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Regional Oil & Gas Summary

Core Content

The document provides an overview of the oil and gas market trends as of 13 August 2014, highlighting price movements, news headlines, and analyst reports for various companies across Asia, the US, and other regions. It also includes valuation comparisons for oil and gas companies and services.

Market Price Movements

• Brent Crude Oil: Down 1.7% overnight to $102.92 per barrel.
• WTI Crude Oil: Down 0.7% overnight to $97.37 per barrel.
• LNG Northeast Asia CFR: Up 0.8% to $11.90 per MMBtu.

News Headlines

OPEC and Oil Price Forecasts

• The International Energy Agency (IEA) suggested that OPEC needs to increase crude output by 400k b/d to maintain its 2014/2015 oil price forecasts.

China's Gas and Oil Price Adjustments

• China announced a 0.4 CNY increase in non-residential gas prices starting 1 September.
• China may adjust oil product excise in October, as per a source in the State Administration of Taxation.
• The new VAT policy in China has not yet impacted the refining feedstock market or independent refinery capacity utilization.

US Oil and Gas Price Forecasts

• The US Energy Information Administration (EIA) reduced its 2014 WTI price forecast to $100.45/bbl due to a surge in production.
• The EIA also lowered its 3Q forecast for Henry Hub gas price to $3.95/MMBtu, attributed to mild weather and higher storage injection.

Chinese Refinery Throughput

• China's refinery daily throughput is expected to rise by 0.5% in August, with Sinopec and PetroChina's combined throughput increasing by 0.63%.

Analyst Reports

Icon Offshore Berhad

• Rating: Buy
• Target Price: MYR2.00
• Reason: One of the largest OSV operators in Malaysia with a fleet of 32 units and expected expansion to 39 units by Q1 2016.
• 3-year net profit CAGR: 30%

Petronas Gas

• Rating: Hold
• Target Price: MYR23.50
• Reason: 1H14 core net profit was in line with expectations, addressing concerns over earnings performance.

Nam Cheong Ltd

• Rating: Buy
• Target Price: SGD0.55
• Reason: Consistent performance with higher revenue recognition and sustained optimism on vessel demand.

Perdana Petroleum

• Rating: Buy
• Target Price: MYR2.55
• Reason: Top pick for OSV play with a compelling growth story, GO angel, and Ezion alternative. Expected earnings boost from new AWBs in 2016.

Sembcorp Industries

• Rating: Hold
• Target Price: SGD5.03
• Reason: 2Q14 PATMI met expectations, but domestic power is under pressure. TP adjusted due to updated components.

Malaysia Marine & Heavy Engineering

• Rating: Buy
• Target Price: MYR4.60
• Reason: 1H14 results met expectations, but below consensus. Valuation methodology changed to backlog-based, increasing TP by 9%.

Regional Oil & Gas Services

• Rating: Overweight
• Reason: Positive feedback from roadshows, with highlights on RAPID, rigs, Indonesian OSVs, and BTS. Key BUYs include KNM, Pernada Petroleum, Ezion, and Nam Cheong.

Cosco Corp

• Rating: Sell
• Target Price: SGD0.67
• Reason: 2Q14 PATMI was in line with expectations, but FY14E order winds were cut from USD2.0b to USD1.5b. TP adjusted to trough P/BV.

Valuation Comparison

Key Points

• Price Trends: Brent and WTI crude prices fell, while LNG Northeast Asia CFR prices rose.
• China: Non-residential gas price hike announced, potential oil excise tax adjustment in October, and refinery throughput increase expected in August.
• US: Lowered oil and gas price forecasts due to increased production and mild weather.
• Analyst Recommendations: Multiple companies are rated Buy or Hold, with specific target prices and growth outlooks.
• Valuation Metrics: A range of valuation ratios (P/E, EV/EBITDA, P/B) are provided for different companies, offering insights into market expectations and company performance.