the shale revolution - credit suisse
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The Shale Revolution Credit Suisse Securities Research & Analytics
DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. FOR OTHER IMPORTANT DISCLOSURES, visit www.creditsuisse.com/researchdisclosures or call +1 (877) 291-2683 for Credit Suisse Equity Research disclosures and visit https://firesearchdisclosure.credit-suisse.com or call +1 (212) 538- 7625 for Credit Suisse Fixed Income Research disclosures. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision..
February 25th 2014 Source: Credit Suisse
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access
Speakers
Hosted by:
Richard Kersley, Head of Global Equity Product & Thematic Research
Participants:
Ed Westlake, Co-head of Global Oil & Gas Research
David Hewitt, Co-head of Global Oil & Gas Research
Arun Jayaram, U.S. Exploration & Production
Jim Wicklund, U.S. Oilfield Equipment & Services
John Edwards, Energy MLPs/Infrastructure
Jan Stuart, Commodities
2
Richard Kersley
Intro Shale Revolution
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
4
Source: Credit Suisse
Shale supply chain mind map
Equipment & Support Services Cost Beneficiaries
Regulation
Subsidies
Construction & Farm Machinery
Caterpillar, Cummins and Fluor.
Revenue Risk
PDC Energy
Penn Virginia
Petrochina Company
Siemens, General Electric, Maruti
Suzuki, Honeywell, Rolls Royce,
Denso, Keihin and Itron, Tenaris,
Vallourec.
Union Pacific, Canadian Pacific and
Kansas City Southern.
Flowserve. Sulzer, Vallourec,
Pentair, Rotork, Weir, CIMC Enric,
Invensys and Energy Recovery
Dongfang Electric, Harbin Electric
and Emerson.
EcoLab, Republic Services, Waste
Management and Waste
Connections
Anadarko Petroleum
Apache
ARC Resources
Athlon Energy
Aurora Oil & Gas
Carrizo Oil & Gas
Chevron
Cimarex Energy
CNOOC
Concho Resources
ConocoPhillips
Continental Resources
Devon Energy
Range Resources
Noble Energy
Agrium Inc
CF Industries
Dow Chemical
Formosa Plastics
Eastman Chemical
Maruti, Westport Innovation
Auto's & Tech
Diamondback Energy
Encana
EOG
Exxon Mobil
Gulfport Energy
Marathon Oil
Molopo Energy
Pioneer Natural Resources
TAG Oil
Trilogy Exploration
Rosetta Resources
Santos
Senex energy
Nucor
Voestalpine
Sinopec china
Korea Gas
Chubu Electric Power
Westlake Chemical
Lyondellbasell Industries
Oil & Gas Equipment Services Government Chemicals & Agriculture
Industrial Machinery
Other
Electrical Equipment
Oil & Gas Refining & Marketing
Utilities
Steel
Perusahaan Gas Negara Persero
Western Refining
Dominion Resources
Osaka Gas
Tokyo Gas
Anton Oilfield Services, Dresser-
Rand, Halliburton,Hilong, Honghua,
Schlumberger,SPT Energy, Tenaris,
Weatherford and Yantai Jerah.
Railroads
Environ & Facilities Services
Yamato Kogyo
Exploration & Production
NextEra Energy
Clean Energy Fuels
Bioamber
Phillips 66
The Shale “Supply Chain”
Edward Westlake
Global Shale What Innings?
Shale Stil l in an Early, Disruptive Innings
Conclusion #1 : In North America, Efficiencies Driving Costs Lower, Recoveries
Are Still Improving. Focus remains on the core of the key shale plays.
Conclusion #2 : Shale is Most Impactful to GAS and NGL Markets
− Shale Gas is More Plentiful
− Gas and Ethane are More Difficult to Transport
− Low Prices Will Mean Significant Rise in US Gas Demand Over Longer Term
− Cost advantages for US Chemicals, Fertilizers, Refiners will be persistent
− Over time, other countries could also benefit from localised low gas prices
Conclusion #3 : Shale Oil Won’t Derail Global Oil Markets For Some Time
− Global decline is a tough challenge to overcome
− Eventually, the world needs to grow at a lower oil intensity (energy efficiency,
natural gas substitution)
Conclusion #4 : Global shale will take longer to be meaningful – but the animal
spirits have been released
6
7
NYMEX Breakeven Price ($ per MMBtu) for 10% ATAX RoR
Well Economics Support Gas in the Mid-$4.00’s LT
Source: Industry data, Credit Suisse research
WTI Oil Breakeven Price at 15% IRR ($ per Bbl)
Source: Credit Suisse Estimates
Oil: Shale “Sweet Spots” Breakeven $70 WTI or lower
8
9
Source : Phillips 66
Chemicals: US Ethane and International Cost Curve
US Ethane Could Be Oversupplied For a Long Time
10
Source: Credit Suisse Equity Research
Capacity Additions Not Sufficient to Drive Cost Curve Lower, But Reduce Upside Potential
Substantial capacity being added in Middle East, China.
Assuming that this new capacity is “state of the art”, then should be relatively low cost (on a
cash basis)
Not sufficient to derail the cost curve but does reduce chance of an upcycle
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000
East
Coa
st E
Quiv
alen
t Bre
akev
en m
argi
n $/
bbl
Cumulative Throughput
2012 Throughput
2016 Throughput
Refiners: Global Cost Curve
Source: Energy Information Administration
Global Shale Regions
Global Shale Regions – Prevalent But Untested
11
Source: Energy Information Administration
Estimated Global Shale Oil Reserves, Bn Bbls
75
58
3227 26
13.1 139.1 9 8
0
10
20
30
40
50
60
70
80
Ru
ssia US
Ch
ina
Arg
en
tin
a
Lib
ya
Ve
nez
uel
a
Me
xico
Pak
ista
n
Can
ada
(*)
Ind
on
esi
a
Bn
BO
E
EIA Estimate for US looks low. Russia being tested
Shale Oil – 345bn boe sounds like a large number
12
Shale Boosts Global Oil R/C Ratio Only Modestly
Source: Energy Information Administration
91
65 61
46
32
21 19 15 14 13 11
0102030405060708090
100
Ve
nez
uel
a
Lib
ya
Ru
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Arg
en
tin
a
Alg
eria
Pak
ista
n
Wo
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Can
ada
(*)
Me
xico
Ind
on
esi
a
No
rth
Am
eri
ca
Bra
zil
US
Ch
ina
Au
stra
lia
Oil
R/P
, ye
ars
Conventional Conventional+Shale Oil
On our higher shale resource estimates, US Oil R/C (Reserves/consumption ratio) is still only
20yrs including shale
13
Global Oil R/P
Shale Gas: Huge Boost for North America
Estimated Global Shale Gas Reserves, TCF
1115
802707 665
573 545437
390285 245
0
200
400
600
800
1000
1200
Ch
ina
Arg
en
tin
a
Alg
eria US
Can
ada
(*)
Me
xico
Au
stra
lia
Sou
th A
fric
a
Ru
ssia
Bra
zil
TCF
Significant Shale Gas Resource Across North America
Source: Energy Information Administration
14
Global Gas R/P
242
189 181160 150
11999
8268
3816
0
50
100
150
200
250
Sou
th A
fric
a
Alg
eria
Au
stra
lia
Arg
en
tin
a
Bra
zil
Ch
ina
Me
xico
Can
ada
(*)
Ve
nez
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a
Lib
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Wo
rld
Ru
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Ind
on
esi
a
No
rth
Am
eri
ca US
Pak
ista
n
Gas
R/P
, ye
ars
Conventional Conventional+Shale
We believe EIA underestimates US shale gas resource
Major impact on North America R/C, China, on Argentina, Brazil, South Africa
Gas Hydrates Would Sharply Increase the Gas R/C ratio if technology matures
Impact on Global Gas R/C Ratio: Dramatic Change
Source: Energy Information Administration
15
The Global Shale Whisperer
Source: Big Stock Photo
16
Tracking a basket of small cap shale companies can indicate shale progress around the world
Shale Play Name Listed Ticker Market Cap, $BN -1y, % -3m, % -1m, %
Colombia
Middle Magdalena Basin CANACOL ENERGY LTD Canada CNE 0.5 87% 35% 2%
Argentina
Vaca Muerta YPF S.A.-SPONSORED ADR Argentina YPF 10.6 65% 8% 5%
UK
Bowland IGAS ENERGY PLC UK IGAS 0.4 53% 23% -20%
Bowland Cuadrilla Private Cuadrilla N/A N/A N/A N/A
Poland
Various POLSKIE GORNICTWO NAFTOWE I Poland PGNig 9.6 -12% -14% 1%
Various POLSKI KONCERN NAFTOWY ORLEN Poland PKN 5.9 -19% -6% 3%
Various 3LEGS RESOURCES PLC UK 3LEG 0.0 -14% 6% 9%
Various SAN LEON ENERGY PLC UK SLE 0.2 -18% 3% 5%
Germany
Various 3LEGS RESOURCES PLC UK 3LEG 0.0 -14% 6% 9%
Various BNK PETROLEUM INC UK BKX 0.2 118% 3% 8%
South Africa
Karoo FALCON OIL & GAS LTD Canada / London FO 0.2 -2% -11% -4%
Australia
Cooper BEACH ENERGY LTD Australia BPT 1.8 4% 13% 16%
Cooper SENEX ENERGY LTD Australia SXY 0.8 8% -7% 15%
Cooper DRILLSEARCH ENERGY LTD Australia DLS 0.6 5% 19% 21%
Canning BURU ENERGY LTD Australia BRU 0.4 -37% -4% -20%
Arkaringa LINC ENERGY LTD Singapore LNC 0.6 NA NA -14%
Beetaloo FALCON OIL & GAS LTD Canada / London FO 0.2 -2% -11% -4%
New Zealand
East Coast Basin TAG OIL LTD Canada TAO 0.2 -28% -21% -10%
East Coast Basin NEW ZEALAND ENERGY CORP New Zealand NZ 0.0 -38% 18% -1%
The Global Shale Whisperer
Source: Credit Suisse Equity Research
17
David Hewitt
Global Energy
China experienced target ‘flip-flop’ in Q4 2013
Mid year 2013 the Land Ministry was saying it lacked confidence China would meet its 6.5Bcm (230Bcf) production target by 2015 – but by November expressed confidence to hit 6.5Bcm with a stretch target of 10Bcm
Sinopec announced it would produce 5Bcm by end of 2015, up from 2Bcm
Regulated gas price increase probably a form of quid quo pro to drive greater focus / urgency from Chinese super-majors re shale.
By the numbers…
100 - 150 shale wells drilled thus far − 7 Bcf produced in 2013
60 shale well target for 2014 − 53 Bcf target production for 2014
230 Bcf target by 2015 − Land Ministry now discussing upsizing the
target to 350Bcf − Sinopec revised UP its 2015 shale target in
November (from 70 to 175Bcf)
2.1 – 3.5 Tcf target by 2020
19
China – Keeping the Faith
Source: Upstream
Australia – Still Early Days
20
Cooper Basin Players?
