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【出版时间及名称】：2010年4月美国石油天然气行业研究报告
【作者】：Prichard Capital
【文件格式】：pdf
【页数】：44
【目录或简介】：
Summary
The EPX index has fallen back roughly 6% from its January 11 high of 413 to 387 currently. We would be selectively
buying “gassy” E&P names which have “best of breed” cost structures and drilling inventories on the theory that
natural gas prices will enjoy stronger buying support thanks to strengthening of industrial natural gas demand and
coal-to-gas switching induced demand, driven by low prices. While coal inventories have fallen, they do remain
somewhat of an impediment to higher prices. Furthermore, the gas rig count has risen more rapidly than we forecasted,
thus we are reducing our 2010 gas price forecast to $4.75/Mcf from $6.50 previously. However, and most notably, our
mid-cycle price based on all-in costs remains unchanged at $6.25, which limits significant decreases in the NAV's of
our covered companies.
In the oil market, with Q4 2009 showing the first y/y demand growth since Q2 2008 in conjunction with demand
strengthening in non-OECD markets, specifically in China, we believe that oil should be able to sustain its current
price level. Therefore, we are increasing our 2010 oil forecast to $80.00/Bbl from $72.50 previously, establishing 2011
price of $88 and increasing our mid-cycle price to $83 from $70.
Key Points
• Our primary gas thesis is that the market will remain well-supplied in 2010 with U.S. natural gas production
decreasing only by ~0.4 Bcf/d y/y and supplies being led by drilling efficiencies, uptick in rig count in H2 2009 and
higher LNG imports. While growth in industrial activity and coal-to-gas switching for electric generation will help
demand, we believe that electric demand will actually be down y/y as fuel switching is expected to be mostly limited
to the shoulder periods, due to larger than average coal stockpiles and higher natural gas prices than last year.
• For the oil and liquids upside our favorite names are Mariner Energy, Inc (ME-$15.60), Murphy Oil Corp
(MUR-$57.64), Swift Energy Company (SFY-$32.50) and Vaalco Energy, Inc (EGY-$4.87). While on the
"gassy" names our favorites are low cost, catalyst driven producers who do not have a potential need for the capital
markets in 2010 based on a low gas price outlook. Those names are: Cabot Oil & Gas (COG-$37.74), EQT Corp
(EQT-$42.08), Gastar Exploration Ltd. (GST-$5.07), Petrohawk Energy Co (HK-$21.36) and Petroleum
Development Corp (PETD-$23.74).
• The largest delta to our NAV’s on the downside are Crimson Exploration (CXPO-$2.92), Goodrich Petroleum
Corp (GDP-$16.26), and Ultra Petroleum Corp (UPL-$47.23) that declined 14%, 10%, 10%, respectively and to
the upside are Chesapeake Energy Corp (CHK-$24.12), Cimarex Energy Co (XEC-$60.35), and SFY that
increased 34%, 34%, 30%, respectively.
• Presumably, E&Ps will lower capex budgets due to low commodity prices. We estimate the rigs at risk to be
100-150, lower than investor sentiment of 200-300 rigs. Rigs shifting to oil directed drilling plays and areas
classified as gas directed drilling but with high liquids content (Eagle Ford and Granite Wash) will limit the declines.
However, we believe the sell-off in the land driller stocks is overdone. Typically, the land driller share price index
peaks 1-3 months prior to the rig count apex, indicating a downtrend in the rig count is likely by early-May, and
share prices fall 40%-60%, slightly more than the recent 30% decline for the group. Nabors Industries Ltd.
(NBR-$19.90) is our top pick.
• On the production services side, Complete Production Services, Inc. (CPX-$11.84) has the most exposure to the
weakness in natural gas. As such, we have revised our H2 2010 EPS estimates lower to reflect weaker gas rig count
assumptions and CPX’s presence in gas basins. Based on lower earnings and valuation multiple, our price target is
now $17.00, down from $20.00, but we are maintaining our ‘Buy’ rating.
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