Energy Prospectus Group Founded in 2001 Current Membership is 530 - - PowerPoint PPT Presentation
Energy Prospectus Group Founded in 2001 Current Membership is 530 We have members in 38 states and eight countries ~ 60% of our members live in Texas Mission is to help our members make money Luncheons at The Hess Club are open
Founded in 2001
Current Membership is 530
We have members in 38 states and eight countries ~ 60% of our members live in Texas
Mission is to help our members make money Luncheons at The Hess Club are open to public
January 23: Taipan Resources January 30: HII Technologies February 27: Hi-Crush Partners LP $40 for non-members
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After 4 years at $100/bbl the price of
On January 12, Goldman Sachs said WTI could drop to $40/bbl
Let’s take a look at
Primary Energy Consumption by Region
BP Energy Outlook 2035
“Global energy consumption will rise by 41% from 2014 to 2035, with most of the demand coming from rapidly growing emerging economies.”
More than half of the world’s people live in China & India
Energy Demand by Fuel Type
BP Energy Outlook 2035
“Twenty years from now oil, gas and coal will still be 80% of global energy supply”
Where have new oil supplies come from?
and Canada are the only countries with meaningful supply growth since 2005.
unconventional resource plays.
Conventional Crude Oil Production did peak in 2005
Imports will be 32% of fuel supply in 2040 - EIA
Crude Oil Consumption is about 15 MM Bbls per day
Demand for Liquid Fuels is “Relentless”
95% of oil demand
Electricity is not the problem: We have
more than enough coal, natural gas, nuclear, hydro, solar and wind to generate all the electricity we need
The problem is we can’t find a
Supply currently exceeds demand
Today supply exceeds demand by ~1.5 million
barrels per day
Demand growth forecast for 2015 lowered for
Asian and the oil-exporting countries
Oil inventory build counter-seasonally in October Libyan oil exports rose during 3rd quarter ISIS Terrorists did not impact oil supply Spike in U.S. Dollar Saudi Arabia refused to cut output on Nov. 27
Supply expected to be 95.4 MMBOPD by end of 2015
Oil Demand from IEA “Oil Market Report”
12/12/2014
Lower Fuel Costs will Stimulate Demand
May cause consumers to be less concerned with mileage on their next car or truck purchase
The world is still very
dependent on the Middle East and North Africa for oil supply
The U.S. spends
$Billions each year to keep the
and 43% of OECD Oil Supply in 2013.
fields
increase and keep Iraq oil reserves from being developed
Crude Oil Supply Disruptions
$Trillion was spent in 2014 on supplies
Full Cycle Economics require $70/bbl WTI to Breakeven for the U.S. Tight Oil Plays
Source: WoodMackenzie, Barclays Research 11-8-2014
We are counting
and Ultra Deep Water oil supplies in the future. Ultra Deep Water wells cost more than $100 million.
Upstream companies are slashing CapEx, so U.S. production should begin to fall by the 3rd quarter
U.S. now consumes over 15 Million Bbls per day of crude oil and produces about 9.2 Million Bbls per day
Large inventory of wells waiting on completion should keep
production rising for a few more month
At today’s oil price, drilling will only continue in the “Sweet
Spots” of the major U.S. Shale Plays
The U.S. is not the only regions where drilling and completion
activities are being cancelled. There are very few areas were drilling is economic at today’s oil price
Most of the OPEC countries’ production is on decline
> Falling production within a few months > Steep drop in demand for oilfield services > Layoffs in the energy sector > Bad news for Texas, OK & ND economies
Oil is too important to stay low for long
Oil accounts for 1/3 of global primary energy supply and
95% of transportation fuels
There are no easy substitutes for oil. From 2005 to 2013
global production increased by only ~6 MM bbls per day,
Global demand is approaching 94 MM BOPD. Demand
goes up by more than 1 million bbls per day each year
Much of Shale Oil is really NGLs Most of the new supplies are “unconventional” and
VERY EXPENSIVE – The Age of “Cheap Oil” is over
Saudi Arabia now in control of Brent pricing
production
reduce production growth
U.S. Market has Abundant Supply Outlook for Natural Gas Prices
Short-term: We may see $4.00/mcf
if we get another very cold winter
Long-term: Bearish outlook
through end of 2015
LNG exports in 2016 should help
stabilize natural gas prices
Crude oil trades on a Global Market
Crude oil transportation system (pipelines and
ships) easily moves oil to various markets
Increasing production from U.S. Shale Plays is a
small part of global oil supply
Natural Gas Trades in Regional Markets
North American natural gas is now the lowest priced
source of energy in the world, giving the U.S. and Canada an economic advantage
International Markets much higher than U.S.
Map shows November 2014 prices for LNG
Increasing Demand for Ngas in the U.S.
Demand going up by approximately a TCF / Year and Canada will have less gas for the U.S. (Global Natural Gas Market ~65 Tcf per year)
Winter started with less gas in storage Mild December hurt chance at price spike
U.S. will be net exporter of natural gas within three years
U.S. needs to close (cold winters help)
heading into 2016
and Permian Basin
companies that have strong balance sheets and are well hedged
firms that will benefit from horizontal drilling in the U.S. Shale Plays
processing, transportation, storage and frac sand still strong in the Big Three plays
Sweet 16 Growth Portfolio
Market Cap = $6 Billion
Mid-Cap E&P Based in Canada
Base production in Western Canada (70% Heavy Oil) Recently acquired Aurora Oil & Gas Ltd.
22,350 net acres in “Sweet Spot” of Eagle Ford Shale Added over 16,000 BOPD at closing in late June
Guidance is now 90,000 Boepd for 4th quarter Common Stock for over 7% annual yield (monthly div.)
Forecasts: 2013A 2014 2015
Earnings per share
$1.31 $1.71 $2.62
Cash flow per share
$5.06 $5.78 $7.89
Production (boepd)
57,196 75,100 95,000
YOY Production Growth
6% 31% 26%
Market Cap = $6.9 Billion
pipelines and storage
contracts
strong capital appreciation