Beach Energy (BPT) most advanced
− 5+ wells fracked by end 2014
− Mix of vertical / horizontal
Drillsearch (DLS) not far behind
− 2 wells by Dec 2014
− 2 more by June 2015
Senex (SXY) plans not clear
− Looking for a partner
− Hornet flowed at 2 mmscf/day
Santos (STO) owns the infrastructure
− Moomba-191 2 mmscf/day; 14 months since first production
− Moomba-193 fracked by mid 2014
By the numbers…
More testing to be done…
− Best wells flowing at ~2-3 mmscf/day…
− …but very inconsistent
− Decline curves expected to be similar to US Shale at 60-80% in year 1
− Horizontal fracking to accelerate in 2H14
Costs are a big unknown
− BPT targets long-term costs of $10m/well…
− …vs US shale at $7-9m/well currently
Commercial production unlikely pre-2016
West Australian shale even further away (Buru Energy)
Source: Beach Energy, Buru Energy, Credit Suisse Estimates Source: Beach Energy, Drillsearch, Senex, Santos, Credit Suisse Estimates
21
Vaca Muerta is not dead. YPF management is starting to deliver on production, shale partnerships
(Chevron, Dow, should we read anything into the recent Apache farm-out?, a Petronas deal soon?), local
debt issuance, better gas prices and a tentative deal with Repsol at the time of writing.
Macro, micro, and the share price. The YPF share price strongly anticipated all those trends, to
recently suffer with wider Argentina macro issues.
Source: EIA , Bloomberg.
The YPF share price: euphoria, setback
01002003004005006007008009001,000
0
200
400
600
800
1,000
1,200
1,400
Ch
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U.S
.A
Arg
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Me
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o
S. A
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Austr
alia
Ca
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Lib
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Alg
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Bra
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Po
lan
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Fra
nce
No
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y
Ch
ile
India
Technically recoverable resources (tcf, LHS)
Reserve life (years, RHS)
Technically recoverable shale gas resources
0
10
20
30
40
50
60
Jan 1
1
Ap
r 11
Jul 11
Oct 1
1
Jan 1
2
Ap
r 12
Jul 12
Oct 1
2
Jan 1
3
Ap
r 13
Jul 13
Oct 1
3
Jan 1
4
Argentina Shale
Source: EIA , Bloomberg.
European Shale Gas License Holders
Source: Credit Suisse Research
22
Eni
Eni followed Exxon, Talisman and Marathon in
exiting its 3 Polish concessions in January 2013.
Chevron still active.
San Leon
San Leon and Baker Hughes have signed a letter
of intent to jointly develop the Siekierki shale gas
field (Feb 2014).
Production will be from four existing wells (tested
at 2-3 million cfd)
San Leon also announced Gdansk has proven to
be the most successful vertical well yet in Poland.
They will now drill a horizontal to prove
commerciality (Jan 2014)
Poland
23
Source: San Leon Energy
UK
Total enters UK licences
Total has become the first Major to enter into shale gas licences in the UK
The company has acquired 40% interest in the Gainsborough Trough area of the East Midlands.
Other companies still leading the way in the UK are Australia’s Dart Energy (partnered with GDF Suez),
IGas and Cuadrilla (partnered with Centrica).
Government incentives improve
British local councils that allow shale gas developments will keep 100% of the local tax they collect from
the sites under a government move to persuade communities to accept fracking
The local tax, known as business rates, could be worth up to £1.7m ($2.8m) a year to councils for a typical
site.
Ukraine
Ukraine and Chevron signed operational agreement in March that will allow Chevron to work on shale gas
extraction in the country.
Germany
Stalled work on legislation governing fracking, only a dozen exploration licences have been issued.
Rest of Europe
24
Canadian Shale – Still Early but Promising
Source: Company data Source: Company data, Credit Suisse Estimates
The Duvernay shale is an up and coming liquids play in Canada
− It stretches across central and western Alberta with windows prone to dry gas, liquids and
oil moving from west to east. It has often been compared with the Eagle Ford play in Texas
A favorable royalty regime in AB, liquids yields and well costs are key drivers of economics
Most producers are drilling in the Kaybob area of the play in the liquids-rich and oil prone
windows
25
Duvernay / Eagle Ford Comparison Duvernay Economics
Parameter Duvernay Eagle Ford
Size (km²) > 80,000 > 45,000
Depth (m) 2,800-3,600 3,050-3,960
Thickness (m) 25-60 40-110
Average Porosity 6-7.5 9.6
TOC (%) 1-7.5 (avg. 3.5) 3-7 (avg. 3.8)
Pressure (kPa) < 69,600 < 66,900
Pressure Gradient (kPa/m) 15.8-19.2 14.7-16.9
Brittleness Moderate Moderate
Yield (bbls/mmcf) < 600 < 600
IRR (pre-tax) 28%
IRR (after tax) 24%
PIR 1.25
Reserves Per Well 4.9 bcfe
First Year Decline 57%
BT NPV - 10 4.3 C$ million
AT NPV - 10 3.0 C$ million
Discounted Payback Period (AT) 3.7 years
Payback Period (AT) 2.7 years
F&D Costs 2.56 $/mcf
Capital Efficiency (30 day) 2,182 $/mcf/d
Capital Efficiency (1 yr avg) 3,311 $/mcf/d
Well Model OutputsWell Model Outputs
Arun Jayaram
US Shale What Innings?
More confident in American oil prices this year
Room for well costs to fall further as industry shifts to pad drilling in certain plays (e.g. Bakken, Permian) over time
Bakken : Industry experimenting with higher intensity fracs to bring forward volume/NPV and down spacing in the core.
Permian : Confidence in rocks is increasing, production growth could be slightly later than anticipated
Wattenberg : Rocks good, infrastructure and hence crude differentials are improving
Marcellus / Utica : Lowest cost gas rocks in world, but a need to connect to market
Eagle Ford : Further growth from the core in 2014.
Emerging Plays : Scoop wins. TMS facing headwinds.
Vail Upstream “Shale” Takeaways
27
28
Bakken Shale: Oil Production per Rig
0
50
100
150
200
250
Jan
-07
Ap
r-07
Ju
l-0
7
Oc
t-0
7
Jan
-08
Ap
r-08
Ju
l-0
8
Oc
t-0
8
Jan
-09
Ap
r-09
Ju
l-0
9
Oc
t-0
9
Jan
-10
Ap
r-10
Ju
l-1
0
Oc
t-1
0
Jan
-11
Ap
r-11
Ju
l-1
1
Oc
t-1
1
Jan
-12
Ap
r-12
Ju
l-1
2
Oc
t-1
2
Jan
-13
Ap
r-13
Ju
l-1
3
Oc
t-1
3
Eagle Ford Shale: Oil Production per Rig
0
20
40
60
80
100
120
140
160
Jan
-07
Ap
r-07
Ju
l-0
7
Oc
t-0
7
Jan
-08
Ap
r-08
Ju
l-0
8
Oc
t-0
8
Jan
-09
Ap
r-09
Ju
l-0
9
Oc
t-0
9
Jan
-10
Ap
r-10
Ju
l-1
0
Oc
t-1
0
Jan
-11
Ap
r-11
Ju
l-1
1
Oc
t-1
1
Jan
-12
Ap
r-12
Ju
l-1
2
Oc
t-1
2
Jan
-13
Ap
r-13
Ju
l-1
3
Oc
t-1
3
Niobrara: Oil Production per Rig
0
50
100
150
200
250
Jan
-07
Ap
r-07
Ju
l-0
7
Oc
t-0
7
Jan
-08
Ap
r-08
Ju
l-0
8
Oc
t-0
8
Jan
-09
Ap
r-09
Ju
l-0
9
Oc
t-0
9
Jan
-10
Ap
r-10
Ju
l-1
0
Oc
t-1
0
Jan
-11
Ap
r-11
Ju
l-1
1
Oc
t-1
1
Jan
-12
Ap
r-12
Ju
l-1
2
Oc
t-1
2
Jan
-13
Ap
r-13
Ju
l-1
3
Oc
t-1
3
Permian Basin: Oil Production per Rig
0
50
100
150
200
250
300
350
Jan
-07
Ap
r-07
Ju
l-0
7
Oc
t-0
7
Jan
-08
Ap
r-08
Ju
l-0
8
Oc
t-0
8
Jan
-09
Ap
r-09
Ju
l-0
9
Oc
t-0
9
Jan
-10
Ap
r-10
Ju
l-1
0
Oc
t-1
0
Jan
-11
Ap
r-11
Ju
l-1
1
Oc
t-1
1
Jan
-12
Ap
r-12
Ju
l-1
2
Oc
t-1
2
Jan
-13
Ap
r-13
Ju
l-1
3
Oc
t-1
3
Source: Credit Suisse, Source: Energy Information Administration
Efficiency Improving in Shales
Source: Credit Suisse, Source: Energy Information Administration
Source: Credit Suisse, Source: Energy Information Administration Source: Credit Suisse, Source: Energy Information Administration
29
Basin by Basin Internal Rates of Return (%)
56
%
34
%
49
%
50
%
48
%
35
% 40
%
34
%
33
%
28
%
29
%
19
%
25
%
31
%
48
%
22
%
16
%
23
%
38
%
24
% 26
%
21
%
18
%
17
%
16
%
10
%
19
%
12
%
13
%
13
%
10
%
5%
70
%
68
%
61
%
61
%
56
%
55
%
47
%
38
%
36
%
32
%
30
%
30
%
29
%
29
%
27
%
25
%
25
%
24
%
24
%
23
%
22
%
22
%
19
%
17
%
17
%
16
%
16
%
13
%
12
%
12
%
9%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%Oct-12 Jun-13
Efficiency gains are still apparent. Oil production per rig is rising. Technology is improving
the recovery per well (EUR) versus the well cost
Source: Credit Suisse
Returns Improving in Shales
Source: HPDI, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Research
Gas History Lesson: Good Rocks Can Still Overcome Falling Commodity Price
Source: HPDI, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Research
30
U.S. Natural Gas Price Marcellus Names (EQT, RRC, COG) Production vs. Relative
Performance
Niobrara: Infrastructure Adds Mark Inflection Point
Core Niobrara/Codell Focus Area DJ Basin Midstream Infrastructure
Midstream infrastructure adds should resolve
production constraints in 2014+. DCP’s
O’Connor plant online (110 MMcfe/d) in
4Q13 expanding to 160 MMcfe/d in 1H14.
DCP plans to add another 460 MMcfe/d of
capacity through 2016.
APC adding 300 MMcfe/d of capacity in
1Q14 with Lancaster start up. Source: NBL, PDCE Presentation
Source: NBL, PDCE Presentation
31
Niobrara: Infrastructure Adds Mark Inflection Point
Core Niobrara/Codell Focus Area Stacked play with repeatable results in Niobrara
B and Codell, strong initial data in the Niobrara C
and upside coming from longer laterals and
downspacing in all zones with as many as 40
wells per section required to maximize resource
recovery.
Recent strong results from PDCE Waste Mgmt
pad – 16 well/section test
Upcoming catalysts include BCEI’s 15-Well
Super Section – including 40-acre staggered Nio
B and C tests. NBL testing 24-32 wells/section
in 2014.
PDCE 16-Well Waste Management Pad – Side View Source: NBL, PDCE Presentation
Source: NBL, PDCE Presentation
32
Utica: Emerging at Low-End of Cost Curve
Utica Area Map
Source: Ohio DNR Oil & Gas Resources, Credit Suisse
The Utica emerged as a big gas/NGL shale contender in 2013 that competes at the low end of the cost curve.
Market looking for confirmation of type curves in 2014 with expectations that the Utica will deliver some of the best economics in U.S. shale. At the futures strip, we estimate the Utica condensate and wet gas projects deliver ATAX IRRs of 70%+.
