20161129-招商证券_香港_-Worst_is_over__Eyes_on_moderate_recovery_in_2017E_37页_5mb_5mb

报告摘要

Industry Report Summary: Oil and Gas Sector in 2017E

Core Content

The China Merchants Securities (HK) report highlights the recovery of the oil and gas sector in 2017E, driven by a slowdown in OPEC supply and solid demand, especially from China's economic growth. The report upgrades the sector from NEUTRAL to OVERWEIGHT, emphasizing the positive outlook for oil price recovery and its impact on upstream capital expenditures (capex) and company valuations.

Main Points and Key Information

Oil Price Outlook

Oil prices are expected to recover in 2017E, trading within a range of US$50–60/bbl.
The average oil price for 2017E is forecasted at US$55/bbl, US$4–5/bbl higher than EIA's projection, due to a more positive view on market balancing.
Long-term oil price projection remains at US$75/bbl, driven by the need for higher prices to support new discoveries.

Upstream Capex Recovery

Global integrated oil companies are expected to increase 2017E capex by an average of 7% YoY, following a 44% cut in 2014–16E.
Independent E&Ps in North America are projected to see a 26% YoY increase in capex, after a 71% plunge in 2014–16E.
Domestic upstream capex in China is expected to grow by 10–15% YoY in 2017E, assuming an oil price of US$55/bbl, which is above the US$40–48/bbl breakeven price for domestic producers.

Sector Upgrade

The sector is upgraded from NEUTRAL to OVERWEIGHT due to the moderate recovery in oil price.
Preferred stocks: CNOOC and SSC (oil price recovery players), and Sinopec Kantons (logistic player with volume growth).
COSL is downgraded to SELL due to continued headwinds in the offshore drilling market and weak earnings outlook.

Company Analysis

Company	Ticker	Rating	Current Price (HK$)	Target Price (HK$)	Upside	EPS (RMB) FY16E	EPS (RMB) FY17E	P/E (x) FY16E	P/E (x) FY17E	P/B (x) FY16E	P/B (x) FY17E	ROE (%) FY16E	ROE (%) FY17E
CNOOC	883 HK	BUY	10.04	12.80	27%	0.03	0.59	n/a	14.5	1.0	1.0	0.4	7.0
Sinopec Kantons*	934 HK	BUY	3.48	4.90	41%	0.43	0.46	8.1	7.5	0.8	0.8	10.8	10.7
SSC	1033 HK	BUY	1.59	1.90	19%	(0.61)	0.03	n/a	42.4	1.2	1.2	(42.7)	2.8
COSL	2883 HK	SELL	7.42	6.20	-16%	(2.11)	(0.07)	n/a	n/a	0.8	0.8	(24.2)	(0.9)

Domestic Gas Price Reform

The NDRC introduced a new transmission tariff pricing mechanism for long-distance gas pipelines in October 2016, with a permitted investment return of 8%.
A RMB0.6/cu.m cut in gas price is needed to reduce the price premium over alternative energy sources.
Upstream players, pipeline operators, and distributors are expected to bear RMB0.4/cu.m of the price cut, saving RMB23.7bn for downstream users.

Global Oil Market Dynamics

OPEC production reached a historical high of 33.1mbpd in October 2016, with Saudi Arabia, Iraq, and Iran as the main contributors.
OPEC production growth is expected to be limited in 2017E, with an increase of 0.2mbpd to 33.3mbpd, due to diminished spare capacity and resumption of production in Iran.
Russia's oil supply is expected to peak in January 2017 and decline gradually, due to investment concerns and tax reforms.

US Shale Industry

The Trump administration is seen as positive for shale development due to deregulation and support for fossil fuels.
Breakeven prices for US shale producers have dropped significantly, from US$67/bbl in 2013 to US$29/bbl in 2016.
A US$60/bbl price level is considered key to curb meaningful supply rebound in the medium term.

Global Oil Demand

Global oil consumption is expected to grow by 1.3–1.5mbpd in 2016E–17E, driven by solid demand from China and India, which account for 48% of the incremental demand.
China's oil imports are expected to grow at a 7% CAGR from 2015 to 2020, supported by inventory build-up and teapot refinery expansion.

Deepwater Drilling Market

The deepwater drilling market shows no signs of recovery yet, with semi-sub rigs contracted down 54% from the 2013 peak to 87 rigs in October 2016.
Jack-up rigs also declined by 27% from the 2014 peak to 285 rigs in October 2016.
Day rates for new contracts have fallen to US$150k/day, close to operating costs, potentially leading to negative cash margins.
Rig utilization is expected to drop to 44% in early 2017 if no new contracts are signed.

China Gas Pricing Reform

The natural gas pricing mechanism has seen a breakthrough with a new transmission fee pricing system.
The central government aims to increase natural gas's share in total energy consumption from 5.9% in 2015 to 10% by 2020.
Natural gas consumption grew at a 15% CAGR from 2005–2015 due to clean energy demand and LNG terminal operations.

Conclusion

The report outlines a positive outlook for the oil and gas sector in 2017E, driven by oil price recovery, domestic demand, and reforms in gas pricing. It recommends BUY for CNOOC, SSC, and Sinopec Kantons, while SELL for COSL. The global oil market is expected to improve with OPEC supply constraints and strong demand from China and India, while the US shale industry remains a key factor in long-term oil price dynamics.

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