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1、Deutsche Bank Markets Research Europe United Kingdom Oil Downgrading Shell to HOLD Total (BUY, 44 TP): Still too early to buy for the operating cash uplift envisaged from 2015. But trading at the low end of their ten year relative range and with a secure 6% plus dividend yield offering absolute supp
2、ort, we see the shares as presenting an attractive risk/reward balance ahead of the broadest and potentially most exciting 2013 exploration programme amongst the European majors. Shell (HOLD, 2475p TP) After a disappointing 2012 we look to stronger performance in 2013 not least as full cash is deliv
3、ered from the megaprojects. The investment case is, however, well rehearsed and with specific upside drivers unclear we revert to a less aggressive Hold stance. See p3 for further discussion of sector valuation and risks 3 December 2012 Integrated Oils European Integrated Oils Page 2 Deutsche Bank A
4、G/London Table Of Contents Sector Investment Thesis . 3 Executive Summary: 10 key questions for 2013 4 1) Will US oil supply outpace Chinese demand? 10 2) Should we be constructive on Atlantic Basin gas prices? . 19 3) Refining: Will the 2012 uplift continue in 2013? 27 4) Volumes: How wrong will we
5、 be in 2013? . 32 5) Cash Flow: Reaching equilibrium in non-productive? 37 6) Exploration: Where to go in the majors? 41 7) Can sector performance turn in 2013? . 46 8) Will 2013 prove to be BPs epiphany year? . 50 9) Total: Will 2013 exploration excite? . 61 10) Will Eni succumb to mean reversion i
6、n 2013? . 66 BG (HOLD, 1350p TP) . 77 BP (BUY, 500p TP) 80 Galp (HOLD, 16.00 TP) . 83 Eni (BUY, 21.00 TP) 86 OMV (HOLD, 30.00 TP) 89 Repsol (HOLD, 16.00 TP) 92 Shell (HOLD, 2475p TP) 95 Statoil (HOLD, NOK160 TP) 98 Total (BUY, 44.00 TP) . 101 Appendix A DB Commodity Price Deck 104 3 December 2012 In
7、tegrated Oils European Integrated Oils Deutsche Bank AG/London Page 3 Sector Investment Thesis Outlook In our recent sector review (“Profiting from Big Oils Renaissance”, Sept-11) we argued that far from being structurally broken the integrated model remained relevant, that the sector had been under
8、going a period of strategic and operational transition, and that sentiment toward a materially undervalued group should begin to improve driven by expected growth in volumes, cash and exploration activity. In this context 2012 has proven disappointing with confidence in operational delivery once aga
9、in undermined by sharply reduced volume expectations. With this in mind, 2013-14 should prove a key staging-post for our thesis as the sector promises to show the first signs of operational rejuvenation. First, after a decade of stagnant volumes we expect the delivery of modest production growth. Se
10、eing is believing; but even allowing for normal slippage we expect the group to return a sentiment boosting uptick in volumes. Second, leveraging margin accretive barrel growth we forecast a 13% expansion in OCF by 2014 at constant oil prices driving an improvement in FCF and lowering the cash break
11、even of the group. Third, with the Majors placing a greater emphasis on frontier exploration we look to drilling activity to improve perceptions of the sustainability. However with market concerns deeply entrenched a sector-wide re-rating will likely require a sustained period of improved performanc
12、e. Recognising that each company stands at a different point in its evolution, we prefer to play this thesis on a bottom-up basis through preferred companies as opposed to a top-down sector call. Valuation We use several earnings and cash flow valuation techniques to value the oils. These include P/
13、E relative, dividend yield, CROCI, discounted cash flow models, Free Cash Flow Yield and a cash-flow asset valuation based Sum-of-the-Parts. The absolute valuation of the sector presently appears attractive: (1) the group trades at an aggregate c35% discount to SOTP with asset disposals made across
14、the past year suggesting that our asset-valuation is conservative relative to the asset-market. (2) the group trades at just 0.78x 2013e Net Capital Invested, c15% below the multiple consistent with our forecast for 2013 CROCI/COC and at odds with our assessment of potential returns on reinvestment.
