UBS on the Energy Sector: Oil & Natural Gas Price Reset; Issues Sector Top Picks
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Price: $18.76 +0.27%
Rating Summary:
21 Buy, 22 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
21 Buy, 22 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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UBS on the Energy Sector: Oil & Natural Gas Price Reset
Analyst, William A. Featherston, said, "Slashing ’12-’14 natural gas forecasts & raising oil price forecasts: We’re cutting ‘12-‘14 NYMEX natural gas forecasts by ~20% to $3.35/MMBtu, $4.00/MMBtu & $4.75/MMBtu due to the absence of weather related demand and stronger than expected shale gas production growth. We expect price recovery to normalized price of $5.50/MMBtu to be deferred to '15. On the oil side, we're raising ‘12 our Brent forecast by $5/Bbl to $105/Bbl & narrowing the WTI/Brent spread to $7/Bbl in ’12 due to the Seaway pipeline reversal. We see both crudes converging toward our long term price of $95/Bbl post ‘12."
"Lowering estimates for gassy E&Ps while raising estimates for oily E&Ps: We’re cutting ‘12E-‘13E CFPS estimates for gassy E&Ps by ~8% & 15%, but raising ‘12E estimates for oily E&Ps by ~5%. E&P NAV estimates were on average little changed for our universe. Majors’ ’12E & ‘13E EPS rose 11% & 2%."
"Despite E&Ps trading below historical P/NAV and EV/EBITDX averages, we are cautious on the sector in the near term given the ~15% rally over the last 3 months on the back of a >$10/Bbl jump in oil price fuelled partly by geopolitical tension in the Middle East. That said, we would use market pullbacks to add to a selective group of high quality oil-weighted E&Ps, but we would generally still avoid gassy E&Ps as weak gas market fundamentals will limit upside over the next 12 month."
UBS E&P Top Picks are Anadarko Petroleum (NYSE: APC), Noble (NYSE: NBL) and Marathon Oil (NYSE: MRO). For Intergrateds, UBS prefers Chevron (NYSE: CVX). Among gas-weighted names, UBS favors Southwestern Energy (NYSE: SWN)
Analyst, William A. Featherston, said, "Slashing ’12-’14 natural gas forecasts & raising oil price forecasts: We’re cutting ‘12-‘14 NYMEX natural gas forecasts by ~20% to $3.35/MMBtu, $4.00/MMBtu & $4.75/MMBtu due to the absence of weather related demand and stronger than expected shale gas production growth. We expect price recovery to normalized price of $5.50/MMBtu to be deferred to '15. On the oil side, we're raising ‘12 our Brent forecast by $5/Bbl to $105/Bbl & narrowing the WTI/Brent spread to $7/Bbl in ’12 due to the Seaway pipeline reversal. We see both crudes converging toward our long term price of $95/Bbl post ‘12."
"Lowering estimates for gassy E&Ps while raising estimates for oily E&Ps: We’re cutting ‘12E-‘13E CFPS estimates for gassy E&Ps by ~8% & 15%, but raising ‘12E estimates for oily E&Ps by ~5%. E&P NAV estimates were on average little changed for our universe. Majors’ ’12E & ‘13E EPS rose 11% & 2%."
"Despite E&Ps trading below historical P/NAV and EV/EBITDX averages, we are cautious on the sector in the near term given the ~15% rally over the last 3 months on the back of a >$10/Bbl jump in oil price fuelled partly by geopolitical tension in the Middle East. That said, we would use market pullbacks to add to a selective group of high quality oil-weighted E&Ps, but we would generally still avoid gassy E&Ps as weak gas market fundamentals will limit upside over the next 12 month."
UBS E&P Top Picks are Anadarko Petroleum (NYSE: APC), Noble (NYSE: NBL) and Marathon Oil (NYSE: MRO). For Intergrateds, UBS prefers Chevron (NYSE: CVX). Among gas-weighted names, UBS favors Southwestern Energy (NYSE: SWN)
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