GPOR and AR have identified the sweet spot of the play, where condensate and wet gas well EURs are estimated at 1.3–2.3 MMBoe and 18.5-23.4 Bcfe, respectively. Dry gas EURs are expected to be 15 Bcf+.
Look for current costs of $9.5-10.5mm to come lower in 2014 as operators drive efficiencies and refine completions and well construction practice.
Gathering and processing was a constraint to growth in 2013. MWE will have ~ 1 Bcfe/d of gas processing by 2Q14 and 60 Mbbls/d of fractionation and 40 Mbbls/d of de-ethanization capacity in 1Q14.
33
Permian: Northern Midland Established
Southern Delaware Play Could Catch Up in 2014
Key Midland Basin Wells
Source: Pioneer Natural Resources
PXD, FANG and ATHL, key names levered to the Northern Midland Basin in CS coverage, have re-rated given initial horizontal drilling success in multiple benches
of the Wolfcamp and Spraberry shales.
Operators have largely de-risked the Wolfcamp B, and
expect 2014 to prove the commercial status of 2+
additional zones with strong initial results in the Wolfcamp A (LPI has proven commercial in Reagan and Glasscock, Counties), D (Cline), lower and middle Spraberry and the Cleafork.
EURs generally noted in the 450 to 750 MBoe range.
The most prolific wells in the Basin appear to be running
toward a 1 MMBoe type curve (ie., PXD’s DL Hutt well).
− PXD’s DL Hutt well appears to be a 1+ MMBoe type well.
EOG, APC, CXO and ROSE are key Southern Delaware Basin players in CS coverage.
− CXO estimates 500-700 mboe (75% oil) EURs for $8.5-10.5mm/well and will run 6 rigs in 2014
− ROSE plans to run 4 hz rigs in 2014 and expects D&C costs of $8-8.5mm/well
34
35
Source: HPDI and Credit Suisse Estimates
Well Productivity
30 day rate (Boe/d) 1365
Gross EUR (Boe) 1,022,309
Net EUR (Boe) 817,847
% oil 60%
% gas 21%
% NGL 19%
1st year decline -78%
B-factor 1.25
Cost Assumptions
Completed well cost $8.50
LOE & Gathering 9.00
Production taxes 6.0%
Tax rate % 36.0%
Royalty 20.0%
Discount rate 10.0%
Well economics
F&D cost $8.31
IRR (pre-tax) 59.8%
NPV per well ($ MM) $12.6
NPV/I 1.5x
PV-10 $21.1
PVI (x) 2.5x
Northern Midland Type Curve
0
60
120
180
240
300
360
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1 3 5 7 9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
Ave
rag
e A
nn
ua
l p
rod
uc
ion
(b
oe
pd
)
Cu
mu
lati
ve
Pro
du
cti
on
(b
oe
)
Year
Cumulative Production (boe)
Annual production (boepd)
Gross EURs by County
652622
552524
491
380 371
256211
180
0
100
200
300
400
500
600
700
Ward
BS
Lo
vin
gB
S
Ward
WF
Lo
vin
gW
F
Reeves
WF
Lea B
S
Ed
dy B
S
Win
kle
rB
S
Ed
dy
WF
Reeves
BS
MB
oe
IRR (After Tax)
49%46%
41%
28%24%
22%19%
14%
8%
0%0%
10%
20%
30%
40%
50%
60%
Ed
dy B
S
Ward
BS
Ward
WF
Lea B
S
Lo
vin
gB
S
Lo
vin
gW
F
Ed
dy W
F
Win
kle
rB
S
Reeves
WF
Reeves
BS
Significant Potential From Midland and Delaware Basins
Source: HPDI and Credit Suisse Estimates Source: HPDI and Credit Suisse Estimates
Source: HPDI and Credit Suisse Estimates
Northern Midland Type Curve Gross Horizontal Permian Production Assuming 500 Mboe EUR
Gross EURs by County IRR (After Tax)
Eagle Ford Shale: Strong Production Growth…
Gross Eagle Ford Oil and Gas Volumes - Quarterly (QTD)
33,541 58,241 91,682155,313
236,808
323,371
464,190
627,536
758,937
904,572
1,065,328
1,219,026
1,381,840
1,501,747
1,602,528
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1Q20
10
2Q20
10
3Q20
10
4Q20
10
1Q20
11
2Q20
11
3Q20
11
4Q20
11
1Q20
12
2Q20
12
3Q20
12
4Q20
12
1Q20
13
2Q20
13
3Q20
13Q
TD
Bo
e/d
Source: HPDI and Credit Suisse
36
Eagle Ford Shale: …at High Returns
Well Productivity
30-day rate (Boepd) 736
Gross EUR (MMBoe) 0.567
Net EUR (MMBoe) 0.454
% Oil 74%
% Gas 13%
% NGL 12.6%
1st year Decline -70.2%
Cost Assumptions
Completed well cost (MM) $5.50
LOE & gathering $7.00
Production taxes 6.0%
Tax rate 36.0%
Royalty 20%
Discount rate 10%
Well Economics
F&D cost (per Boe) $12.13
IRR (pre-tax) 93%
NPV per well (MM) $10.8
NPV/I 2.0x
PV-10 (MM) $16.3
PVI (x) 3.0x
Eagle Ford Type Curve
0
100
200
300
400
500
600
0.000
0.100
0.200
0.300
0.400
0.500
0.600
0.700
0.800
1
21
41
61
81
101
121
141
161
181
201
221
241
261
281
301
321
341
361
381
401
421
441
461
481
Cu
mu
lati
ve
Pro
du
cti
on
(M
Bo
e)
Da
ily P
rod
uc
tio
n (M
Bo
e/d
)
Month
Source: HPDI and Credit Suisse
37
Eagle Ford Type Curve
38
Completion Design Improving
Source: MRO
Only 10-15% Degradation with Downspacing
Eagle Ford: Completion / Downspacing Success
Source: MRO
Bakken: Improving Recovery in Mature Basin
The Williston Basin Map Better completions and downspacing in 2013 point to improving resource recovery in the Bakken
Initial downspacing tests from operators such as KOG and CLR are showing promising results.
− KOG will now be testing tighter spacing with 8 Middle Bakken wells and 8 TFS wells per DSU.
− CLR is also testing down to 32 wells per DSU (vs. 16 wells per DSU).
New completion techniques have allowed companies to realize improved IP rates
− WLL moving to plug & perf with cemented liners from sliding sleeves and has seen 64% improvement in 24-hr IP rates.
− EOX is utilizing rotary steerables and slickwater ceramics and has seen meaningful improvement in performance.
Source: Continental Resources Presentation
39
Bakken: Improving Recovery in Mature Basin
Three Forks
Source: Continental Resources Presentation
40
James Wicklund
Oilfield Services Shifting Landscape
42
Natural gas prices may not be high or stable enough to boost dry gas drilling but they
are high enough to boost US E&P cash flows by ~3%, likely boosting capex (OFS
revenue) by 8%-9% in 2014.
Unconventional reserve potential has grown high enough to compete with Deepwater
for IOCs attention, resulting in some shift to shales.
The latest “hot” basin is the Permian, with 29% of all US rigs, at the starting point on rig efficiency and service intensity and the potential to last for decades.
“Bundling” of services reduces E&P cost, promises to boost IPs and EURs, with
service/technology integration that will change the way the companies do
business, benefitting the larger OFS companies the most.
Shifting Landscape in OFS Benefits Shale Exposure
43
$’s Shifting to Shale is Increasingly Likely
Source: Energy Information Administration
44
OFS benefits more from the volumes produced rather than near-term
E&P economics
Source: Energy Information Administration based on DrillingInfo and LCI Energy Insight
U.S. Production
45
Optionality on Future Natural Gas Production is Huge
Source: Energy Information Administration based on DrillingInfo and LCI Energy Insight
U.S. Dry Natural Gas Production
46
Sector is compensated on return metrics rather than growth
− Less chance of over-build
− Focus on cash generation and efficiency
− Fewer market share fights
− Discipline
Long-term Growth
− Maintaining current production will be critical
− Increasing production grows net volumes
− Natural gas will matter one day
Shift in Business model
− Little guys lose out in a 24-hour world
− “Managed Shale” – Single Service Provider makes headway
− Higher manageable risk, Higher generated return
Key Issues for the Oilfield Services Universe
47
Top Picks – Several Ways to Play
HAL, BHI, & SPN Most leveraged to the improving US completions
market
Most of the world’s OFS markets are operating close to “normalized’ except US completions and as it starts to improve, toward normalized, it should have the fastest margin/earnings growth in the industry. Early signs of pricing improvement in some markets puts the inflection point nearby.
HAL & BHI have the more relative exposure than SLB and SPN has more than any with 70% of revenues tied to onshore completion work. As downward earnings revisions end, the stock should move up.
CAM & WFT Buys on both market and self-help metrics
The new CFO and operations head, both ex-SLB, bring experience, maturity and adult supervision the company hasn’t seen in years.
CAM appears to be making progress on healing self-inflicted wounds with a diverse base of business that should continue to improve
John Edwards
N.A. Infrastructure
49
US NGL Supply Demand Model – Balanced by Exports and Ethane Rejection
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3E
201
4E
201
5E
201
6E
201
7E
Total NGL Demand (M Bbls/d)
NGL Feedstock Usage (M Bbls/d)
Heating/Other Propane Demand (M Bbls/d)
Exports (M Bbls/d)
Refinery Blending/Other Demand (M Bbls/d)**
Ethane Rejection (CS est.)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
Total NGL Supply (M Bbls/d)
NGLs from gas processing (M Bbls/d)
NGLs from Refining (M Bbls/d)
NGLs Imported (M Bbls/d)
Renewable Fuels & Oxygenate (M Bbls/d) NGL Supply – 1MM+ bbl/d growth
over 2013- 2017
Driven by High GPM Gas Production
in the NE
NGL Demand – Feedstock Use and Exports/Ethane Rejection to Balance
the US NGL Market
Weather remains a key unknown demand driver
Source: Credit Suisse, EIA
Source: Credit Suisse, EIA
50
US Ethane Incremental Supply and Demand
718 803 882 931 935 941 976 1,021 1,044
1,225
40100
150
200
50200
275
285320
175
718 803
882 931
985
1,141
1,291
1,406
1,514 1,600
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2008
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
Petrochemical Demand
Exports
Ethane Rejection (CS est.)
Total Ethane Supply (M Bbls/d)
Credit Suisse, CMAI, EIA
Outlook study suggests Ethane to remain in surplus until at least 2017
Ethane Rejection and Exports could together reach ~470MBbl/d in 2016
51
Enough Midstream Infrastructure for Marcellus/Utica Production? …Yes
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Gas P
rocessin
g &
Pro
ductio
n V
olu
me (
MM
cf/
d) Marcellus & Utica Gas Processing Supply vs.
Demand
Markwest Williams
Access Other
Proposed Utica/Marcellus Production
Biggest question for liquids rich production out of the Northeast has been lagging
midstream infrastructure
….but processing capacity has finally caught up.
Processing cap. should exceed production through 2014, and balance by EOY 2016.
Source: Credit Suisse, Company Filings
52
Enough Midstream Infrastructure for Marcellus/Utica Production? …Yes
-
200
400
600
800
1,000
1,200
Fractionation Capacity (Utica + Marcellus, Mbpd)
Fractionation Capacity Utica/Marcellus NGL Production
Gap potentially filled by shipping y-grade barrels to Gulf Coast (i.e. Bluegrass or UMTP) or export to Canada or Europe (i.e. Mariner West and Mariner East 1, Mariner East 2)
Biggest question for liquids rich production out of the Northeast has been lagging midstream
infrastructure
….but fractionation capacity is finally reaching balance
More y-grade pipelines are being proposed/constructed to move NGLs out of N.E., filling
implied gap in local fractionation capacity in 2015/16.