15、 On a market relative basis we observe that the 12 month forward consensus PE of the sector stands at c0.75x the market as compared to a trailing 7-year average of c0.8x. Furthermore, with the sector balance sheet robust and limited absolute downside we regard the sector as defensive in the event of
16、 any market pull- back. Aggregating our company target prices implies a 2013E sector target PE multiple of 9.0x and a sector target EV/NCI of 1.0x. Risks As ever, the key risk to our estimates is the outlook for commodity prices and crude oil in particular. Specifically, we note exposure to evolving
17、 expectations for economic growth in the key consuming countries and to expectation around the behaviour of OPEC particularly in light of geopolitical tensions in the MENA region. Thus our forecasts are consequently vulnerable to moves in the price of crude about our $113/bbl 2013 oil price estimate
18、. As a sector whose functional currency is the US dollar, a sharp fall in that currency would be counter to our current expectations and could significantly undermine asset values and the local currency value of dividend payments. Considering company-specific factors we note that equity value will b
19、e sensitive to perceived changes in economic/fiscal conditions in key countries of operation, to the physical risks inherent in an asset intensive business, and to the risks borne of the environmental challenges directly associated with producing crude oil and gas. 3 December 2012 Integrated Oils Eu
20、ropean Integrated Oils Page 4 Deutsche Bank AG/London Executive Summary: 10 key questions for 2013 In this note we examine the critical issues facing the European Integrated Oil sector in 2013 by posing and seeking to answer what we consider to be the ten key questions faced by investors. The ten qu
21、estions are divided into four broad topics (macro drivers, operational momentum Macro Drivers Q1) Will US oil supply outpace Chinese demand? From 2000-2008 the gradual erosion of OPEC spare capacity through sustained non- OECD demand growth created the conditions for a bull market in oil. We worry t
22、hat we are now in the early stages of a period of sustained growth in North American supply, potentially of sufficient magnitude to largely satisfy anaemic global demand growth, which will gradually place pressure on the OPEC core (Saudi, Kuwait, UAE) to accommodate both this growth and capacity exp
23、ansion within their membership (Iraq, Angola). In this context we see 2013 as a year of transition. The US tight oil plays remain in their infancy, so whilst long-term growth potential appears significant (upwards of 500kb/d p.a.), if a structural bear case on crude is to gain traction we need to se
24、e confirmation that this kind of growth can be delivered for a second year. But with the rig-count flattening, WTI sub-$90/bbl and a lack of visibility over well performance this is an area where we do not expect to be able to reach a confident conclusion imminently. With the call on OPEC (ex-Iraq/L
25、ibya/Angola) set to decline by c500kb/d we do see a more bearish skew to market fundamentals in 2013, but expect uncertainty around Iran to support to the downside keeping Brent within a $90-115/bbl range. WTI looks set to remain under pressure as capital attracted to the tight oil plays continues t
26、o push this benchmark toward $80-90/bbl marginal cost Q2) Should we be more constructive on Atlantic Basin gas pricing? Demand may be challenged. But with indigenous supply continuing to decline and Atlantic Basin LNG being diverted to gas hungry Pacific Basin markets the supply position suggests th
27、at the opportunities for European pipeline suppliers to increase market share and hold price remain all too real. Remarkably, we estimate that despite European gas demand standing some 6-7% below the levels of 2008, indigenous decline and LNG diversions mean that the call on Russian and Norwegian ga
28、s in 2013 will be above that at the peak of the demand cycle. Set against this backcloth we believe that as the year progresses investors will increasingly recognize that European spot prices will need to rise if new sources of supply are to materialize and the Continent is to avoid an impending mid
29、-decade supply crunch. With the US also expected to see supply growth falter and prices rise, 2013 has all the hallmarks of a year in which, in our view, the market becomes more constructive natural gas. Q3) Refining: Will the 2012 uplift continue in 2013? With European capacity expected to decline
30、at broadly the same pace as European demand we see some support for margins. Relatively low distillate inventories on both sides of the Atlantic also argue for a solid start to the year normal winter permitting. There, however, the positives end. We expect increased competition from tight-oil advant
31、aged US refiners to further eat into Europes share of Atlantic Basin gasoline with growth in the export of North American distillate also containing the European gasoil short. Despite a larger than anticipated c4% reduction in capacity through 2012, further capacity cuts will soon be needed as oil p
32、roduct demand continues to falter. Not as bad as 2011 but certainly not a 2012 gross refining margin year either. 3 December 2012 Integrated Oils European Integrated Oils Deutsche Bank AG/London Page 5 Operational Momentum Q4) Volumes: How wrong will we be in 2013? Over the past decade neither analy
