picks in the sector remain Afren, Premier and Tullow.

O&G sector level broker/analyst/media coverage

most recent update 14/08/09

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AnonymousUser858

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Hike in oil prices raises too many questions for comfort

Oil prices hit almost $74 last week – a high for this year. Crude has risen no less than 120pc in six months, posing a major headache for the world's oil importing nations and spawning all kinds of theories about what's causing this latest price surge.......

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