Citi on Integrated Oil: Beta Reversal for Majors; Strong Growth for MRO into 2011
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Citi on Integrated Oil: Beta Reversal for Majors; Strong Growth for MRO into 2011
Citi analyst says, "We estimate US Integrateds are pricing in $62/bbl oil and $5/mcf natural gas. The range is wide with Exxon Mobil (NYSE: XOM) at $52 oil and Occidental Petroleum (NYSE: OXY) at nearly $80 oil. Our NAVs continue to show XOM ($8.68 per Boe) and Chevron (NYSE: CVX_ ($11.88 per Boe) trading at some of the lowest valuations in the group on proved reserves, despite both companies having modest growth prospects (excluding XTO Energy (NYSE: XTO))."
"We continue to believe CVX and XOM are solid lower risk names. However, we believe Marathon has strong potential in the end of the year. We expect MRO to grow production between 10% and 15% in 2011. This growth will come from nearly 70 mboe/d of new oil production from new projects in the Gulf and Canada, which have low effective tax rates compared to the rest of the world. We estimate MRO’s Garyville expansion can earn 15% to 20% pre-tax cashon-cash returns at forward gasoline and diesel margins."
Citi analyst says, "We estimate US Integrateds are pricing in $62/bbl oil and $5/mcf natural gas. The range is wide with Exxon Mobil (NYSE: XOM) at $52 oil and Occidental Petroleum (NYSE: OXY) at nearly $80 oil. Our NAVs continue to show XOM ($8.68 per Boe) and Chevron (NYSE: CVX_ ($11.88 per Boe) trading at some of the lowest valuations in the group on proved reserves, despite both companies having modest growth prospects (excluding XTO Energy (NYSE: XTO))."
"We continue to believe CVX and XOM are solid lower risk names. However, we believe Marathon has strong potential in the end of the year. We expect MRO to grow production between 10% and 15% in 2011. This growth will come from nearly 70 mboe/d of new oil production from new projects in the Gulf and Canada, which have low effective tax rates compared to the rest of the world. We estimate MRO’s Garyville expansion can earn 15% to 20% pre-tax cashon-cash returns at forward gasoline and diesel margins."
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