Sie sind auf Seite 1von 10

Oil Market

Oil price has taken a couple of odd turns throughout the last
years. Since the early 2000s the oil price had been rising from
about $20/bbl topping to $140/bbl by 2008. This was followed
by a massive plunge to $42/bbl in early 2009, only to settle
again close to $100/bbl for the next couple of years. In fact,
crude price has been bouncing around $100/bbl since 2010
owing to soaring oil consumption in high-growth countries like
China and conflicts in key oil nations like Iraq (containing
output growth). Oil production in conventional fields couldn't
keep up with demand, so prices spiked.

Then in 2014, between June and December crude oil price fell
by 44% (or $49) due to a slowdown in global economic activity
caused by weakening economies (such as China) and new
efficiency measures; the remaining part originated from
supply and demand shocks in the oil market. A major factor in
the supply growth was the surge of shale-oil producers in the
US, encouraged by the prevailing high price. By exploiting
fracking technology, shale oil companies were an important
player in raising U.S. oil production, from 5M bbl/day in 2010,
to over 9M bbl/day at the time being.
However, up until June 2014 this US oil boom had had
surprisingly little effect on global price. This was due to
geopolitical conflicts flaring
up in key oil regions, such as
the civil war in Libya as well as
the ISIS threats to Iraq and
the international sanctions on
Iran. Those conflicts took
more than 3M bbl/day off the
market.
In response to this oversupply
and
downward
pressure on oil prices, there
was some expectation that
OPEC would reduce its supply to bring up the prices, since
many of its members depend on the oil price to meet the
break-even point on their budgets and pay for all the
government spending theyd rack up.

In late 2014, the cartel (headed by Saudi Arabia, its de facto


leader) announced that it wasnt planning to cut oil production
despite the pressure by some OPEC members such as
Venezuela and Iran. This was viewed as a strategic move to
hurt the profitability of American shale oil companies, since
these have much higher break-even points than companies
within the OPEC countries. In spite of this fall, international
crude oil prices have recovered remarkably in recent weeks.
From a nadir of $28.5/bbl in mid-January to around $47/bbl
st
registered on April 31 . This should not, however, be taken as
a definitive sign that the worst is necessarily over.
Nevertheless, there are reasons to expect the decline in oil
prices to end soon.

Oil Supply
According to OECD/IEA, the world oil supply in the last quarter
of 2015 was 97.23 mb/d, 1.8 mb/d higher than in 2014. The US
toppled Saudi Arabia as the worlds larger oil supplier in 2014,
with Russia grasping a close third place. OPEC members
represent about 40% of the total world oil production. NonOPEC oil supply growth for 2015 was 1.46 mb/d making them
the main responsible for the oil glut on the market. There is a
slowdown on investment across the industry due to lower oil
prices and therefore reducing prospects for future oil
production.

Considering the OPEC countries, crude oil output increased


mostly from Iran, Iraq and Angola, while production decreased
in UAE, Libya and Nigeria. OPEC tried to coordinate a cut back
in production, with Saudi Arabia leading the effort
accompanied by other countries which were severely

Corporate Finance Department | www.fepfinanceclub.org

damaged by the low prices, but it was all in vain. The real cut
on production came from non OPEC countries. OPEC has an
interest in preserving market quotas while other countries are
being unable to sustain production bellow the breakeven
point.
The US Energy Information Administration reported that daily
production in the US has gone from a maximum of 9.06 mb/d
in June 2015 to 8.95 mb/d in April 2016, as light tight oil
producers drilled fewer wells in response to lower prices.
However, ongoing technical improvements are scaling back
the costs of extraction to $50 or even lower.

production established by the cartel, having constant


disruptions of target productions within the organization.
Cuts in the supply mustnt be too severe to make the price
skyrocket above $50. In an OPEC point-of-view it is desirable
that it stays as high as possible but still below the break-even
point for most U.S. shale oil producers. These are far more
dependent on short-term financing of day-to-day operations,
and also more price-responsive, having the capacity to provide
a fast supply response once terms look favorable.
Some efforts have gone through such as the interruption on
growth production by Saudi Arabia, Venezuela, Qatar and
Russia agreed on February 2016s levels. Although this
coordinated action might have positive repercussions in the
future, the market was so oversupplied that it might have not
had an immediate impact.
In terms of OPEC supply, only post-sanctions Iran is expected
to show any significant upside potential. It is, however,
unlikely that Iran, which plans to boost crude exports to 2
mb/d until September 2016, will participate in any agreement
to restrain supply.

