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Regional Oil & Gas Summary - 09 July 2014

Core Content

The summary covers recent developments in the oil and gas sector across various regions, including Asia, India, Indonesia, and others, along with major price movements and analyst reports.

Market Overview

• Brent Crude Oil fell by 1.2% to $108.94 on 08 July 2014.
• Dow Jones and S&P 500 both declined by 0.7%.
• LNG Northeast Asia CFR showed a -5.1% change over the last month.
• Gold decreased by 0.1% to $1,318.63.
• USD-CNY remained stable at 6.20.

News Headlines

Upstream Developments

• Technip secured a subsea contract with Statoil, ExxonMobil, and Gassco for services over four years.
• Shell exited the Kidan Saudi gas project due to poor exploration results with Saudi Aramco.

Refining & Petrochemicals

• Thailand's PTTGC will shut down its LLDPE plant for a 12-day maintenance in late July.
• Taiwan's CPC plans to restart its No. 4 cracker on 11 July, while the No. 5 cracker remains offline.
• India's ONGC sold 35,000 tonnes of naphtha for delivery on 9-10 August.

Other Developments

• NZOG expanded into unconventional Indonesian plays with Pacific Oil & Gas and Bukit Energy.
• Russian gas delivery to Turkey resumed via the Blue Stream pipeline on 4 July, with Gazprom supplying 16bcm/year.

Analyst Reports

China

• Sinopec - HOLD, Target Price: HKD6.85
  Restructuring update indicates no IPO in the short term, with 70% of enlarged capital retained. Valuation appears stretched.

• Yinson Holdings - BUY, Target Price: MYR3.03
  1QFY1/15 results are in line with expectations. Target price adjusted for rights and share split. 19x FY1/16 PER target.

• Petron Corp - BUY, Target Price: PHP16.80
  RMP-2 is expected to be completed by the end of the month, with full commercial operations by December 2014. Stock underperformed the PSEi by 28 ppts.

• SapuraKencana Petroleum - BUY, Target Price: MYR5.30
  Core net profit is in line, with a 2.35sen DPS positive surprise. Secured 2 EPCIC contracts worth MYR1.3b, increasing backlog to MYR30b.

• China Oil & Gas (initiation) - NEUTRAL
  Initiated with a NEUTRAL view. PetroChina and NewOcean Energy are BUY, while CNOOC and Sinopec are HOLD.

• CNOOC - HOLD
  Struggles with the 'producer's curse', with 2.6% CAGR expected despite volume growth. FCF return on new barrels is challenging.

• NewOcean Energy - BUY
  Offers access to auto LNG, which is the fastest-growing segment in China. Expected to be the largest auto natural gas distributor by 2017.

India

• ONGC - HOLD
  No rating update, but the company is selling naphtha for 9-10 August.

Malaysia

• Gas Malaysia - Hold, Target Price: MYR3.80
  Optimistic about long-term fundamentals but cautious about near-term challenges.

• Petronas Gas - Hold, Target Price: MYR23.50
  Market cap is MYR15.3b, with MYR24.56 as the current price.

Philippines

• Petron Corp - BUY, Target Price: PHP16.80
  RMP-2 completion expected by the end of the month.

Thailand

• PTT Global Chemical PCL - Buy, Target Price: THB87.00
  Current price is THB66.50.

• Thai Oil PCL - Sell, Target Price: THB65.00
  Current price is THB51.50.

Vietnam

• PetroVietnam Gas - Buy, Target Price: VND103,000
  Current price is VND111,000.

Valuation Comparison

Key Points

• Market Trends: Crude oil prices declined, while LNG and other energy commodities faced mixed movements.
• Corporate Moves: Technip secured major contracts, Macquarie acquired a U.S. terminal business, and Shell exited a project in Saudi Arabia.
• Operational Updates: Thailand and Taiwan are undergoing maintenance and restarting operations, respectively.
• Analyst Views: Various companies are rated with BUY or HOLD, with target prices and earnings forecasts.
• Valuation Insights: The table provides a comparative view of valuation metrics for key companies in the region.