Source: Credit Suisse, Company Filings
53
MLPs Sustained Outperformance…
-50%
50%
150%
250%
350%
450%
550%
AMZX MLP Index TR MLPXTR TR S&P500 TR
Russell 2000 TR (Small Cap) S&P500 Utilities TR MSCI US REIT TR
10-yr Total Return CAGRMLPs (MLPXTR) = 19%
MLPs (AMZX) = 15%Utilities = 9%
Small Cap = 8%REITs = 8%S&P500 TR = 7%
10 Years Total Returns
Source: As of 1/24/14; Source: FactSet; Credit Suisse
2014 Outlook:
AMZX: Expect Total Returns for AMZX Index at 5% - 16%
MLPX: Expect Total Returns for next 12 months at 7% - 21%
54
MLP Capital Expenditure – Current Estimates
Connecting growing supply and demand creating significant infrastructure opportunities
does NOT include potential growth from acquisitions / dropdowns
Capex levels in 2014 expected to set record highs; Should bode well for distribution growth
Expect 2015 capex to trend higher as mgmt. release their updated annual budgets
$107.3
$141.5
$86.5
$146.3
$229.0
$282.6
$336.2
$464.0
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$0
$5
$10
$15
$20
$25
$30
$35
$40
2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E
Mkt Cap $BCapEx $Bn
Oil & Nat Gas Transportion Gathering & Processing Oil & Nat Gas Production
Shipping Propane Coal
Others MLP Total Market Cap
14% CAGR in CapEx (2007-2013E)
Growth in MLP Capex ($B) and Total MLP Market Cap ($B)
As of 12/31/13; Source: FactSet, RAVE, Credit Suisse
55
For full equities disclosures, please see slide 67.
Jan Stuart
Commodities
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS.
57
Non-Opec crude oil production,
has become a US story.
While US production has risen,
the rest of non-Opec has stagnated.
Source: Credit Suisse, IEA, EIA, ANP, CAPP, UK NBP, Reuters
36
37
38
39
40
41
42
43
44
45
46
J-95 J-97 J-99 J-01 J-03 J-05 J-07 J-09 J-11 J-13 J-15
RussianRebound
No response to high prices
USramps
up
36,000
38,000
40,000
42,000
44,000
46,000
4000
6000
8000
10000
12000
14000
J-04 J-05 J-06 J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14
Non-Opec (ex-US) CAGR:2004 - 2010 = 0.67%2011 - 2013E = -0.53%
US CAGR:2004 - 2010 = 1.75%2011 - 2013E = 12.22%
More quantifiable deltas: Non-Opec crude (read US) growth
Monthly total crude production
(raw, kb/d)
Monthly total liquids production (kb/d) SA
U.S. in blue (lhs), non-Opec ex-U.S. in red (rhs)
Source: Credit Suisse, IEA, EIA, ANP, CAPP, UK NBP, Reuters
58
2020 New Supply Cost Curve – Enough low cost gas to meet bullish demand scenarios?
Source: Credit Suisse
* Supply cost breakeven calculation assumes $90/b oil price
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
-5.6 -2.8 0.0 2.8 5.6 8.4 11.2 14.0 16.8 19.6
NY
ME
X B
rea
ke
ven
fo
r 1
5%
A
TA
X IR
R*
Cumulative production growth 2013-2020 (Bcf/d)
Needed to make up for base declines in conventional and GOM production
? ?
?
Upside risk to supply estimates for low cost-emerging shale plays?
Downside risks to breakeven costs for older shale plays once exploration resumes with higher natural gas prices?
Mississippian NE (dry) Marcellus Niobrara
Utica Eagle Ford Fayetteville
SW (rich) Marcellus Granite Wash Barnett
Permian Cana Woodford Haynesville
? ?
In natural gas, the story of plentiful low cost US supply remains the same.
59
Cumulative pipeline additions from Northeast to South look too small (Mmcf/d)
Source: Bentek Energy, Credit Suisse
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
To New England To South To Midwest & Canada
To New England 1,310
To South 3,015
To Midw est & Canada 3,725
Total through 2016 8,050
Cumulative through 2016
REX Reversal (1Q), ANR Lebanon Lateral (1Q), TCO Westside Exp (4Q), TETCO Team 2014 (4Q)
ANR-Glenn Karnes (2Q), Constitution (4Q ?), TETCO Unioncity to Gas City (4Q), TETCO Open (4Q), TGP Utica Backhaul (4Q), TCO Eastside Expansion (4Q), Transco Leidy Southeast (4Q)
AIM (1Q), NGPL Expansion (3Q)
But growth depends upon additions to pipeline infrastructure
60
Dominion South Chicago Citygate Tenn Zone 0
2010 0.19$ 0.12$ (0.08)$
2011 0.15$ 0.12$ (0.10)$
2012 (0.01)$ 0.10$ (0.07)$
2013 (0.20)$ 0.11$ (0.07)$
Winter 2014 (0.24)$ 1.80$ (0.18)$
Summer 2014 (0.85)$ 0.07$ (0.13)$
Winter 2015 (0.84)$ 0.16$ (0.14)$
Summer 2015 (0.98)$ (0.15)$ (0.17)$
Winter 2016 (0.82)$ (0.06)$ (0.15)$
Summer 2016 (0.87)$ (0.29)$ (0.18)$
Futures
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2014 2015 2016 2017 2018 2019 2020
CS forecast Dominion South
Further downside risk? Delays
extend weakness?2015/2016 bottom?
-$0.78-$-0.92
-$-0.87-$0.83 -$0.81 -$0.96 -$0.98
Core northeast Marcellus
economic breakeven point
Basis weakness in Appalachia may need to weaken further
Not until basis reaches $2 does NE core Marcellus begin to slow NYMEX versus Dominion South – how low for how long?
Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Global Commodities Research
But current plans still leaves too little gas headed south
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2014 2015 2016
South Demand (cumulative)
pipeline capacity from Marcellus/Utica toSouth
(MMcf/d)
($/MMbtu)
($/MMbtu)
And without ample pipes, NE basis diffs need to widen
Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Global Commodities Research
Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Global Commodities Research Source: the BLOOMBERG PROFESSIONAL™ service, Credit Suisse Global Commodities Research
Appendix
62
Source: Credit Suisse
Note: *Stocks in bold are attractive on HOLT ®
Company Country Market Cap ($bn) Type Sensitivity Rating Explanation
USA
ACCESS MIDSTREAM PARTNERS USA 10,576 Equip & Support Services High OUTPERFORM Active at Marcellus, Utica, Miss Lime, Granite Wash, Permian, Eagleford and Wolfberry
AGRIUM INC USA 13,009 Cost Beneficiary High OUTPERFORM Could continue to benefit from increased margins in nitrogen production due to low shale gas pricing.
ANADARKO PETROLEUM CORP USA 41,424 E&P High OUTPERFORM Exposure to core Wattenberg play
BAKER HUGHES INC USA 26,677 Equip & Support Services High OUTPERFORM Hydraulic fracturing services
CAMERON INTERNATIONAL CORPUSA 14,708 Equip & Support Services High OUTPERFORM Frac stimulation trees & frac manifold rentals
CANADIAN PACIFIC RAILWAY LTD USA 27,409 Equip & Support Services High OUTPERFORM Crude by rail; inbound drilling materials
CATERPILLAR INC USA 63,619 Equip & Support Services High OUTPERFORM Intentions to launch LNG powered locomotives.
CUMMINS INC USA 26,664 Equip & Support Services High OUTPERFORM Are developing natural gas engines for truck manufacturers.
DEVON ENERGY CORP USA 26,557 E&P High OUTPERFORM Large US gas and NGL exposure and emerging liquids portfolio
DOW CHEMICAL USA 56,133 Cost Beneficiary High OUTPERFORM Could benefit from a cost advantage from shale gas at least until 2015.
EMERSON ELECTRIC CO USA 44,583 Equip & Support Services High OUTPERFORM Supplier of process automation control technology for gas fired power plants
ENBRIDGE INC USA 35,729 E&P High OUTPERFORM Could benefit from growth in the pipeline industry in North America.
FLOWSERVE CORP USA 11,142 Equip & Support Services High OUTPERFORM Could benefit from increased demand in centrifugal pumps which are used around the well
GENERAL ELECTRIC CO USA 253,983 Equip & Support Services High OUTPERFORM #1 in gas turbines globally, and it is refreshing its product suite.
GULFPORT ENERGY CORP USA 5,294 E&P High OUTPERFORM Exposure to Southern Louisiana, Permian, Niobraa and Utica shale.
HALLIBURTON CO USA 47,053 Equip & Support Services High OUTPERFORM Hydraulic fracturing services
KANSAS CITY SOUTHERN USA 10,537 Equip & Support Services High OUTPERFORM Crude by rail; inbound drilling materials
KINDER MORGAN ENERGY USA 35,345 Equip & Support Services High OUTPERFORM Leading multiline MLP with pipeline access to most active or emerging shale basins.
LYONDELLBASELL USA 47,035 Cost Beneficiary High OUTPERFORM Could benefit from a cost advantage from shale gas at least until 2015.
MAGELLAN MIDSTREAM USA 15,301 Equip & Support Services High OUTPERFORM Leading refined products pipeline franchise with potential to generate relatively high dist. growth.
MARATHON OIL CORP USA 23,170 E&P High OUTPERFORM Low cost way to play growing high return production in the Eagle Ford Shale with expl. optionality
MARKWEST ENERGY USA 11,732 Equip & Support Services High OUTPERFORM Leading provider of midstream services in the Marcellus and Utica shale plays.
NOBLE ENERGY INC USA 24,246 E&P High OUTPERFORM We see a unique risk-reward opportunity at NBL given unparalleled visibility from its five core areas
PIONEER NATURAL RESOURCES USA 25,942 E&P High OUTPERFORM 2nd N. Midland test appears to confirm the prospectivity one of the largest new unconventional oil plays.
PLAINS ALL AMERICAN USA 18,176 Equip & Support Services High OUTPERFORM Leading operator of oil infrastructure assets - well positioned in major crude production growth areas.
RANGE RESOURCES CORP USA 14,000 E&P High OUTPERFORM Sold all holdings in Barnett shale and bought heavily in to the Marcellus Shale trend
SCHLUMBERGER LTD USA 117,671 Equip & Support Services High OUTPERFORM Fraccing crews could benefit from the growing E&P of shale gas.
UNION PACIFIC CORP USA 81,510 Equip & Support Services High OUTPERFORM Crude by rail; inbound drilling materials
WASTE CONNECTIONS INC USA 5,217 Equip & Support Services High OUTPERFORM Will benefit as the volume of Shale extracted increases
WEATHERFORD INTERNATIONAL USA 11,541 Equip & Support Services High OUTPERFORM Fraccing crews could benefit from the growing E&P of shale gas.
CANADA
ARC RESOURCES CAN 9,428 E&P High OUTPERFORM Canadian shale resource, potential for better extraction costs & higher future gas prices.
CANADIAN NATURAL RESOURCESCAN 44,749 E&P High OUTPERFORM Current sellers of shale/tight gas resource
ENBRIDGE INC CAN 39,701 Equip & Support Services High OUTPERFORM Could benefit from growth in the pipeline industry in North America.