Russian oil production is estimated to have grown by 0.17


mb/d in 2015 to an average of 10.85 mb/d but forecasts for
2016 suspect that Russia will also cut production with oil
supply decreasing by 20 tb/d to an average of 10.83 mb/d.
OPEC countries face a great problem with the low oil price
since their economies and the government budget are both
highly dependent on the oil price. Oil price at $35 isnt enough
to maintain a surplus in the government budget for some of
the countries and therefore, there is an incentive, like in the
past, to coordinate their production and cut back the oil
supply.

Supporting 40% of the total oil supply, they can impact the
prices but they would have to lose market share to other
countries that wouldnt cut production. This cut would
obviously be more advantageous for those who would
maintain their production, which would take advantage of a
price surge and a higher market quota. Even some OPEC
countries like Iran, dont want to cut their production and that
makes Saudi Arabia second guess their strategy. The members
of OPEC have also a past of not following the targets

Supply Forecast
With OPEC countries, Russia and the US freezing production,
for different reasons, and Iran alone increasing production, its
expected a quasi-stagnation of oil production growth
throughout 2016. With the oil glut dissipating, the price will
increase and as incentive to collude decreases, OPEC countries
will start to free their productions and fight over market share.
Shale oil production in the US will jumpstart again as soon as
oil price passes the breakeven point of $50.

According to the Medium-term Market Oil Report 2015, OPEC


crude capacity is expected to rise to 36.2 mb/d in 2020, with
annual average growth limited to 200 kb/d. Non-OPEC oil
supply is expected to grow by 3.4 mb/d to 60 mb/d in 2020, to
an annual average of 570 kb/d.
Instability in the Middle East could produce oil supply
disruptions, being always an unknown factor which is hard to
forecast. There is also a risk of social and economic instability
resulting from prices that have collapsed far below the fiscal
breakeven in countries like Angola, Russia and Venezuela. The
case of Venezuela is especially serious, since at the current
price it suffers from a big default risk, making any oil
shipments susceptible to a seizure by its creditors. Investment

Corporate Finance Department | www.fepfinanceclub.org

in oil production in the Gulf countries may divert to others


sectors as they seek to diversify their economy. This new
approach will certainly play a part in future negotiations at
OPEC and their production policy.

Oil Demand
Economic growth and industrial production tend to increase
the demand for oil. Many manufacturing processes consume
oil as fuel or use it as feedstock, and in some non-OECD
countries, oil remains an important fuel for power generation.
Considering these uses, oil prices tends to rise when economic
activity is growing since this implies a higher oil demand.
Obviously, oil prices themselves also affect oil demand.
Other important factors that affect demand include
transportation (both commercial and personal), population
growth, and seasonal changes. Oil use increases during travel
season and in the winter, when more heating fuel is
consumed.
There is a strong relationship between GDP growth rates of
non-OECD countries and oil. Since 2001, oil consumption in
non-OECD countries declined only in the fourth quarter of
2008 and in the first quarter of 2009. Many non-OECD
countries are also experiencing rapid growth in population,
which is an additional factor supporting strong oil
consumption growth.
China, India and Saudi Arabia had the largest growth in oil
consumption among the countries in the non-OECD during this
period. China has already surpassed America as the largest oil
importer and, together with other non-OECD nations,
continues to play a crucial role in dictating the demand for
crude.

Demand Forecast
Global oil demand growth is expected to recover in the years
to 2020 from exceptionally weak gains in 2014, but to lag the
stronger rates experienced prior to the financial crisis of 200809.
An oil market selloff since June 2014, resulting in dramatically
lower spot crude and product prices and lower future prices, is
expected to have a mixed impact on economic growth, but
overall to provide only a modest net boost to global oil
demand. Generally speaking, lower oil prices are a negative for
oil-exporting countries, undermining export and fiscal
revenues, with knock-on effects on government spending and
non-oil economic growth, and a positive in oil-importing
economies, lifting disposable income and cutting input costs,
while at the same time lowering oil-import and subsidy bills.

The Organization of Economic Cooperation and Development


(OECD) consists of the United States, the great majority of
Europe and other advanced countries. At 53 percent of world
oil consumption in 2010, these large economies consume
more oil than the non-OECD countries, but have much lower
oil consumption growth. Oil consumption in the OECD
countries actually declined in the decade between 2000 and
2010, whereas non-OECD consumption rose 40 percent during
the same period.
In contrast to non-OECD countries, oil consumption in OECD
countries fell from 2006-2009 after prices rose, and declined
significantly during the economic downturn. Due in part to
their relatively slower economic growth and more mature
transportation sectors, the impact of prices on OECD
consumption has been more evident than for non-OECD
countries.

A combination of cyclical and structural factors stand behind


this softer demand outlook, including, but not limited to,
significantly reduced expectations of global economic growth
for the early part of the forecast period. Towards the latter
part of the forecast, a structurally-driven reduction in the oil
intensity of the global economy, supported in part by fuel
switching out of oil and increased energy efficiency, somewhat
blunts the demand impact of forecast economic growth.
Global oil deliveries will average 95.9 mb/d in 2016, a gain of
1.2 mb/d on the year, as the forecast non-OECD expansion
remains relatively supportive while OECD deliveries essentially
flatten.

