26
Oil and Gas 2015 Outlook: Can Asia Oils Drill Through An Oil Price Plunge 15 Jan 2015 Grace Lee Asia Oil and Gas Analyst (BI EXPRA) Bloomberg Intelligence [email protected]
Oil and Gas 2015 Outlook: Can Asia Oils Drill Through An Oil Price Plunge 15 Jan 2015
Grace Lee Asia Oil and Gas Analyst (BI EXPRA)
Bloomberg Intelligence
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Will Prices Fall Further?
China: Performance and Valuations
India Outlook: Performance and Valuations
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Will Prices Fall Further?
China: Performance and Valuations
India Outlook: Performance and Valuations
Recap 2014 Stock Performance Correlations
Note: Prices are normalized
Brent 1st Month Price
MSCI Asia Pacific Index
BI Asia Pacific Oil and Gas Index
65.09
87.38
99.54
R = 0.62, Rsq = 0.39
Recap 2014 A 2008 Style Collapse?
Source: Bloomberg Intelligence
Brent 1st Month Price $ per BBL
46
Recap 2014 Demand, OPEC drove oil prices
U.S shale story no longer new
Growing demand offsets supply
Growing OPEC output
Strengthening USD
Demand cut on Japan Eurozone growth
IEA cut 2014 demand
Saudi lowers OSP
OPEC leaves output target unchanged,
Saudi lowers OSP
Money managers cut long positions
Political uncertainty affecting output abates
Brent 1st Month Price
$ per BBL 68.24
Source: Bloomberg Intelligence
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Finding the Floor?
China: Performance and Valuations
India Outlook: Performance and Valuations
Oil 2015: Will Prices Fall Further? Short-Term Signals
Oil 2015: Will Prices Fall Further? China’s Underlying Oil Demand Slowing
(5,000)
-
5,000
10,000
15,000
20,000
25,000
30,000
2009-10 (OctYTD)
2010-11 (OctYTD)
2011-12 (OctYTD)
2012-13 (OctYTD)
2013-14 (OctYTD)
LPG Demand Growth (k tons) Naphtha Demand Growth (k tons)
Fuel Oil Demand Growth (k tons) Kerosene Demand Growth (k tons)
Diesel Demand Growth (ktons) Gasoline Demand Growth (k tons)
Oil 2015: Will Prices Fall Further? China’s Underlying Oil Demand Slowing
(15)
5
25
45
65
85
105
125
145
165
185
Gre
en
Riv
er
oil
Vt
Bri
sc
oe
Ra
nce
vo
l o
il (
Ea
gle
Fo
rd)
Sa
n J
ua
n o
il (
Ma
nco
s S
hale
)
Wa
tte
nb
erg
Hz o
il
Ute
lan
d B
utt
e
Uin
tah
Wa
sa
tch
Hz
Bri
sc
oe
Ra
nch
co
nd
y (
Ea
gle
Fo
rd)
Pe
rmia
n W
olf
ca
mp
Hz
Pe
rmia
n Y
eso
Vt
Ba
kke
n
Pe
mb
ina
oil
y
Ba
kke
n A
nte
lop
e
Re
d W
as
h +
Gre
en
Riv
er
sta
ck
ed
Vt
Ea
gle
vil
le v
ol
oil
(E
ag
le F
ord
)
PR
B S
us
sex
/Sh
an
no
n H
z
Pe
rmia
n D
el B
as
in V
t (W
olf
bo
ne
)
Pe
rmia
n C
en
tral
Ba
sin
Pla
tfo
rm V
t
Ka
yb
ob
Du
vern
ay
oil
y
Pe
rmia
n D
el B
as
in H
z (
Bo
ne S
pri
ng
)
Pe
rmia
n C
en
tral
Ba
sin
Pla
tfo
rm H
z
Bro
wn
De
ns
e
Pe
rmia
n Y
eso
Hz
Pe
rmia
n C
lin
e S
ha
le H
z
Mis
s L
ime
Co
re
SC
OO
P C
ore
Oil
Tu
sc
alo
os
a M
ari
ne S
ha
le
Ea
gle
vil
le c
on
dy
(E
ag
le F
ord
)
Wa
tte
nb
erg
Hz T
ier
2
Ea
gle
bin
e
Pe
rmia
n D
el B
as
in H
z (
Av
alo
n)
Ma
rma
ton
(S
he
lf)
Pe
rmia
n S
pra
be
rry
Vt
Pe
rmia
n M
idla
nd
sta
ck
ed
Vt
To
nka
wa
ST
AC
K
Pe
mb
ina
ga
ssy
Ca
na C
ore
Oil
Mis
s L
ime
Tie
r 2
SC
OO
P N
on
-Co
re O
il
US Shale Play Breakevens (US$ per Barrel)
Oil 2015: Will Prices Fall Further? OPEC Inaction, U.S. sets the price floor
Source: BNEF
US Shale Play Break-evens (US$ Per Barrel)
Oil 2015: Will Prices Fall Further? All About Economic Growth
Global growth may accelerate in
2015, unlike the recession
which accompanied falling oil
prices in 2008.
