america’s energy renaissance: top plays for income and growth
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America’s Energy Renaissance: Top Plays for Income and Growth. Elliott H. Gue January 18, 2014 Editor, Energy & Income Advisor Editor, Capitalist Times. Back to July 1988. The World’s Largest Oil and Gas Producer. US Energy Liberty Day is Approaching. - PowerPoint PPT PresentationTRANSCRIPT
America’s Energy Renaissance: Top Plays for
Income and GrowthElliott H. Gue
January 18, 2014Editor, Energy & Income Advisor
Editor, Capitalist Times
Where’s Oil Trading?
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160 Oil Prices
LLS WTI Brent WTI Midland Bakken
Refining: As Easy as 3-2-1
• Refiners are manufacturing firms: convert oil to gasoline, diesel, jet fuel, other products.• 3 Barrels of oil ($93.82/bbl x 3) =
$281.46• 2 Barrels of Gasoline ($2.68/ gallon x
42 x 2) = $225.12• 1 Barrel of Diesel ($3.05/gallon x 42 x
1) = $128.1• 3-2-1 Spread: $225.12 + $128.1 -
$281.46 = $70.76 divided by 3 = $23.58 per Barrel.
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NYMEX 3-2-1 Crack Spread
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Shale Development: Where’s the Money Coming From?
297; 55%
112; 21%
74; 14%
53; 10%
Major North American E&Ps Capital Raised Since 2007
Asset Sales Debt Equity JVs
Vanguard Natural Resources (NYSE: VNR)• Recently acquired 87,000 Gross
Acres in Pinedale and Jonah fields WY.• 80% NatGas, 16% NGLs• Historically Hedges 85% of Gas
production through 1H 2017 and 75% of Oil through 2015• Opportunity for more acquisitions
as producers need to fund shale. • Yields 8.4%, Paid Monthly 1/4
/2008
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Upstream MLPs and the Alerian
Pacific Coast Oil Trust (ROYT)
• Perpetual trust with an 11.7 percent yield. • Produces 98 percent crude oil. • Southern California fields are
mature and have a low decline rate, often well under 5%. • 80% interest in developed
properties.• 25% royalty interest in Diatomite
formation.• Active waterfloods and steamfloods
Patterson-UTI (NSDQ: PTEN)
• 60% of revenues from contract drilling, 40% from pressure pumping• 300 working rigs• 2009: 75% of rigs mechanical,
2013: more than 50% electric, 126 rigs APEX.• 6 New APEX Rigs (all “Walking”)
in 2H 2013, 12 in 1H 2014
Noble Energy (NBL)
• First wells in the DJ Basin in 2010, last year drilled 195 Wattenburg, 25 in CO• By 2016 plans 500 wells/yr. in DJ
Basin• Liquids rich portion of Marcellus• Eastern Med. Tamar 9 tcf and
Leviathan 17 tcf in Israel, Cyprus-A 5 to 8 tcf
Eni (NYSE: E)
• 16.81% stake in Kashagan in Caspian Sea first oil produced middle 2013
• 100,000 boe/day in deepwater GOM• 700,000 in new projects over 4 years,
3 to 4% annualized• Mamba Complex Mozambique 30 tcf
gas• Barent’s Sea Norway and Russia• Disposing of non-core assets • PIIGS discount unwarranted.• Offers a 6.5% yield.
LyondellBasell Industries (NYSE: LYB)
• 80 percent of Companies EBITDA benefits from favorable US NGLs prices.• Ethane cracking capacity to
expand in 2014-2015, before competition.• Using NGLs imported from USA
to reduce EU costs• Near 3% yield and share
buybacks
Thank You.
Elliott H. GueJanuary 18, 2014
Editor, Energy & Income AdvisorEditor, Capitalist Times