Corporate Finance Department | www.fepfinanceclub.org

For the next six years, global demand growth is projected to


average 1.2% per annum taking global oil product demand up
to around 99.1 mb/d by 2020. This represents aggregate
demand growth of 6.6 mb/d for the six-year period.

Venezuelan people, like the military. After 2017 its expected


to oil prices gradually return to the oil shale breakeven point
($55) in 2020, as investment in new explorations are
compensating the slowly growth of oil demand.

Source I FEP Finance Club, Corporate Finance Department team

Oil Price forecast


Oil prices are usually volatile with innumerous factors that can
have a huge impact, making the oil market greatly
unpredictable. Citing the Medium-term oil market report
2016 from IEA, In 2016, we are living in perhaps the first
truly free oil market we have seen since the pioneering days of
the industry. In todays oil world, anybody who can produce oil
sells as much as possible for whatever price can be achieved.
Just a few years ago such a free-for-all would have been
unimaginable but today it is the reality and we must get used
to it, unless the producers build on the recent announcement
and change their output maximization strategy. The long-term
consequences of this new era are still not fully understood but
this report aids the debate in shedding light on the outlook for
the next five years.
The shale oil production is a disruptive technology that already
changed the world, making what was certain a few years ago,
absurd nowadays and in the future. OPEC has been unable to
increase the price and its the non-OPEC countries that have
been cutting production (until prices grow enough to justify
new investments). The paradigm in which some countries
were in the last years is changing. Countries such as
Venezuela, Russia, Brazil, Angola and some Middle East
countries have considered that their governments budget and
the economys dependence on oil must come to an end.
The result is an expected political instability for the following
year, as these currently instable countries readapt their
economy. This may skyrocket the oil prices in 2017, with prices
possibly reaching the $80 per barrel, but in the end of the
year, the price may return to $65 per barrel after a somewhat
management of the crisis. The current Venezuelan President,
Nicolas Maduro, may endure in an aggressive rhetoric against
other countries and his national opposition, but will want to
make the crisis as brief as possible because the oil revenue
supports all the tools that back him as leader of the

Corporate Finance Department | www.fepfinanceclub.org

Date: 31/05/2016
Ticker: EPA: FP

Headquarters: Courbevoie, France


Potential: 11.94%

Current Price: 43.58


Target Price: 48.78

Business Description
Share Price ()

Yahoo Finance

Total S.A is a French multinational company focused on oil and gas undertaking activities
in more than 50 countries. It is one of the six "Supermajor" oil companies in the world
and it covers the whole oil and gas chain. Other than the exploration and production of
crude oil and natural gas, Total deals with power generation, transportation, refining,
petroleum product marketing, and international crude oil and product trading, and is
also considered a large-scale chemicals manufacturer. TOTAL S.A. is a public limited
company listed on the Paris, Brussels, London and New York stock exchanges, and is an
important component of the Euro Stoxx 50 index. It represents the highest market
capitalization on the Paris SE, at 101.4 billion by end-2014.
Key Ratios
Total Revenues
Net Profit
EBITDA Margin
Return on Assets
Return on Equity
Cash Cycle
Debt/Assets
Fin. Leverage
Interest Coverage
PER
EV/EBITDA
NetDebt / EBITDA

2015
143 940
10 698
16%
10%
24%
39
57%
1,35
17,10
10,53
5,74
25%

2016F
155 146
11 665
16%
10%
24%
41
57%
1,32
18,44
10,20
5,68
25%

2017F
195 278
15 356
16%
12%
28%
43
56%
1,29
25,54
8,14
4,66
6%

2018F
193 311
14 908
16%
12%
26%
44
54%
1,19
24,76
8,80
4,99
5%

2019F
195 634
14 898
16%
11%
24%
46
53%
1,12
24,05
9,24
5,21
0%

2020F
200 315
16 014
16%
11%
23%
48
50%
1,02
24,12
9,02
5,19
-24%

Source: Company Data and FFC Analysis


Investing.com

TOTAL SA faced in 2014 and 2015 a period of adjustment to a market of low oil prices.
TOTAL SA s EBITDA grew from 2010 to 2013 at a CAGR of 9.5%, but with the oil prices
drop, the EBITDA shrank 7% in 2014 and 32% in 2015. TOTAL respond cutting production
in 2014 and scale back investment and beginning to sell some assets. With the oil prices
increasing, TOTAL wants to increase production and start to spend more in CAPEX.
TOTAL wants to diversify more its production, starting to invest more in production of
Natural Gas to be less expose to oil prices. EBITDA margin looks stable, being always
around 16% since 2010 and its expected that, with a steady increase of production and
planned and a return of oil prices to values above 55$ per barrel, TOTAL will increase its
cash flows enough to start reduce its debt.
FFC Analysis