TRANSCANADA CAN 34,629 Equip & Support Services High OUTPERFORM Coastal GasLink pipeline industry in Bakken formation, North America.
TALISMAN ENERGY INC CAN 10,823 E&P High OUTPERFORM Current sellers of shale/tight gas resource
WESTPORT INNOVATIONS INC CAN 704 Equip & Support Services High OUTPERFORM May benefit from spurred demand in natural gas engines.
EUROPE
ARKEMA GROUP FRA 7,050 Equip & Support Services High OUTPERFORM Elevated propylene prices in the US could support higher derivatives prices globally.
SIEMENS AG DEU 114,790 Equip & Support Services High OUTPERFORM Is a gas turbine manufacturer so could benefit from the move towards gas-fired power generation.
VALLOUREC FRA 6,625 Equip & Support Services High OUTPERFORM Premium casing, tubing, and connections used for unconventional oil & gas wells
WOOD GROUP GBR 2,788 Equip & Support Services High OUTPERFORM
ASIA-PACIFIC
DENSO CORPORATION(C) JPN 42,091 Equip & Support Services High OUTPERFORM Could benefit from increased demand in fuel injection systems for NGVs.
INPEX CORPORATION(C) JPN 18,724 E&P High OUTPERFORM Has acquired mining concessions in Canada.
MARUTI SUZUKI INDIA LTD IND 8,186 Equip & Support Services High OUTPERFORM May benefit from further growth NGVs.
MITSUBISHI CORPORATION(C) JPN 32,079 Equip & Support Services High OUTPERFORM Is located in Canada where it has exposure to potential LNG.
PERUSAHAAN GAS NEGARA IDN 10,377 Cost Beneficiary High OUTPERFORM May get more gas supply, which has been the major constrain, and likely at cheaper price in the future
SENEX ENERGY LIMITED AUS 806 E&P High OUTPERFORM Drilling exploration shale wells in the Cooper Basin.
SINOPEC CHINA PETROLEUM HKG 93,169 E&P High OUTPERFORM Has signed deals with BP, Total, Exxon and Chevron to work on shale.
Key Shale Recommendations by Region
63
While this growth has weighed on CFROI, aggregate plays on the theme remain (slightly) wealth creating with a CFROI just above cost of capital.
For the shale theme, stocks have significantly ramped up their investments over the last 4 years, translating in a real asset growth of 5.9% p.a. (pink bars). The 5 year CFROI implied is not particularly demanding vs. history.
Source: Credit Suisse HOLT ®
Source: Credit Suisse HOLT ®
Shale in HOLT
64
Source: Credit Suisse
Note: Basket can be viewed on Bloomberg,
ticker CSGLSHAL Index [GO]
Ticker Company Sector Country CS Recom. DY (FY1) P/E (FY1) Ticker Company Sector Country CS Recom. DY (FY1) P/E (FY1)
ACMP.N Access Midstream Energy United States OUTPERFORM 3.8% 33.2 KBR.N KBR Inc. Industrials United States OUTPERFORM 0.0% 13.1
APC.N Anadarko Petroleum Energy United States OUTPERFORM 0.0% 20.5 LYB.N LyondellBasell Ind Materials United States OUTPERFORM 2.4% 11.6
BHI.N Baker Hughes Inc. Energy United States OUTPERFORM 1.0% 15.5 MRO.N Marathon Oil Corp Energy United States OUTPERFORM 2.0% 13.6
CAM.N Cameron International Energy United States OUTPERFORM 0.0% 15.7 MWE.N MarkWest Energy Energy United States OUTPERFORM 4.9% 125.1
CF.N CF Industries Chemicals United States NEUTRAL 1.0% 11.9 7011.T Mitsubishi Heavy Ind Industrials Japan OUTPERFORM 1.3% 19.1
0883.HK CNOOC Ltd Energy China NEUTRAL 4.7% 6.4 NBL.N Noble Energy Energy United States OUTPERFORM 0.0% 23.1
6902.T Denso Auto Parts Japan OUTPERFORM 1.8% 15.4 PDCE.OQ PDC Energy Energy United States OUTPERFORM 0.0% 31.8
DOW.N Dow Chemical Co Materials United States OUTPERFORM 2.8% 16.6 PSX.N Phillips 66 Energy United States NEUTRAL 1.8% 10.3
ENB.TO Enbridge Inc. Energy Canada OUTPERFORM 2.7% 27.0 ROR.L Rotork plc Industrials United Kingdom NEUTRAL 1.9% 20.8
ETE.N ETE Energy United States OUTPERFORM 5.8% 45.5 TRP.TO TransCanada Corp. Energy Canada OUTPERFORM 3.8% 21.7
GE.N General Electric Industrials United States OUTPERFORM 3.2% 14.9 UNP.N Union Pacific Industrials United States OUTPERFORM 1.6% 16.5
HAL.N Halliburton Energy United States OUTPERFORM 0.0% 13.7 VLLP.PA Vallourec Industrials France OUTPERFORM 1.8% 21.1
1605.T INPEX Corporation Energy Japan OUTPERFORM 1.3% 11.5 WCN.N Waste Connections Industrials United States OUTPERFORM 1.0% 22.5
1963.T JGC Corporation Industrials Japan NEUTRAL 1.3% 18.7 WEIR.L Weir Group Industrials United Kingdom NEUTRAL 1.8% 16.3
Credit Suisse has a Delta One basket based around the shale theme. The constituents reflect our analysts’ view on the most exposed companies to this story, and those likely to benefit the most from its development.
Shale – Credit Suisse Delta One Basket
65
Source: Credit Suisse, company info
Recent News
Mexichem and Oxychem announced ethylene JV in 4Q13
Axiall chose Lotte as JV partner for 1 m tonne/yr cracker in February 2014
Major Chemical Projects
Project Announced Company Capacity (tonnes/yr)
Expected Timing
for StartupLake Charles 2 expansion Westlake 108,863 2H'2012St Charles ethane cracker restart Dow 390,000 end 2012Geismar ethane cracking capacity expansion Williams 272,158 Q4'2013
Chocolate Bayou Debottlenecking capacity INEOS 115,000 end 2013
US Gulf Coast Grassroots HDPE Plant INEOS/Sasol 470,000 Q4'2015
Lake Charles 1 ethane conversion expansion Westlake 113,399 2014
Calvert City expansion Westlake 82,000 Q2'2014
La Porte expansion LyondellBasell 363,000 mid 2014
Port Arthur ethylene Expansion BASF Fina Petrochemicals NA 2014
Channelview ethane cracker expansion LyondellBasell 113,398 2015
Corpus Christi expansion LyondellBasell 363,000 Late 2015
Baytown new ethane cracker ExxonMobil 1,500,000 2016
Point Comfort ethane cracker facility Formosa 1,200,000 2017
Louisiana new ethylene plant Formosa 1,200,000 -
New Polyethylene Plant LyondellBasell 453,592 2016
Olefin NGL Recovery Unit LyondellBasell 68,039 2016
Lake Charles Westlake Ethane Cracker Sasol 1,500,000 2017
Cedar Bayou new ethane cracker CP Chem 1,500,000 Q1'2017
Freeport new ethane cracker Dow 1,500,000 2017
Ingleside new cracker Occidental/Mexichem 544,000 Feb-17
Louisiana world-scale new cracker Axiall/Lotte Chemical 1,000,000 2018
Key Contacts
Richard Kersley
Head of Global Equity Product & Thematic Research
+44 20 7888 0313
Edward Westlake
Co-head of Global Oil & Gas Research
+1 212 325 6751
David Hewitt
Co-head of Global Oil & Gas Research
+65 6212 3064
Arun Jayaram
U.S. Exploration & Production
+1 212 538 8428
Jim Wicklund
U.S. Oilfield Equipment & Services
+1 214 979 4111
John Edwards
Energy MLPs/Infrastructure
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Jan Stuart
Commodities
Head of Fixed Income Global Energy Research
+1 212 325 1013
66
Companies Mentioned (Price as of 21-Feb-2014)
Harum Energy (HRUM.JK, Rp2,420) ABB (ABBN.VX, SFr22.29) ABM Investama (ABMM.JK, Rp2,985) ALFA (ALFAA.MX, $31.66) AMEC (AMEC.L, 1119.0p) ARC Resources Ltd. (ARX.TO, C$29.98) ASX (ASX.AX, A$37.5) AWE Ltd (AWE.AX, A$1.42) Access Midstream Partners, LP (ACMP.N, $55.92) Adaro Energy (ADRO.JK, Rp970) Agrium Inc. (AGU.N, $90.53) Air Products & Chemicals, Inc. (APD.N, $118.27) Alfa Laval (ALFA.ST, Skr170.0) Alon USA Energy, Inc. (ALJ.N, $14.27) Alon USA Partners LP (ALDW.N, $14.3) Alstom (ALSO.PA, €19.7) Americas (BOE.V, C$1.38) Anadarko Petroleum Corp. (APC.N, $82.31) Anritsu (6754.T, ¥1,168) Anton Oilfield Services Group (3337.HK, HK$5.19) Apache Corp. (APA.N, $84.56) Arch Coal, Inc. (ACI.N, $4.26) Arch Coal, Inc. (ACI.N, $4.26) Arkema (AKE.PA, €81.74) Atwood Oceanics, Inc. (ATW.N, $47.11) Aurora Oil & Gas (AUT.AX, A$4.11) BP (BP.L, 501.7p) Babcock & Wilcox (BWC.N, $34.96) Baker Hughes Inc. (BHI.N, $61.02) Bankers Petroleum Ltd. (BNK.TO, C$4.75) Beach Energy (BPT.AX, A$1.52) BioAmber Inc. (BIOA.N, $13.94) BioteQ Env Tech (BQE.TO, C$0.1) Burckhardt (BCHN.S, SFr450.5) CF Industries Holding Inc. (CF.N, $242.97) CGG Veritas (GEPH.PA, €11.97) CIMC Enric (3899.HK, HK$11.42) CNOOC Ltd (0883.HK, HK$12.4) CONCHO RESOURCES, INC. (CXO.N, $114.7) CSX Corporation (CSX.N, $27.32) CVR Refining LP (CVRR.N, $22.35) Cabot Oil & Gas (COG.N, $36.07) Cameron International Corp. (CAM.N, $61.83) Canadian National (CNI.N, $55.71) Canadian Natural Resources Limited (CNQ.TO, C$41.15) Canadian Pacific Railways (CP.N, $156.22) Canxus (CUS.TO, C$5.88) Carbon Energy (CNX.AX, A$0.018) Carrizo Oil & Gas Inc. (CRZO.OQ, $44.98) Caterpillar Inc. (CAT.N, $97.5) Cemex Latam Holdings, S.A. (CLH.CN, peso15000.0) Chesapeake Energy Corp. (CHK.N, $26.57) Chevron Corp. (CVX.N, $112.68) Chicago Bridge & Iron (CBI.N, $79.17) China Oilfield Services Ltd (2883.HK, HK$21.35) China Petroleum & Chemical Corporation - H (0386.HK, HK$6.54) China Shenhua Energy Company Limited (1088.HK, HK$21.0) Chubu Electric Power (9502.T, ¥1,245) Clean Enrgy Fuel (CLNE.OQ, $9.65) Clean Harbors (CLH.N, $53.55) ConocoPhillips (COP.N, $64.68) Crescent Point Energy Corp (CPG.TO, C$38.87) Crosstex Energy, Inc. (XTXI.OQ, $40.97) Cummins Inc. (CMI.N, $142.83) DCP Midstream Partners, LP (DPM.N, $48.09) Danieli & C (DANI.MI, €26.66) Delek US Holdings, Inc. (DK.N, $29.35) Denbury Resources (DNR.N, $15.94) Denso (6902.T, ¥5,438) Devon Energy Corp (DVN.N, $63.67) Diamond Offshore Drilling, Inc (DO.N, $48.01) Diamondback Energy, Inc. (FANG.OQ, $63.99) Dillard's Inc. (DDS.N, $89.33) Dominion Resources (D.N, $71.39) Donaldson Company, Inc. (DCI.N, $41.53) Dongfang Electric Corp (1072.HK, HK$11.36) Dow Chemical Company (DOW.N, $46.96) Dresser Rand Grp (DRC.N, $54.1) E.I. du Pont de Nemours and Company (DD.N, $64.87) ENI (ENI.MI, €17.36) EOG Resources (EOG.N, $178.0) EQT Midstream Partners, LP (EQM.N, $65.47) EXCO Resources (XCO.N, $4.77) Eastman Chemical (EMN.N, $84.34) Ecolab (ECL.N, $102.19) Emerson (EMR.N, $63.42) Empire Energy (EEG.AX, A$0.1) Enbridge Energy Partners, LP (EEP.N, $27.15) Enbridge Inc. (ENB.TO, C$47.77) Enbridge Income (ENF.TO, C$25.36) Encana Corp. (ECA.N, $18.91) Energy Recovery Inc. (ERII.OQ, $4.56) Enerplus Corporation (ERF.TO, C$21.49) Ensign (ESI.TO, C$17.45) Entergy Corporation (ETR.N, $64.45) Enterprise Products Partners, LP (EPD.N, $65.37) Everest Kanto (EKCL.BO, Rs13.91) Exelon Corporation (EXC.N, $30.42)
ExxonMobil Corporation (XOM.N, $95.03) FMC Technologies, Inc. (FTI.N, $50.02) Fanuc (6954.T, ¥16,965) FedEx Corporation (FDX.N, $134.9) Fenner (FENR.L, 432.9p) Ferro (FOE.N, $13.09) First Republic Bank (FRC.N, $50.45)
FirstEnergy (FE.N, $31.7) Flotek Indus (FTK.N, $24.27) Flowserve Corp. (FLS.N, $80.98) Fluor (FLR.N, $79.19) Forest Oil (FST.N, $3.08) Formosa Chemical & Fibre (1326.TW, NT$78.4) Formosa Petrochemical (6505.TW, NT$76.8) Formosa Plastics (1301.TW, NT$77.0) Foster Wheeler (FWLT.OQ, $32.04) Gardner Denver, Inc. (GDI.N, $75.99) Gazprom (GAZPq.L, $8.498) General Electric (GE.N, $24.94) Genesee & Wyoming, Inc. (GWR.N, $97.79)
Genesis Energy, LP (GEL.N, $52.34) Goodrich Petrol (GDP.N, $12.67) Great East (GEECq.L, 130.0p) Gulfport Energy (GPOR.OQ, $62.96) Halliburton (HAL.N, $55.3) Harbin Power Equipment (1133.HK, HK$4.48) Helmerich & Payne, Inc. (HP.N, $94.34) Hess Corporation (HES.N, $81.17) Holly Frontier Corp. (HFC.N, $46.13) Honeywell International Inc. (HON.N, $93.93) Honghua Group Ltd (0196.HK, HK$2.14) IGas Energy (IGAS.L, 123.0p) INPEX Corporation (1605.T, ¥1,310) Imperial Oil Ltd (IMO.TO, C$48.65) Indika Energy (INDY.JK, Rp560) Itron (ITRI.OQ, $35.05) JGC Corporation (1963.T, ¥3,702) Jacobs Engineering (JEC.N, $60.1) Japan Petroleum Exploration (1662.T, ¥3,830) Jereh Group (002353.SZ, Rmb74.69) KBR Inc. (KBR.N, $30.84) Kansas City Southern (KSU.N, $95.58) Keihin (7251.T, ¥1,586) Kennametal Inc. (KMT.N, $43.5) Key Energy Services, Inc. (KEG.N, $8.47) Kinder Morgan Energy Partners, LP (KMP.N, $78.44)
Komatsu (6301.T, ¥2,108) Korea Gas Corp (036460.KS, W68,400) Kunlun Energy (0135.HK, HK$13.6) Lincoln National Corp. (LNC.N, $49.95) Luxfer (LXFR.N, $21.57) LyondellBasell Industries (LYB.N, $85.65) MRC Global (MRC.N, $25.01) Magellan Midstream Partners , LP (MMP.N, $67.5) Magnum Hunter Resources Corp. (MHR.N, $8.93) Marathon (MPC.N, $87.31) Marathon Oil Corp (MRO.N, $33.26) MarkWest Energy Partners, LP (MWE.N, $70.48)
Maruti Suzuki India Ltd (MRTI.BO, Rs1674.65) MasTec, Inc. (MTZ.N, $37.18) Matador Resource (MTDR.N, $22.9) McDermott International (MDR.N, $8.68) Melrose (MRON.L, 317.3p) Methanex (MEOH.OQ, $64.82) Mitsubishi Corp (8058.T, ¥1,993) Mitsui & Co (8031.T, ¥1,573) Molopo Australia (MPO.AX, A$0.19) Mr Price Group Limited (MPCJ.J, R140.88) Murphy Oil Corp. (MUR.N, $57.67) Nan Ya Plastics (1303.TW, NT$64.7) National Oilwell Varco (NOV.N, $74.8)
Natural Gas (NGS.N, $31.81) Nexen Inc. (NXY.TO, C$28.29) Noble Corporation (NE.N, $31.16) Noble Energy (NBL.N, $66.86) Norfolk Southern (NSC.N, $90.47) Northern Tier Energy, LP (NTI.N, $24.02) Nucor Corporation (NUE.N, $50.42) Nuverra Environmental Solutions (NES.N, $15.49) OMV (OMVV.VI, €33.59) ONEOK Partners, LP (OKS.N, $55.54) Occidental Petroleum (OXY.N, $95.39) Ocean Rig UDW Inc (ORIG.OQ, $17.33) Okuma Corporation (6103.T, ¥920)
Orion Energy Sys (OESX.A, $5.38) Osaka Gas (9532.T, ¥411) PBF ENERGY INC (PBF.N, $26.21) PDC Energy (PDCE.OQ, $59.16) PGNIG (PGN.WA, zł5.04) PKN Orlen (PKN.WA, zł43.15) PPG Industries, Inc (PPG.N, $189.87) PT Indo Tambangraya Megah (ITMG.JK, Rp26,650) Parker Hannifin Corporation (PH.N, $117.77) Peabody Energy Corp (BTU.N, $16.98) Pembina Pipe (PPL.TO, C$39.91) Penn Virginia Corp (PVA.N, $14.15) Penn West Petroleum Ltd. (PWT.TO, C$8.83)
Pentair Ltd. (PNR.N, $79.17) Perusahaan Gas Negara (PGAS.JK, Rp5,000) PetroChina (0857.HK, HK$8.12)
Petrobras Arg (PZE.N, $4.89) Petrofac (PFC.L, 1379.0p) Petroleum Geo Services (PGS.OL, Nkr64.75) Petronas Chemicals Group BHD (PCGB.KL, RM6.71) Phillips 66 (PSX.N, $74.95) Phillips 66 Partners, LP (PSXP.N, $48.0) Pioneer Natural Resources (PXD.N, $187.08) Plains All American Pipeline, LP (PAA.N, $53.0) Progressive Waste Solutions Ltd. (BIN.N, $24.71) Public Svc Ent (PEG.N, $36.58) Quanta Services (PWR.N, $34.5) Questerre Energy (QEC.TO, C$1.23) Quicksilver Resources, Inc. (KWK.N, $3.46) Range Resources (RRC.N, $85.67) Repsol (REP.MC, €18.08) Republic Services (RSG.N, $33.76) Rex Energy Corp. (REXX.OQ, $17.59) Rockwell Automation (ROK.N, $119.32) Rolls-Royce (RR.L, 995.0p) Rosetta Resources Inc. (ROSE.OQ, $45.41) Rotork plc (ROR.L, 2570.0p) Rowan Companies (RDC.N, $32.28) Royal Dutch Shell plc (RDSa.L, 2216.0p) SBM Offshore (SBMO.AS, €11.32) SES (SESFd.PA, €24.76) SPT Energy (1251.HK, HK$4.41) SPX (SPW.N, $104.74) Saipem (SPMI.MI, €16.8) Salt Lake Indust (000792.SZ, Rmb15.56) San Leon Energy (SLEN.L, 4.1p) Sanchez Enrgy (SN.N, $29.29) SandRidge Energy, Inc. (SD.N, $6.4) Sandvik (SAND.ST, Skr89.6) Santos Ltd (STO.AX, A$13.59) Sasol (SSL.N, $50.49) Savanna Energy (SVY.TO, C$8.03) Schlumberger (SLB.N, $90.07) Seadrill (SDRL.N, $36.83) Senex Energy Limited (SXY.AX, A$0.76) Shanghai Electric Group Co., Ltd. (2727.HK, HK$2.56) Siemens (SIEGn.DE, €94.85) Solvay (SOLB.BR, €113.2) Southwestern Energy Co. (SWN.N, $42.81) Statoil (STL.OL, Nkr160.5) Stepan (SCL.N, $59.73) Strad Energy (SDY.TO, C$3.93) Sumitomo Corp (8053.T, ¥1,331) Superior Energy Services, Inc. (SPN.N, $27.98) TAG Oil Ltd. (TAO.TO, C$3.0) Talisman Energy Inc. (TLM.N, $10.45) Tambang Batubara Bukit Asam (PTBA.JK, Rp9,325) Targa Resources Corp. (TRGP.N, $95.99) Technip (TECF.PA, €71.74) Tenaris (TENR.MI, €15.4) Tesoro Corp. (TSO.N, $50.34) Tetra Technologies, Inc. (TTI.N, $12.03) Tokyo Gas (9531.T, ¥494) Total (TOTF.PA, €45.6) TransCanada Corp. (TRP.TO, C$48.95) Transocean Inc. (RIG.N, $43.14) Trinidad Dri (TDG.TO, C$10.76) U.S. Silica (SLCA.N, $31.69) URS Corporation (URS.N, $45.81) Ultra Petroleum Corp. (UPL.N, $25.1) Union Pacific (UNP.N, $179.12) United Parcel Service Inc. (UPS.N, $96.11) Valero Energy Corporation (VLO.N, $50.23) Vallourec (VLLP.PA, €37.63) Veresen (VSN.TO, C$16.25) Vermilion Energy Inc. (VET.TO, C$63.3) Voestalpine (VOES.VI, €32.67) WPX Energy Inc. (WPX.N, $17.95) Waste Connections (WCN.N, $42.21) Waste Management (WM.N, $40.99) Weatherford International, Inc. (WFT.N, $15.0) Weichai Power Co. Ltd (2338.HK, HK$29.85) Weir Group (WEIR.L, 2346.0p) Wellstream (WSML.L^C11, 782.0p) Wellstream (WSML.L^C11, 782.0p) Wellstream (WSML.L^C11, 782.0p) Wellstream (WSML.L^C11, 782.0p) Wellstream (WSML.L^C11, 782.0p) Western Gas Equity Partners, L.P. (WGP.N, $42.68) Western Refining Inc. (WNR.N, $38.98) Westlake Chem (WLK.N, $131.84) Williams Companies, Inc (WMB.N, $42.06) Wood Group (WG.L, 743.5p) Woodward Inc (WWD.OQ, $43.34) World Point Terminals, LP (WPT.N, $21.28) XOMA Corporation (XOMA.OQ, $8.48) YPF Sociedad Anonima (YPF.N, $27.93) Yamato Kogyo (5444.T, ¥3,135) Yara International ASA (YAR.OL, Nkr247.1)
Disclosure Appendix
Important Global Disclosures
The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts’ stock rating are defined as follows:
Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.
Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less at tractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector , with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non -Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia , New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:
Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.
*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating Versus universe (%) Of which banking clients (%)
Outperform/Buy* 43% (53% banking clients)
Neutral/Hold* 40% (49% banking clients)
Underperform/Sell* 15% (43% banking clients)
Restricted 2%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (0883.HK, SOLB.BR, ITMG.JK, BIOA.N, ENF.TO, PXD.N, CVX.N, ERII.OQ, KWK.N, CRZO.OQ, REP.MC, 2727.HK, CAM.N, ACMP.N, 036460.KS, 0857.HK, SIEGn.DE, XTXI.OQ, SPMI.MI, DPM.N, 3337.HK, ALFAA.MX, AWE.AX, MHR.N, UPS.N, IMO.TO, TENR.MI, ENB.TO, ALFA.ST, ALJ.N, AUT.AX, 1088.HK, ABBN.VX, ALSO.PA, BHI.N, KSU.N, WMB.N, DNR.N, FDX.N, GEPH.PA, PGAS.JK, 0386.HK, WEIR.L, INDY.JK, WM.N, ABMM.JK, STO.AX, ADRO.JK, REXX.OQ, TAO.TO, ECL.N, PTBA.JK, RSG.N, 2883.HK, CNQ.TO, TRP.TO, EQM.N, DOW.N, FST.N, URS.N, HES.N, DVN.N, BIN.N, FANG.OQ, APC.N, 6301.T, JEC.N, 8031.T, 8053.T, 8058.T, AGU.N, CAT.N, CBI.N, CF.N, CHK.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, D.N, EMR.N, ECA.N, EEP.N, EOG.N, EPD.N, FLR.N, FLS.N, FOE.N, FRC.N, GE.N, GPOR.OQ, GWR.N, HAL.N, HON.N, KBR.N, KMP.N, LNC.N, LYB.N, MMP.N, MRO.N, MWE.N, NBL.N, NOV.N, NSC.N, OXY.N, PSX.N, PVA.N, PWR.N, ROSE.OQ, RRC.N, SD.N, SPN.N, SPW.N, TLM.N, TSO.N, TRGP.N, TTI.N, UNP.N, VLO.N, WNR.N, WPT.N, WPX.N, XOM.N, ALDW.N, PBF.N, NTI.N, CVRR.N, PSXP.N, PEG.N, SDRL.N, RIG.N, PPG.N, ATW.N, DD.N, DO.N, EXC.N, FE.N, NE.N, ORIG.OQ, XOMA.OQ, CLH.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the subject company (0883.HK, SOLB.BR, BIOA.N, PXD.N, KWK.N, CRZO.OQ, 2727.HK, CAM.N, ACMP.N, 036460.KS, SIEGn.DE, DPM.N, ALFAA.MX, AWE.AX, IMO.TO, ENB.TO, AUT.AX, 1088.HK, ABBN.VX, WMB.N, DNR.N, PGAS.JK, 0386.HK, WM.N, STO.AX, TAO.TO, ECL.N, PTBA.JK, 2883.HK, TRP.TO, EQM.N, FST.N, DVN.N, FANG.OQ, APC.N, CHK.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, EEP.N, GE.N, GPOR.OQ, HAL.N, KBR.N, KMP.N, LNC.N, PSX.N, PVA.N, ROSE.OQ, RRC.N, SD.N, SPN.N, SPW.N, TSO.N, UNP.N, VLO.N, WNR.N, WPT.N, WPX.N, XOM.N, PBF.N, NTI.N, CVRR.N, PSXP.N, PEG.N, SDRL.N, PPG.N, ATW.N, DD.N, DO.N, EXC.N, FE.N, ORIG.OQ, XOMA.OQ, CLH.N) within the past 12 months.
Credit Suisse provided non-investment banking services to the subject company (SOLB.BR, ENF.TO, PXD.N, KWK.N, CRZO.OQ, REP.MC, CAM.N, 036460.KS, SIEGn.DE, DPM.N, ALFAA.MX, MHR.N, UPS.N, ALJ.N, AUT.AX, ABBN.VX, ALSO.PA, BHI.N, KSU.N, DNR.N, FDX.N, GEPH.PA, WM.N, ECL.N, RSG.N, CNQ.TO, TRP.TO, DOW.N, FST.N, DVN.N, APC.N, 6301.T, 8031.T, 8053.T, 8058.T, CHK.N, COP.N, CSX.N, CXO.N, D.N, EMR.N, ECA.N, EOG.N, EPD.N, FRC.N, GE.N, GPOR.OQ, GWR.N, HAL.N, HON.N, KMP.N, LNC.N, LYB.N, MRO.N, NBL.N, NSC.N, RRC.N, SD.N, TLM.N, TRGP.N, TTI.N, VLO.N, WPX.N, XOM.N, PSXP.N, PEG.N, RIG.N, PPG.N, DD.N, EXC.N, FE.N, NE.N) within the past 12 months
Credit Suisse has managed or co-managed a public offering of securities for the subject company (0883.HK, SOLB.BR, BIOA.N, KWK.N, 2727.HK, CAM.N, ACMP.N, 036460.KS, SIEGn.DE, DPM.N, IMO.TO, AUT.AX, WMB.N, TAO.TO, 2883.HK, EQM.N, DVN.N, FANG.OQ, CHK.N, CP.N, CSX.N, GE.N, HAL.N, KMP.N, LNC.N, PVA.N, ROSE.OQ, RRC.N, UNP.N, VLO.N, WNR.N, WPT.N, XOM.N, NTI.N, CVRR.N, PSXP.N, PEG.N, SDRL.N, ATW.N, FE.N, XOMA.OQ) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (0883.HK, SOLB.BR, BIOA.N, PXD.N, KWK.N, CRZO.OQ, 2727.HK, CAM.N, ACMP.N, 036460.KS, SIEGn.DE, DPM.N, ALFAA.MX, AWE.AX, IMO.TO, ENB.TO, AUT.AX, 1088.HK, ABBN.VX, WMB.N, DNR.N, PGAS.JK, 0386.HK, WM.N, STO.AX, TAO.TO, ECL.N, PTBA.JK, 2883.HK, TRP.TO, EQM.N, FST.N, DVN.N, FANG.OQ, APC.N, CHK.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, EEP.N, GE.N, GPOR.OQ, HAL.N, KBR.N, KMP.N, LNC.N, PSX.N, PVA.N, ROSE.OQ, RRC.N, SD.N, SPN.N, SPW.N, TSO.N, UNP.N, VLO.N, WNR.N, WPT.N, WPX.N, XOM.N, PBF.N, NTI.N, CVRR.N, PSXP.N, PEG.N, SDRL.N, PPG.N, ATW.N, DD.N, DO.N, EXC.N, FE.N, ORIG.OQ, XOMA.OQ, CLH.N) within the past 12 months
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (0883.HK, 1662.T, SOLB.BR, ITMG.JK, BIOA.N, PXD.N, AMEC.L, CVX.N, ERII.OQ, KWK.N, CRZO.OQ, BPT.AX, 6505.TW, 1303.TW, 2727.HK, HRUM.JK, CAM.N, ACMP.N, 036460.KS, 0857.HK, SIEGn.DE, XTXI.OQ, SPMI.MI, DPM.N, 3337.HK, 1072.HK, ALFAA.MX, AWE.AX, UPS.N, 1301.TW, AKE.PA, IMO.TO, ENB.TO, MRTI.BO, ALFA.ST, ALJ.N, AUT.AX, 1088.HK, ABBN.VX, BHI.N, KSU.N, OMVV.VI, WMB.N, DNR.N, VOES.VI, FDX.N, PGAS.JK, 0386.HK, WEIR.L, INDY.JK, WM.N, ABMM.JK, STO.AX, ADRO.JK, SXY.AX, 1251.HK, 6902.T, REXX.OQ, TAO.TO, ECL.N, PTBA.JK, RSG.N, 2883.HK, TRP.TO, EQM.N, SESFd.PA, DOW.N, FST.N, URS.N, HES.N, DVN.N, FANG.OQ, CMI.N, APC.N, 6301.T, MUR.N, JEC.N, 8031.T, 8053.T, 8058.T, AGU.N, APA.N, BWC.N, CAT.N, CBI.N, CF.N, CHK.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, DCI.N, DDS.N, EMR.N, EEP.N, FTI.N, FLR.N, FLS.N, FOE.N, GE.N, GEL.N, GPOR.OQ, GWR.N, HAL.N, HON.N, HP.N, KBR.N, KMP.N, KMT.N, LNC.N, LYB.N, MDR.N, MMP.N, MPC.N, MRO.N, MWE.N, NBL.N, NOV.N, OKS.N, OXY.N, PAA.N, PH.N, PSX.N, PVA.N, PWR.N, ROSE.OQ, RRC.N, SD.N, SLB.N, SPN.N, SPW.N, TSO.N, TTI.N, UNP.N, VLO.N, WCN.N, WNR.N, WPT.N, WPX.N, XOM.N, ALDW.N, PBF.N, NTI.N, CVRR.N, PSXP.N, ETR.N, PEG.N, SDRL.N, PPG.N, ATW.N, APD.N, DD.N, DO.N, EXC.N, FE.N, ORIG.OQ, XOMA.OQ, CLH.N) within the next 3 months.
