20150720-Maybank_KERPL-Regional_Oil___Gas_11页_376kb

Regional Oil & Gas Summary - 20 Jul 2015

Core Content

This document provides an overview of the oil and gas market dynamics and company valuations across Asia and other regions, with a focus on key developments and analyst ratings as of 17 July 2015.

Market Trends

• Crude Oil Prices:

  • Brent: Up 0.3% to USD57.10/b
  • WTI: Flat at USD50.89/b
  • Dubai Fateh Spot: Flat at USD56.72/b
  • China Daqing Spot: Flat at USD53.08/b

• Natural Gas Prices:

  • NYMEX Henry Hub: Up 0.6% to USD2.87/MMBtu
  • LNG Northeast Asia CFR: Up 0.0% to USD7.83/MMBtu

• Other Commodities:

  • Gold: Down 1.0% to USD1,134.14/Oz
  • USD-CNY Exchange Rate: Flat at 6.21
  • DJI: Down 0.2% to 18,086.45
  • S&P 500: Up 0.1% to 2,126.64

Key News Headlines

1. Hedge Funds Dump Crude Oil:

   • Speculators reduced their net-long position in WTI by 15% due to concerns over the Iran nuclear deal potentially leading to a prolonged supply glut.
   • Longs in WTI dropped 7.9%, while short wagers increased by 4.2%.

2. China's Industry Reforms:

   • China is advancing its upstream reforms, focusing on opening up exploration, deregulating natural gas imports, and allowing third-party access to oil and gas infrastructure.
   • The reform package is under review by industry stakeholders and will be endorsed by national authorities.

3. US Rig Count:

   • The number of US oil and gas rigs fell by six to 857.
   • Oil rigs decreased by seven to 638, while gas rigs increased by one to 618.
   • The Eagle Ford shale lost the most rigs, while the Permian rig count continued to rise.

4. South China's LPG Prices:

   • LPG prices rebounded due to increased demand from third-tier distributors.
   • Both imported and domestic LPG prices fell by 18%-19% last week, but distributors are now replenishing stocks.

5. Thai PTT and Vladivostok LNG Project:

   • Thai PTT may participate in the Vladivostok LNG project, which has been delayed due to sanctions on technology exports to Russia.
   • Gazprom is also expected to be involved in a pipeline connecting Thailand's shelf fields to internal regions.

6. Honeywell's LNG Pipeline Improvements:

   • Honeywell Process Solutions is helping improve the Guangxi LNG high-pressure pipeline in China with its gas measurement equipment.
   • The pipeline is crucial for optimizing China's energy structure and meeting LNG demand in Guangxi.

Analyst Ratings and Key Companies

Malaysia Oil & Gas

• Malaysia Oil & Gas: NEUTRAL, focus on production-business operators.
• Preferred BUYs: Yinson, Bumi Armada, Dialog, KNM

SapuraKencana Petroleum

• Rating: HOLD
• Notes: Bags ONGC's USD273m turnkey job; GSA negotiation ongoing; Target price at MYR2.80

Petronas Chemicals

• Rating: HOLD
• Notes: Petrochemical ASPs down 25% YTD in USD terms and 13% in MYR terms.
• Target Price: Raised to MYR6.60 from MYR5.35

NewOcean Energy

• Rating: BUY
• Notes: Top pick in the energy space; Target price at HKD7.70, implying 105% upside.
• Earnings: Volume and margin are on track for FY15 projections.

Asian Oil & Gas Valuations

Asian Oil-Service Valuations

Summary

The oil and gas market in the region was influenced by geopolitical developments, such as the Iran nuclear deal, which raised concerns about a prolonged supply glut and led to a reduction in hedge fund bullish bets. In China, LPG prices rebounded due to increased demand, and NewOcean Energy was highlighted as a top pick with a strong upside potential. In Malaysia, the focus remained on production-business operators, with a NEUTRAL rating for the overall market and specific BUY ratings for Yinson, Bumi Armada, Dialog, and KNM. The document also included detailed valuations for major oil and gas companies in Asia, highlighting key financial metrics and analyst ratings.