Global energy equity and oil & gas macro analyst

Anish Kapadia

Akap Energy

Thematic (Sector/Industry)

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<h2>We run through our views on the main themes that will impact the oil and gas market in 2019 and the stocks to play these through. We outline the 10 key themes including oil demand, US oil supply growth, OPEC+ policy, base production decline rates, exploration potential and the outlook for new project final investment decisions. We also look at the refining market, LNG supply and demand, the M&amp;A prospects and the impact of the energy transition. We outline 12 stocks (7 bullish and 5 bearish calls) that we think you can play the themes through.</h2>
</div>
<p>We examine some of the key drivers of the oil price and on the whole we are relatively bullish as although we see some risk to demand growth forecasts in 2019, in the absence of a recession we think that supply has more room to surprise to the downside. Geopolitics and financial markets will play a huge role in prices. We think that US oil supply growth will be lower y/y in 2019, OPEC+ compliance with cuts will be high and maybe helped by unplanned disruptions and base production will decline more rapidly than forecast. Companies will accelerate the sanctioning of new projects in 2019 and also will increase exploration spending, despite a number of years of poor success rates - overall the trend should be positive for the offshore oil service companies. We expect strong LNG supply growth in 2019 to hit spot pricing but still expect a large number of projects to be sanctioned helping the LNG engineering and construction companies. It will be a very interesting year for the refining industry as new regulations limiting shipping sulphur emissions should lead to a spike in diesel and to some extent gasoline margins towards the end of the year, helping complex refiners. Major oil companies will continue to embrace renewables as investors continue to push for companies to plan for the energy transition.</p>
<p>The main stocks that we come out positive on are <a href="https://www.smartkarma.com/entities/12835" target="_blank" data-smartkarma-citation="entities:12835:1">Hess Corp (HES US)</a>, <a href="https://www.smartkarma.com/entities/12530" target="_blank" data-smartkarma-citation="entities:12530:1">Valero Energy (VLO US)</a>, <a href="https://www.smartkarma.com/entities/27505" target="_blank" data-smartkarma-citation="entities:27505:1">TechnipFMC PLC (FTI FP)</a>, <a href="https://www.smartkarma.com/entities/5780" target="_blank" data-smartkarma-citation="entities:5780:1">Kosmos Energy (KOS US)</a>, <a href="https://www.smartkarma.com/entities/9675" target="_blank" data-smartkarma-citation="entities:9675:1">Transocean Ltd (RIG US)</a>, <a href="https://www.smartkarma.com/entities/4324" target="_blank" data-smartkarma-citation="entities:4324:1">Golar Lng Ltd (GLNG US)</a> and <a href="https://www.smartkarma.com/entities/21364" target="_blank" data-smartkarma-citation="entities:21364:1">Galp Energia Sgps Sa (GALP PL)</a>.</p>
<p>We are more negative on <a href="https://www.smartkarma.com/entities/24253" target="_blank" data-smartkarma-citation="entities:24253:1">Cenovus Energy Inc (CVE CN)</a> , <a href="https://www.smartkarma.com/entities/22108" target="_blank" data-smartkarma-citation="entities:22108:1">Royal Dutch Shell (RDSA LN)</a> , <a href="https://www.smartkarma.com/entities/16683" target="_blank" data-smartkarma-citation="entities:16683:1">Cheniere Energy (LNG US)</a>; <a href="https://www.smartkarma.com/entities/11153" target="_blank" data-smartkarma-citation="entities:11153:1">Eog Resources (EOG US)</a> and <a href="https://www.smartkarma.com/entities/27640" target="_blank" data-smartkarma-citation="entities:27640:1">Ecopetrol SA (ECOPETL CB)</a> . </p>


We run through our views on the main themes that will impact the oil and gas market in 2019 and the stocks to play these through. We outline the 10 key themes including oil demand, US oil supply growth, OPEC+ policy, base production decline rates, exploration potential and the outlook for new project final investment decisions. We also look at the refining market, LNG supply and demand, the M&amp;A prospects and the impact of the energy transition. We outline 12 stocks (7 bullish and 5 bearish calls) that we think you can play the themes through.

We examine some of the key drivers of the oil price and on the whole we are relatively bullish as although we see some risk to demand growth forecasts in 2019, in the absence of a recession we think that supply has more room to surprise to the downside. Geopolitics and financial markets will play a huge role in prices. We think that US oil supply growth will be lower y/y in 2019, OPEC+ compliance with cuts will be high and maybe helped by unplanned disruptions and base production will decline more rapidly than forecast. Companies will accelerate the sanctioning of new projects in 2019 and also will increase exploration spending, despite a number of years of poor success rates - overall the trend should be positive for the offshore oil service companies. We expect strong LNG supply growth in 2019 to hit spot pricing but still expect a large number of projects to be sanctioned helping the LNG engineering and construction companies. It will be a very interesting year for the refining industry as new regulations limiting shipping sulphur emissions should lead to a spike in diesel and to some extent gasoline margins towards the end of the year, helping complex refiners. Major oil companies will continue to embrace renewables as investors continue to push for companies to plan for the energy transition.
The main stocks that we come out positive on are Hess Corp (HES US), Valero Energy (VLO US), TechnipFMC PLC (FTI FP), Kosmos Energy (KOS US), Transocean Ltd (RIG US), Golar Lng Ltd (GLNG US) and Galp Energia Sgps Sa (GALP PL).
We are more negative on Cenovus Energy Inc (CVE CN) , Royal Dutch Shell (RDSA LN) , Cheniere Energy (LNG US); Eog Resources (EOG US) and Ecopetrol SA (ECOPETL CB) . 

