Saturday, February 21, 2009

oil and gas outlook

--excess supply and weak demand is the whole story --avg oil price in 2009 48.75/bbl --natural gas avg 6.25/mcf throughout 2009 --total deman of oil in 2009 85 mmbd --flat non-OPEC growth and full year supply of 49.6 mmbd --OPEC 35.4 --over the long term, the non-OPEC oil constraints over the past years remained unresolved, and once oil demand returns the upward oil price pressure might be significant --refining outlook in 2009: weak margin driven by weak demand and bloated inventories. --natural gas producers are actively reacting to the supply gut and falling gas prices by slashing activity lelves, cutting US natural gas rig count by 23%, or 367 rigs to 1239 rigs since arly August 2008. Another 400 rigs is under way. the level of contraction is greater than the 13% the industry had been discussing. --Integrated oils (Hess, ConocoPhillips, Marathon, Murphy) - largest earning declines --Refiners (Sunoco, Valero) - stuck in the trough. Refined product margins are the most volatile commodity in the energy sector. --Credightsights expected the best performer among expolration and produciton firms will be Newfield (NFX, High Yield), posting earning growth 23% and production growth 8%, hedge book consisting of 69% of gas volumes hedged at $8.25/mcf and 54% of oil volume hedged at 118/bbl. --XTO Energy, -10% earning, 18% production growth target, 70% gas hedge at 8.73/mcf, and 90% of oild hedged at 97/bbl. --the weakest earning growth will be integrated oils -68%, followed by exploration & production who are dominantly naturla gas levered -48%, oilfield services -29%, and lastly drillers -7% and refiners -2%. --It will be one of the worst performing sector

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