Credit Suisse has received compensation for products and services other than investment banking services from the subject company (SOLB.BR, ENF.TO, PXD.N, KWK.N, CRZO.OQ, REP.MC, CAM.N, 036460.KS, SIEGn.DE, DPM.N, ALFAA.MX, MHR.N, UPS.N, ALJ.N, AUT.AX, ABBN.VX, ALSO.PA, BHI.N, KSU.N, DNR.N, FDX.N, GEPH.PA, WM.N, ECL.N, RSG.N, CNQ.TO, TRP.TO, DOW.N, FST.N, DVN.N, APC.N, 6301.T, 8031.T, 8053.T, 8058.T, CHK.N, COP.N, CSX.N, CXO.N, D.N, EMR.N, ECA.N, EOG.N, EPD.N, FRC.N, GE.N, GPOR.OQ, GWR.N, HAL.N, HON.N, KMP.N, LNC.N, LYB.N, MRO.N, NBL.N, NSC.N, RRC.N, SD.N, TLM.N, TRGP.N, TTI.N, VLO.N, WPX.N, XOM.N, PSXP.N, PEG.N, RIG.N, PPG.N, DD.N, EXC.N, FE.N, NE.N) within the past 12 months
As of the date of this report, Credit Suisse makes a market in the following subject companies (BIOA.N, PXD.N, CVX.N, ERII.OQ, KWK.N, FWLT.OQ, CRZO.OQ, CAM.N, ACMP.N, XTXI.OQ, WWD.OQ, DPM.N, SWN.N, MHR.N, ITRI.OQ, LXFR.N, UPS.N, YPF.N, ALJ.N, BHI.N, KSU.N, WMB.N, DNR.N, FDX.N, PDCE.OQ, WM.N, REXX.OQ, ECL.N, RSG.N, DOW.N, FST.N, ROK.N, URS.N, HES.N, DVN.N, BIN.N, FANG.OQ, CMI.N, APC.N, MUR.N, JEC.N, 8058.T, AGU.N, APA.N, BWC.N, CAT.N, CBI.N, CF.N, CHK.N, CNI.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, D.N, DCI.N, DDS.N, DK.N, EMR.N, ECA.N, EEP.N, EOG.N, EPD.N, FTI.N, FLR.N, FLS.N, FOE.N, FRC.N, GE.N, GEL.N, GPOR.OQ, GWR.N, HAL.N, HFC.N, HON.N, HP.N, KBR.N, KMP.N, KMT.N, LNC.N, LYB.N, MDR.N, MMP.N, MPC.N, MRO.N, MWE.N, NBL.N, NES.N, NOV.N, NSC.N, OKS.N, OXY.N, PAA.N, PH.N, PNR.N, PSX.N, PVA.N, PWR.N, ROSE.OQ, RRC.N, SD.N, SLB.N, SPN.N, SPW.N, TLM.N, TSO.N, TRGP.N, TTI.N, UNP.N, VLO.N, WCN.N, WFT.N, WGP.N, WNR.N, WPT.N, WPX.N, XOM.N, ALDW.N, PBF.N, NTI.N, CVRR.N, PSXP.N, ETR.N, PEG.N, SDRL.N, RIG.N, PPG.N, ATW.N, APD.N, RDC.N, DD.N, DO.N, EXC.N, FE.N, NE.N, ORIG.OQ, XOMA.OQ, CLH.N).
Credit Suisse may have interest in (PCGB.KL)
As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (SBMO.AS, FWLT.OQ, BPT.AX, VLLP.PA, 0857.HK, SIEGn.DE, XTXI.OQ, MRTI.BO, AUT.AX, 1088.HK, ABBN.VX, 0386.HK, 2883.HK, EQM.N, APC.N, GEL.N, GPOR.OQ, MMP.N, MPC.N, MWE.N, PAA.N, TRGP.N, RIG.N).
Credit Suisse has a material conflict of interest with the subject company (0883.HK) . Credit Suisse is acting as financial advisor to both CNOOC Ltd. and SINOPEC on the acquisition of Marathon Oil Corporation's 20% interest in Block 32, offshore Angola.
Credit Suisse has a material conflict of interest with the subject company (0857.HK) . Any Nielsen Media Research material contained in this report represents Nielsen Media Research's estimates and does not represent facts. NMR has neither reviewed nor approved this report and/or any of the statements made herein.
Credit Suisse has a material conflict of interest with the subject company (WG.L) . Credit Suisse Securities (Europe) Limited acts as broker to WG.L.
Credit Suisse has a material conflict of interest with the subject company (AUT.AX) . Credit Suisse is acting as financial advisor to Aurora Oil & Gas Limited in relation to the proposed acquisition by Baytex Energy Corp.
Credit Suisse has a material conflict of interest with the subject company (0386.HK) . Credit Suisse is acting as financial advisor to both CNOOC Ltd. and SINOPEC on the acquisition of Marathon Oil Corporation's 20% interest in Block 32, offshore Angola.
Credit Suisse has a material conflict of interest with the subject company (CNQ.TO) . A Credit Suisse analyst involved in the preparation of this report has a long position in the common stock of CNQ.TO.
Credit Suisse has a material conflict of interest with the subject company (URS.N) . Credit Suisse Securities (Canada), Inc provided a Fairness Opinion and acted as financial advisor to Flint Energy Services Ltd. on the announced acquisition by URS Corporation.
Credit Suisse has a material conflict of interest with the subject company (KMP.N) . Credit Suisse has a material conflict of interest with the subject company (KMP). As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with
subject company (KMP). An analyst or a member of the analyst's household has a long position in the common stock of Kinder Morgan Energy Partners LP (KMP).
Credit Suisse has a material conflict of interest with the subject company (SPW.N) . Credit Suisse Securities USA LLC acted as financial advisor to SPX Corp in the sale of its Service Solutions business to Robert Bosch GmbBH.
Credit Suisse has a material conflict of interest with the subject company (TLM.N) . A Credit Suisse analyst involved in the preparation of this report has a long position in the common stock of TLM.
Credit Suisse has a material conflict of interest with the subject company (VLO.N) . Credit Suisse Securities (USA) LLC is acting as financial advisor to Valero Energy Corp. on their announced decision to pursue separation of their retail business.
Credit Suisse has a material conflict of interest with the subject company (DD.N) . Credit Suisse Securities (USA) LLC is acting as financial advisor to Ei du Pont de Nemours & Co in connection with the announced sale of the DuPont Performance Coatings business to the Carlyle Group.
Credit Suisse has a material conflict of interest with the subject company (CLH.N) . Credit Suisse Securities (USA) LLC is acting as financial advisor to Safety-Kleen Inc. in connection with the announced acquisition by Clean Harbors Inc.
Important Regional Disclosures
Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.
The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (0883.HK, SBMO.AS, 1662.T, SOLB.BR, ITMG.JK, BIOA.N, PXD.N, AMEC.L, CVX.N, ERII.OQ, KWK.N, FWLT.OQ, ERF.TO, CRZO.OQ, REP.MC, BPT.AX, 6505.TW, 1303.TW, SAND.ST, VLLP.PA, 2727.HK, HRUM.JK, 6103.T, CAM.N, YAR.OL, ACMP.N, 0135.HK, 036460.KS, 7251.T, 1326.TW, 0857.HK, SIEGn.DE, XTXI.OQ, SPMI.MI, WWD.OQ, PCGB.KL, DPM.N, SWN.N, 3337.HK, 1072.HK, ALFAA.MX, AWE.AX, MHR.N, WG.L, ITRI.OQ, LXFR.N, UPS.N, 1301.TW, YPF.N, TECF.PA, AKE.PA, VET.TO, TENR.MI, MRTI.BO, ROR.L, ALFA.ST, ALJ.N, MRON.L, PWT.TO, AUT.AX, 6954.T, 1088.HK, 1088.HK, ABBN.VX, ALSO.PA, BHI.N, KSU.N, OMVV.VI, PFC.L, WMB.N, DNR.N, VOES.VI, FDX.N, GEPH.PA, PDCE.OQ, PGAS.JK, 0386.HK, WEIR.L, INDY.JK, WM.N, ABMM.JK, STO.AX, ADRO.JK, CPG.TO, SXY.AX, 1251.HK, ARX.TO, 6902.T, REXX.OQ, TAO.TO, ECL.N, PTBA.JK, RSG.N, 1133.HK, 1963.T, 2883.HK, FENR.L, EQM.N, SESFd.PA, DOW.N, ASX.AX, FST.N, ROK.N, URS.N, HES.N, DVN.N, BIN.N, 1605.T, FANG.OQ, CMI.N, 5444.T, APC.N, 6301.T, 6754.T, MUR.N, JEC.N, 8031.T, 8053.T, 8058.T, AGU.N, APA.N, BWC.N, CAT.N, CBI.N, CF.N, CHK.N, CNI.N, CLH.CN, COP.N, CP.N, CSX.N, CXO.N, D.N, DCI.N, DDS.N, DK.N, EMR.N, ECA.N, EEP.N, EOG.N, EPD.N, FTI.N, FLR.N, FLS.N, FOE.N, GE.N, GEL.N, GPOR.OQ, GWR.N, HAL.N, HFC.N, HON.N, HP.N, KBR.N, KMP.N, KMT.N, LNC.N, LYB.N, MDR.N, MMP.N, MPC.N, MRO.N, MWE.N, NBL.N, NES.N, NOV.N, NSC.N, OKS.N, OXY.N, PAA.N, PH.N, PNR.N, PSX.N, PVA.N, PWR.N, ROSE.OQ, RRC.N, SD.N, SLB.N, SPN.N, SPW.N, TSO.N, TRGP.N, TTI.N, UNP.N, VLO.N, WCN.N, WFT.N, WGP.N, WNR.N, WPT.N, XOM.N, ALDW.N, PBF.N, NTI.N, CVRR.N, MPCJ.J, PSXP.N, ETR.N, PEG.N, SDRL.N, RIG.N, PPG.N, ATW.N, APD.N, RDC.N, DD.N, DO.N, EXC.N, FE.N, NE.N, ORIG.OQ, XOMA.OQ, CLH.N) within the past 12 months
An analyst involved in the preparation of this report has visited certain material operations of the subject company (ENF.TO, IMO.TO, ENB.TO, CNQ.TO, TRP.TO, TLM.N) within the past 12 months
The travel expenses of the analyst in connection with such visits were not paid or reimbursed by the subject company, other than de minimus local travel expenses.
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.
Credit Suisse Securities (Europe) Limited (Credit Suisse) acts as broker to (WG.L, FENR.L).
The following disclosed European company/ies have estimates that comply with IFRS: (SBMO.AS, SOLB.BR, REP.MC, SAND.ST, VLLP.PA, YAR.OL, SIEGn.DE, SPMI.MI, WG.L, TECF.PA, TENR.MI, ALFA.ST, ABBN.VX, ALSO.PA, OMVV.VI, PFC.L, VOES.VI, WEIR.L, DK.N, XOM.N, SDRL.N, APD.N).
Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (0883.HK, SOLB.BR, BIOA.N, PXD.N, KWK.N, ERF.TO, CRZO.OQ, 2727.HK, CAM.N, ACMP.N, 036460.KS, SIEGn.DE, DPM.N, ALFAA.MX, MHR.N, WG.L, YPF.N, IMO.TO, ALJ.N, AUT.AX, ABBN.VX, WMB.N, DNR.N, GEPH.PA, WM.N, ARX.TO, TAO.TO, ECL.N, RSG.N, 2883.HK, EQM.N, FST.N, URS.N, DVN.N, FANG.OQ, CHK.N, COP.N, CP.N, CSX.N, ECA.N, EEP.N, EOG.N, FLR.N, FRC.N, GE.N, HAL.N, KMP.N, LNC.N, LYB.N, NES.N, OXY.N, PSX.N, PVA.N, ROSE.OQ, RRC.N, SD.N, TLM.N, TSO.N, TRGP.N, UNP.N, VLO.N, WNR.N, WPT.N, XOM.N, PBF.N, NTI.N, CVRR.N, PSXP.N, ETR.N, PEG.N, SDRL.N, RIG.N, PPG.N, ATW.N, DD.N, DO.N, FE.N, ORIG.OQ, XOMA.OQ, CLH.N) within the past 3 years.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.
To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Credit Suisse AG, Singapore Branch .................................................................................................................................................... David Hewitt
Credit Suisse Securities (Europe) Limited....................................................................................................................................... Richard Kersley
Important MSCI Disclosures
The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, re-disseminated or used to create and financial products, including any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy
completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Credit Suisse.
Important Credit Suisse HOLT Disclosures
With respect to the analysis in this report based on the Credit Suisse HOLT methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the Credit Suisse HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report.
The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. The adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur.
Additional information about the Credit Suisse HOLT methodology is available on request.
The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variable may also be adjusted to produce alternative warranted prices, any of which could occur.
CFROI®, HOLT, HOLTfolio, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or service marks or registered trademarks or registered service marks of Credit Suisse or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse.
For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.
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Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only