33、sts or companies have covered themselves in glory when it comes to forecasting or delivering production growth. After initially forecasting 5% underlying growth for 2012 , a number subsequently pared to 500mmb) and Big Cat (250mmb) prospects, several of which are at the frontier, Total looks, howeve
34、r, to contain the broadest and potentially most exciting 2013 exploration programme amongst the European majors. Trading at the low end of their ten year relative range and supported in absolute terms by a secure 6% plus dividend yield we see the shares as presenting an attractive risk/reward balanc
35、e. Accordingly we upgrade to Buy with a 45/share 12- month price target and look to early year news flow from H113 weighted exploration activity as a potentially meaningful source of absolute and relative share price upside. Q10) Will Eni succumb to mean reversion in 2013? In our note dated 29th Aug
36、ust (Eni: Go with the cash flow) we argued that a combination of strong operational momentum (production and cash flow growth), continued restructuring catalysts (Snam, Galp and Mozambique) and potential for progressive messaging around shareholder distributions allied to an attractive valuation sho
37、uld see Eni outperform the peer group. Following a period of sustained strong performance Enis vulnerability to mean reversion is a concern; however, with a strengthened balance sheet and resource base offering materially stronger company fundamentals than at any point over the past 6 years we do no
38、t see the recent trading range relative to the sector as an imminent ceiling. During 2013 we look for project start-ups (Kashagan 1Q13), clarity on the distribution policy (1Q strategy update), evidence of a turn in downstream earnings momentum and further progress on restructuring to drive outperfo
39、rmance. We reaffirm Eni as one of our Top Picks. 3 December 2012 Integrated Oils European Integrated Oils Deutsche Bank AG/London Page 7 Most Preferred but with a strengthened balance sheet and resource base offering materially stronger company fundamentals than at any point over the past 6 years we
40、 do not see the recent trading range relative to the sector as an imminent ceiling. During 2013 we look for project start-ups, clarity on the distribution policy, evidence of a turn in downstream earnings and further progress on restructuring to drive outperformance. TOTAL (BUY, 44.0 TP):TOTAL (BUY,
41、 44.0 TP): The Total investment thesis continues to be dominated by the re-positioning of the business. Through the recycling of significant capital, not least from downstream to upstream, Total is setting in place the building blocks for future growth and cash generation, the benefits of which shou
42、ld become evident from mid- decade. A marked increase in exploration spend, often at the frontier, has also seen the company return to the drill bit as a source of growth and with a multitude of frontier wells planned in 2013 offers the potential for upside surprise in our view. This combined with a
43、 6%+ dividend yield argues that at its current lowly rating the shares represent an attractive risk/reward balance. At current levels we see trading upside of over 10%. Upgrade to Buy. 3 December 2012 Integrated Oils European Integrated Oils Page 8 Deutsche Bank AG/London LEAST PREFERRED OMV (HOLD,
44、30.0 TP):OMV (HOLD, 30.0 TP): In absolute terms at least, OMV screens as the cheapest stock in our IOC coverage universe, trading at 5.5x 2013e PE, a 28% discount to the sector. Furthermore, the investment story seems to be moving in the right direction with the emphasis on Upstream increasing, the
45、medium-term growth outlook being strengthened by exploration and acquisitions, ongoing efforts to take capital out of the Downstream and an efficiency programme to bolster ROCE. However, we see this as evolution rather than revolution with production-led momentum not beginning to build until 2015. S
46、o whilst 2013 does promise a number of milestone events - ongoing efforts to divest Bayernoil, a possible decision on Nabucco West and end-13 appraisal of Domino we see insufficient triggers to materially alter perceptions around valuation. REPSOL (HOLD, 16.0 TP):REPSOL (HOLD, 16.0 TP): Near-term th
47、e Repsol investment debate continues to be dominated by the ramifications of the YPF expropriation as we wait for clarity on whether the proposed LNG sale will be completed. We believe that a credit downgrade will be avoided, are optimistic that the LNG sale succeeds as the route to achieve this, an
48、d believe that the remaining business deserves a premium multiple. However, with Repsol having already moved to trade at a c25% premium to the group on both 2013e PE at least directionally crude has remained relatively well aligned with equity markets. Second, a series of material changes in supply-
49、side expectations non-OPEC (ex US) disappointing, but US tight-oil exhibiting much more rapid growth than anticipated. And third, events in the Middle East, and specifically prevailing sentiment toward the possible Israel/US response to Irans nuclear ambitions. Figure 3: Brent ($/bbl) 10% growth in 2013 ($bn) Figure 20: Onshore Oil Rig count (LHS, #) versus WTI (RHS, $/bbl) a 15% increase since end-2011 66 18 43 65 72 77 0 10 20 30 40 50 60 70 80 90 2008200920102011201220132014 50 60 70 80 90 100 110 120 500 600 700 800 900 1000 1100 1200 1300 1400 1500 O