Sensitivity Analysis

FFC Analysis

Corporate Finance Department | www.fepfinanceclub.org

Production

P&L

Source: Team Estimates

EBITDA

BS

Source: Team Estimates

Net Debt

Source: Team Estimates

Assumptions

FCFF

Source: Team Estimates

Corporate Finance Department | www.fepfinanceclub.org

Date: 06/06/2016
Ticker: GALP.LS

Headquarters: Lisbon, Portugal


Potential: 17.81%

Current Price: 11.82


Target Price: 13.14

Business Description
Galp Energia is a Portuguese multinational energy company, which finds and
extracts oil and natural gas from the four continents to deliver energy to millions
of customers every day. Galp Energia has activities that are expanding strongly
worldwide, mainly in Portugal, Spain, Brazil, Angola, Mozambique, Cape Verde,
Guinea-Bissau, Swaziland, Gambia, East Timor, Uruguay, Equatorial Guinea,
Namibia and Malawi.

Yahoo Finance

Additionally, Galp Energias activities goes from exploration and production of


oil and natural gas to refining and marketing oil products, natural gas marketing
and sales and power generation.
Galp Energia is a public company listed, and a very important component at PSI20.

Sensitivity Analysis

Source: Team Estimates

Galp Energias strategy was designed to take advantage of the current and
future of the Oil & Gas industry dynamics, namely the expected increase in oil
and natural gas demand worldwide, and to shift the strategic focus away from
markets with higher economic slowdown, as is the case in Europe, particularly in
the Iberian Peninsula.
Galp Energia pursues a strict financial discipline policy, in order to maintain a
solid capital structure.
In view of ensuring sustainable value creation in the long term, the Company is
committed to the implementation of responsible policies, namely addressing the
principles of ethics and of respect for human rights, and is focused on the
pursuit of adequate safety practices.
Investment made in its human capital, through the development of the skills of
its employees are also fundamental to the execution of the Company's strategy.

Corporate Finance Department | www.fepfinanceclub.org

Production at 2020

BS

2020

6%
1%
39%
54%

P&L
Source: Team Estimates

FCFF
Source: Team Estimates

Corporate Finance Department | www.fepfinanceclub.org

The Team
Director
Pedro Reis

pdreis1988@gmail.com

Analysts
Catarina Lindo
Cludia Fernandes
Cludia Castro
Eduardo Magalhes
Gil Flores
Joo Santos
Joo Martins
Pedro Silva

catarina.lindo@hotmail.com
leticia.gomez22@hotmail.com
claudiasofiaa96@hotmail.com
eduardopmagalhaes97@gmail.com
gilquadrosflores@gmail.com
joniguitarra@gmail.com
joaopedro56@gmail.com
pedroasilvawork@gmail.com

Media

Oil & Gas


Renewables
Telecom
Telecom
Oil & Gas
Telecom
Oil & Gas
Oil & Gas

Copyright 2016, FEP Finance Club, All rights reserved.


This document has been prepared by FEP Finance Club (FFC). This document is provided
solely to you and at your specific request. In consideration of FFC providing you with this
document, you hereby acknowledge and agree to the following terms and conditions:
The Information represents our view as of the date hereof and is subject to change and/or
withdrawal at any time without notice. The Information may be based on (a) data that may no
longer be current, (b) estimates that may involve highly subjective assessments and (c) models
that may change from time to time and be different from the assumptions and models used by
other persons.
The Information is not intended as an indicative price or quotation and the actual market price of
the security referred to herein can only be determined when and if executed in the market.
Consequently, the Information may not reflect hedging and transaction costs, credit
considerations, market liquidity or bid-offer spreads.
FFC does not guarantee the accuracy, reliability or completeness of the Information (including
any assumptions, modelling or back-testing used to develop such Information), which may have
been developed based upon trade and statistical services or other third party sources. Any data
on past performance, modelling or back-testing contained herein is no indication as to future
performance.
The Information should not be the basis for determining the value of any security or in making
any investing decision.
The Information is illustrative. It is not intended to predict actual results, which may differ
substantially from those reflected in the Information, and no assurances are given with respect
thereto. FFC does not represent that any Information in this document directly correlates with
values which could actually be achieved now or in the future. The value of any investment may
fluctuate as a result of market changes.
Visit us on:
https://www.fepfinanceclub.org
https://www.facebook.com/FEPFinanceClub/
https://www.linkedin.com/in/fepfinanceclub/

Corporate Finance Department | www.fepfinanceclub.org

10

Das könnte Ihnen auch gefallen