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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (184629)	6/26/2014 9:08:09 AM
From: Dennis Roth	1 Recommendation Recommended By evestor Read Replies (1) \| Respond to of 206114

CAT oil (O2C.DE), ConocoPhillips (COP), Nabors Industries, Ltd. (NBR). Petrobras (PBR), Russian Oil & Gas, Riding LNG Shipping Wave, Wood Group (WG.L), Unburnable Carbon & Stranded Assets CAT oil (O2C.DE) New framework agreement with Gazprom Neft supports growth strategy execution, Buy reiterated 24 June 2014 ¦ 8 pages ir.citi.com CAToil issued a press release this morning announcing the new three-year framework agreement with Gazprom Neft, which guarantees full utilization of four new drilling rigs and one new fracturing fleet through the end of 2016. The new drilling and fracturing capacities are expected to be deployed in the field from Sept to Dec 2014, which implies the positive effect on CAToil’s profitability should be visible as soon as from 4Q14 onwards. We welcome the news, which in our view diminishes execution risks around the 2014-16E growth strategy, the cornerstone of CAToil’s investment case. We reiterate our Buy rating for the stock and consider CAToil as one of the primary beneficiaries of the growing complexity of Russian reserves base and the ongoing transition to more sophisticated and advanced technological solutions in Russian OFS industry. ConocoPhillips (COP) Portfolio Depth/Quality Mitigates Reinvestment Risk 25 June 2014 ¦ 11 pages ir.citi.com Global Big Oil has outperformed broader markets over the last 4M, and within that group COP has been the best performer (+33% since 10 Feb versus Big Oil +20% and markets +9%). We still see considerable capacity for outperformance. We think versus peers that the company offers relatively low-risk growth, delivering a potential 15% ROE (+300bps vs. peers) and 9% p.a. expansion in book value to 2018. The valuation of 1.3x end-17E book is a discount to most Big Oil (and many North American E&P) peers, a discount that we think largely stems from market concerns around capital re-allocation: perhaps a prejudice around the COP management team of old. Nabors Industries, Ltd. (NBR) A Consolidator Has Emerged NBR Merges C&P Business with CJES. 25 June 2014 sendspace.com Petrobras (PBR) Unexpected PSC award adds weight to PBR balance sheet 24 June 2014 ¦ 13 pages ir.citi.com Surprise announcement of new PSC adds extra weight to balance sheet. Today, the CNPE (National Energy Policy Council) approved the sale of a new PSC (production sharing contract) directly to Petrobras for R$2bn upfront and another R$13bn to be paid until 2018 characterized as an anticipation of future taxes due from the field’s development phase. The PSC provide the terms for PBR to exploit potential reserves located on the same acreage where it has negotiated rights to produce up to 5bn boe. Our best case points for production to start by 2023. The payment adds extra weight to PBR stressed balance sheet, implies a lower return to the estimated IRR (10%-18%) recently bid on Libra (12-20% USD IRR) and should negatively impact investors’ perception of political influence behind this decision. We see PBR trading at a large 2015-2016 year-end EV/EBITDA premium at 6.5x and 6.3x. Neutral rating maintained Russian Oil & Gas MinFin’s “tax maneuver” proposal floated, refiners set to benefit in near term 24 June 2014 ¦ 7 pages ir.citi.com Vedomosti reports that MinFin has adjusted its reform proposal for the Russian oil industry from that reported in the paper two weeks ago. The proposed reforms, popularly dubbed as MinFin’s “tax maneuver”, are set to accelerate existing plans whereby export duties on crude are lowered even as extraction taxes on crude and export duties on heavy products are increased. Vedomosti credits Rosneft CEO Igor Sechin for having influenced process in favor of refiners, who as a group are generally investing heavily in upgrading their plants to boost light product output and decrease the share of heavy products in their refining slates. Regarding the near-term improvement, companies such as Bashneft and Gazpromneft are set tp benefit more – relative to both the current law and MinFin’s initial proposal – than will those with lower refining cover such as Tatneft and SurgutNG, while Lukoil and Rosneft are in the middle of the pack. Riding LNG Shipping Wave Equity Strength Can Accelerate Growth for GasLog Entities 25 June 2014 ¦ 16 pages ir.citi.com We are increasing our price targets for both GasLog Ltd and GasLog Partners, as recent strength in the equity markets, which appears to be driven by rising geopolitical tensions, has opened the door to potentially faster growth at Partners and a valuation arbitrage at GasLog Ltd. Wood Group (WG.L) 1H 2014 trading update 26 June 2014 sendspace.com Unburnable Carbon & Stranded Assets — Minerals Council Challenges Legality of Divestment Campaigns Australia/NZ 24 June 2014 ¦ 9 pages ir.citi.com The Minerals Council of Australia issued a report “A Critique of the Coal Divestment Campaign”. The report appears to reflect MCA concerns that the divestment campaign will successfully damage the coal industry, in line with campaigners’ objectives. It acknowledges the role of those who discuss investment risks, but suggests that where campaigners cause investors to make valuation errors and rebalance their portfolios away from fossil fuels, this may contravene the Corporations Act regarding false or misleading information. We retain our view that "mainstream” investors will continue to value stocks based on assessment of supply/demand/price, but probably with growing consideration of scenarios that challenge the status quo. We expect greater fossil fuel use than in the extreme “unburnable carbon” scenario, and more global warming. We see emerging trends that might accelerate risks for coal: cost reductions in renewables, measures to address local air quality, and progress with carbon emissions constraints.