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Will Prices Fall Further?
China: Performance and Valuations
India Outlook: Performance and Valuations
Oil: Will Prices Fall Further? Success factors in the last oil drop
Strong production
growth
Government Reforms
Crude Importers / Processors
No production growth
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Will Prices Fall Further?
China: Performance and Valuations
India Outlook: Performance and Valuations
China 2015 Outlook Reforms and Moderating Capex
Note: PetroChina and Sinopec Capex
China 2015 Outlook Growing Upstream Focus
20%
30%
40%
50%
60%
70%
80%
90%
100%
2H
08
1H
09
2H
09
1H
10
2H
10
1H
11
2H
11
1H
12
2H
12
1H
13
2H
13
1H
14
% Upstream Capex % Downstream Capex
China 2015 Outlook Cleaner Fuel, Lower Oil Aids Refiners
China 2015 Outlook P/E Valuations more resilient today
Agenda
01
02
03
04
A Recap of 2014
Oil 2015: Will Prices Fall Further?
China: Performance and Valuations
India Outlook: Performance and Valuations
India 2015 Outlook Reform Optimism
India 2015 Outlook India: More Deregulation?
India 2015 Outlook India: More Deregulation?
India 2015 Outlook India: More Deregulation?
Note: 2013 refer to FY14 fiscal year and so forth
India 2015 Outlook Forward P/B valuations
CNOOC
ONGCWoodside
Inpex
PTTEP
Oil Search
Santos Cairn India
Oil India
Japex Senex
Beach Energy
Drillsearch
y = 0.0697x + 0.1755R² = 0.5018
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0
Pri
ce
to
Bo
ok
(x
)
Return On Equity (%)itle
Bloomberg Intelligence
The BLOOMBERG PROFESSIONAL service, BLOOMBERG Data and Bloomberg Intelligence (the
"Services") are owned and distributed by Bloomberg Finance L.P. ("BFLP") in all jurisdictions other than
Argentina, Bermuda, China, India, Japan and Korea (the "BLP Countries"). BFLP is a wholly owned
subsidiary of Bloomberg L.P. ("BLP"). BLP provides BFLP with global marketing and operational support
and service for the Services and distributes the Services either directly or through a non-BFLP subsidiary
in the BLP Countries. Certain functionalities distributed via the Services are available only to sophisticated
institutional investors and only where the necessary legal clearance has been obtained. BFLP, BLP and
their affiliates do not guarantee the accuracy of prices or information in the Services. Nothing in the
Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their
affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment
strategy or whether or not to "buy", "sell" or "hold" an investment. Information available via the Services
should not be considered as information sufficient upon which to base an investment decision.
BLOOMBERG, BLOOMBERG PROFESSIONAL, BLOOMBERG MARKETS, BLOOMBERG NEWS,
BLOOMBERG ANYWHERE, BLOOMBERG TRADEBOOK, BLOOMBERG TELEVISION, BLOOMBERG
RADIO, BLOOMBERG PRESS and BLOOMBERG.COM are trademarks and service marks of BFLP, a
Delaware limited partnership, or its subsidiaries. © 2014 Bloomberg Finance L.P. All rights reserved. The
contents of the chat rooms may not be forwarded or redistributed without the prior consent of Bloomberg.
