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Regional Oil & Gas Summary

Core Content

This document provides an overview of the regional oil and gas market as of 10 June 2014, highlighting key price movements, recent news, and analyst ratings. It includes information on major oil and gas companies across Asia, India, Japan, Malaysia, the Philippines, South Korea, Thailand, and Vietnam, with a focus on their performance, valuation metrics, and market outlook.

Key Market Movements

• Henry Hub Price: The overnight price dropped by 2.5%, the largest drop in a week.
• Crude Oil Prices:
  • Brent Crude: Last price was $109.52, down 0.47 USD or -0.4% in the last day, with a 2.1% increase over the last month.
  • WTI Crude: Last price was $104.35, down 0.06 USD or -0.1% in the last day, with a 5.1% increase over the last month.
• LNG Northeast Asia CFR: The price was $13.80, with no change in the last day, and a -0.4% drop over the last month.
• China Daqing Spot: The price was $108.32, up 0.79 USD or 0.7% in the last day, with a 1.4% increase over the last month.
• Other Commodities:
  • Gold: $1,259.90, up 7.56 USD or 0.6% in the last day, with a -2.3% drop over the last year.
  • USD-CNY: 6.23, down 0.01 or -0.2% in the last day, with a -0.5% drop over the last year.

News Headlines

China

• Refinery Throughput Increase: Refineries in China are expected to increase daily throughput by 7.0% MoM in June, processing 40.5m-41.0m tonnes of crude oil.
• Sinopec and PetroChina: Both companies are planning to increase their crude throughput to 30.9m-31.1m tonnes, implying a 5.11% MoM increase.
• Sinopec Shengli Oilfield: Made a breakthrough in oil and gas technology for deep reserves.
• FTS and Sinopec: A 15-year contract was signed to develop unconventional resources.
• Sinopec Yangzi: Reduced crude throughput due to a fire at its refinery.
• Wuhan Petrochemical: Increased LPG supply to external parties.

Other Regions

• Gazprom Fined: $48 million by Lithuanian authorities for hindering competition in the domestic utilities market.

Analyst Reports

SapuraKencana Petroleum

• Rating: BUY
• Target Price: MYR5.30
• Key Points: Made four significant gas discoveries offshore Sarawak, with a GSA likely to be inked by year-end.

Phoenix Petroleum Philippines

• Rating: BUY
• Target Price: PHP7.05
• Key Points: Maintained BUY with revised TP due to lower-than-expected 1Q14 volume sales. One of the best performing stocks YTD, up 25ppts over PSEi.

KNM Group

• Rating: BUY
• Target Price: MYR1.00
• Key Points: Initiated BUY with revised TP (13x FY15), as the company is now on a more solid footing for growth with a stronger balance sheet and improved outlook.

Valuation Comparison

Asia Oil & Gas

Asia Oil Service

Main Views

• The Chinese oil and gas sector is showing signs of growth, with increased refinery throughput and technological advancements.
• Sinopec and PetroChina are key players with plans to boost crude throughput, but Sinopec Yangzi faced a reduction due to facility damage.
• There is a mix of positive and negative news, including technological breakthroughs and regulatory fines.
• Analysts have issued BUY ratings for several companies, including SapuraKencana Petroleum and KNM Group, with revised target prices.
• Valuation metrics suggest varied performance and outlooks across the region, with some companies showing strong growth potential and others facing challenges.

Key Information

• Market Trends: Increased refinery throughput in China, technological breakthroughs, and new contracts in unconventional resources.
• Price Movements: Brent and WTI crude prices dropped, while LNG and other commodities showed mixed trends.
• Analyst Ratings: Multiple companies were rated BUY, with some showing improved financial outlooks.
• Valuation Metrics: Includes P/E, EV/EBITDA, RoE, and P/B ratios for comparison, highlighting the financial health and growth prospects of companies.