德银-中国-石油天然气行业-德银中国数据库2018年会议纪要-20180110-10页_699kb

DB Access China 2018 Conference Summary

Core Content

The DB Access China 2018 conference provided key insights into the Oil & Gas (O&G) industry, with Wood Mackenzie presenting on the outlook for 2018. The report outlines major trends, cost dynamics, and investment opportunities in the sector, with a focus on China, the Middle East, and Latin America.

Main Views and Key Information

1. Oil Price Outlook

• Brent crude oil is expected to average USD56/bbl in 2018.
• Maintaining prices above USD60/bbl will be increasingly difficult.
• Near-term equilibrium exists, but global supply growth is projected to outpace demand growth for the rest of 2018.
• Tight oil is expected to grow by 1.2 million b/d, with significant output from deepwater Brazil.
• US tight oil can now hedge positions at USD62/bbl WTI.

2. Capital Expenditure (Capex)

• Total upstream spending is expected to remain flat at USD400 billion.
• LNG spending, particularly in Australia, has seen a significant drop.
• Deepwater and unconventional projects will fill the gap, with an expected 15% year-on-year (yoy) growth.

3. Cost Curve

• Pre-FID deepwater breakeven costs have fallen from USD78/bbl (3Q14) to USD56/bbl (3Q17).
• The decline in costs in 1Q17 was due to the removal of Angola projects.
• Cashflow positive reserves increased from 5 billion BOE in 2014 to 20 billion BOE in 2017.

4. Tight Oil Development

• Output is expected to rise by 24% to 6.2 million b/d.
• Rapid growth brings challenges and rising costs.
• Productivity is the key to success in tight oil.
• A 10% fall in production destroys 60% more value than a 10% cost increase.
• Undrilled liquid resources in the Permian have increased to 13 billion BOE under USD60/bbl WTI.

5. Offshore Field Services (OFS)

• 2018 will remain a challenging year for OFS companies.
• The business model must adapt to a USD50/bbl oil environment.
• Operators with the best OFS cost control will benefit.

Resource Capture Opportunities

• Asian NOCs have 15 billion BOE of resources available for capture.
• Iran has 28 billion BOE of discovered resources up for grabs.
• In UAE, the ADMA concession expires in March 2018, with 7.4 billion bbl of remaining reserves.
• Brazil aims to offer 10 billion BOE of deepwater DROs (Developed Reserves Opportunities).

Investment Recommendations

Equity Rating Key

• Buy: Based on a 12-month total shareholder return (TSR) forecast.
• Sell: Based on a 12-month TSR forecast indicating a negative outlook.
• Hold: A neutral stance on the stock over a 12-month horizon.

Risk and Disclosure Information

• Deutsche Bank and its affiliates may hold debt or equity securities in the subject companies.
• Recommendations may be based on short-term trade ideas, which can differ from long-term ratings.
• Derivative transactions involve market, counterparty default, and illiquidity risks.
• FX risk is a concern for investors in foreign-denominated securities.
• Liquidity and regulatory risks are also highlighted, especially for foreign exchange and derivatives.

Legal and Regulatory Disclosures

• Deutsche Bank operates under various regulatory frameworks across global markets, including US, Germany, UK, Hong Kong, India, Japan, and others.
• Investors are advised to review all disclosures before making investment decisions.
• Deutsche Bank is not acting as a financial adviser or fiduciary.
• Investment decisions should be made independently, considering individual financial circumstances.

Analysts and Leadership

• David Folkerts-Landau: Group Chief Economist and Global Head of Research.
• Raj Hindocha: Global Chief Operating Officer Research.
• Michael Spencer: Head of APAC Research and Global Head of Economics.
• Steve Pollard: Head of Americas Research and Global Head of Equity Research.
• Anthony Klarman: Global Head of Debt Research.
• Paul Reynolds: Head of EMEA Equity Research.
• Dave Clark: Head of APAC Equity Research.
• Pam Finelli: Global Head of Equity Derivatives Research.
• Andreas Neubauer: Head of Research - Germany.
• Spyros Mesomeris: Global Head of Quantitative and QIS Research.

Contact Information

• Deutsche Bank AG Sydney: (61) 2 8258 1234
• Deutsche Bank AG London: (44) 20 7545 8000
• Deutsche Bank AG Frankfurt: (49) 69 910 00
• Deutsche Bank Securities Inc. New York: (1) 212 250 2500
• Deutsche Bank AG Hong Kong: (852) 2203 8888
• Deutsche Securities Inc. Tokyo: (81) 35156 6770

Additional Notes

• The report is for informational purposes only.
• Past performance is not indicative of future results.
• Target prices are based on analyst judgment and are subject to change.
• Deutsche Bank provides liquidity for securities it covers.
• SOLAR ideas are short-term trade ideas and may differ from long-term ratings.
• Investors are encouraged to consult legal and financial advisors before making investment decisions.