2019 Energy Market Themes & Stocks with Exposure: Focus on Oil, Refining, LNG, M&A & Renewables

Diversified Industries

Avi Dalfen

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

We offer the best research for institutional investors by:

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Cross-Asset & Quantitative Research

<p><strong>Investors using the Smartkarma (SMARTKARMA SP) platform may find useful the following information, along with our observations, on developments in North America and in South America.</strong></p>
<p>Highlights of significant happenings this past week include:</p>
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<ol>
<li>
<strong>Feeding the Dragon</strong> -  <a href="https://www.smartkarma.com/entities/132" target="_blank" data-smartkarma-citation="entities:132:1">Ck Hutchison Holdings (1 HK)</a>-controlled company is hunting assets in the oil sands, and Mexico's new president is looking to Asia for Pacific port preferment partners.</li>
<li>
<strong>Local News on Global Companies</strong> –  <a href="https://www.smartkarma.com/entities/20962" target="_blank" data-smartkarma-citation="entities:20962:1">BYD Co Ltd (H) (1211 HK)</a> has success in selling battery operated tour buses, <a href="https://www.smartkarma.com/entities/1291" target="_blank" data-smartkarma-citation="entities:1291:1">Ebay Inc (EBAY US)</a> is suing <a href="https://www.smartkarma.com/entities/409" target="_blank" data-smartkarma-citation="entities:409:1">Amazon.com Inc (AMZN US)</a> for dirty tricks, <a href="https://www.smartkarma.com/entities/4904" target="_blank" data-smartkarma-citation="entities:4904:1">Ryder System (R US)</a> is upping its North American e-fulfillment capabilities, and retailers <a href="https://www.smartkarma.com/entities/11134" target="_blank" data-smartkarma-citation="entities:11134:1">Wal Mart Stores (WMT US)</a> and <a href="https://www.smartkarma.com/entities/20359" target="_blank" data-smartkarma-citation="entities:20359:1">Target Corp (TGT US)</a> are each buying more companies to offer new products and services as sector competition intensifies. </li>
<li>
<strong>Trade Deals &amp; No Deals</strong> – Argentina, Chile and Canada all taking advantage of new opportunities to ramp-up sales to China, while the U.S. State of Illinois is being harmed.  </li>
<li>
<strong>Outliers</strong> - Legalizing pot for recreational use means new highs for greenhouse prices in Canada, and U.S. highway congestion continuing to get worse, increasing costs for the trucking industry.</li>
</ol>
</div>

Investors using the Smartkarma (SMARTKARMA SP) platform may find useful the following information, along with our observations, on developments in North America and in South America.
Highlights of significant happenings this past week include:



Feeding the Dragon -  Ck Hutchison Holdings (1 HK)-controlled company is hunting assets in the oil sands, and Mexico's new president is looking to Asia for Pacific port preferment partners.

Local News on Global Companies –  BYD Co Ltd (H) (1211 HK) has success in selling battery operated tour buses, Ebay Inc (EBAY US) is suing Amazon.com Inc (AMZN US) for dirty tricks, Ryder System (R US) is upping its North American e-fulfillment capabilities, and retailers Wal Mart Stores (WMT US) and Target Corp (TGT US) are each buying more companies to offer new products and services as sector competition intensifies. 

Trade Deals &amp; No Deals – Argentina, Chile and Canada all taking advantage of new opportunities to ramp-up sales to China, while the U.S. State of Illinois is being harmed.  

Outliers - Legalizing pot for recreational use means new highs for greenhouse prices in Canada, and U.S. highway congestion continuing to get worse, increasing costs for the trucking industry.



Business Happenings in the Americas that May Be “Below the Radar” - Week Ending October 21, 2018

Canada

MEG Energy Corporation is an oil and gas corporation. The Company is involved in oil sands development and owns oil sand leases. MEG Energy is located in Calgary, Canada.

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MEG Energy Corp (MEG CN)

2019 Energy Market Themes & Stocks with Exposure: Focus on Oil, Refining, LNG, M&A & Renewables

We run through our views on the main themes that will impact the oil and gas market in 2019 and the stocks to play these through. We outline the...

Anish Kapadia

Business Happenings in the Americas that May Be “Below the Radar” - Week Ending October 21, 2018

Investors using the Smartkarma (SMARTKARMA SP) platform may find useful the following information, along with our observations, on developments in...

Avi Dalfen

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