Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

UAE- Oil and gas deal and story shares  Join our daily free Newsletter

MENAFN - Khaleej Times - 25/08/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Khaleej Times) The euro has now fallen to 1.3420, more than 200 points below my strategic recommended short level at 1.3650. Cable was, as I thought, last week vulnerable to the euro's fall and extreme position in base rate hike expectation dashed by the Bank of England minutes. The Canadian dollar has plunged from my 1.0730 sell level to 1.0820. Dollar/yen was an ideal buy at 101.30. Energy has been my favourite theme in 2014. Cheap valuations, credible EPS growth, money-flow momentum, Middle East/Russia geopolitical risks, inflation hedge and deal talk/restructuring (Oxy, Anadarko, Apache) all reinforce my enthusiasm for the sector.

Occidental Petroleum, a firm with a major UAE footprint via its stake in the Dolphin Project and the Shah oilfield, was founded by legendary wildcatter Armand Hammer and discovered epic gushers in Alaska, Libya and the North Sea. Oxy is a firm in transition as it slashes its noncore businesses, spins off its California operations to focus on drilling in Texas shale, where it is the largest producer in the Permian Basin. The real ballast for Oxy will be the divestiture of its high risk, low-return Middle East and Africa projects, midstream/pipeline assets in a quest to reduce both geopolitical risk and corporate debt. Since global E&P firms trade at significant valuation discounts to pure-play US producers, Oxy is a candidate for a valuation rerating, given it trades at a significant discount to NAV. Oxy's assets in the Arab world are in Iraq, Libya, Qatar, Oman, the UAE and Yemen. Occidental's value zone is in the 95-98 range for a 108 target for me or 13 times earnings as I expect both a rise in free cash flow/accelerate share buybacks and a secular rise in dividend growth.

Apache has been a beauty since February, when the shares traded at 78. Apache has sold one-third of its oil and gas fields in Egypt's Western Desert to Sinopec and will now sell almost a billion dollars in Argentina assets. I had profiled Apache as one of America's most attractive E&P firms since 2013 and Apache has vindicated my faith, up 28 per cent in the pastfour months. Like Oxy, Apache is ramping up reserves/production in the Permian Basin in West Texas. However, unlike Oxy, I believe the valuation rerating in Apache is behind us. The time to buy Apache was three month ago at 80-85, not now when the rerating is over.


Chevron has been another Big Oil/Seven Sister supermajor I often profiled in this column. Chevron has also been an outperformer on Wall Street, up 18 per cent since last February at 134. Chevron, to me, was attractive due to its incredible exposure to some of the planet's most attractive energy themes, from Australian LNG (Gorgon/Wheatstone), Gulf of Mexico deepwater drilling, Angola, the Caspian, Marcellus/Permian Basin shale, Brazil, Southeast Asia. I was stunned by the Q2 daily production data, 2.562 million barrels of oil equivalent with some of the most attractive upstream margins I have seen in this sector.

Sure, production growth is flattish in 2014 but Chevron's Australian/Angolan LNG projects and offshore Gulf of Mexico will boost production/reserve growth next year. I believe new money should avoid Chevron at 134-135 as the risk-reward potential is mediocre here, even though I expect the shares to move higher. However, Chevron can deliver 11 EPS in 2014 and thus has compelling value at 11 times earnings or somewhere near 122-124. This level is entirely possible if there is a correction in Big Oil. Brazil's Petrobras has been the worst-performing major oil company in the world in the past three years. The Brazilian government, its majority shareholders, forced Petrobras to sell natural gas/refined products to the local market at a loss, a political gambit by the populist Workers Party. However, no matter who wins the October election, Brazil could raise petroleum product prices without fear of an immediate political backlash. If President Dilma Rousseff is defeated, Petrobras's current 40 per cent NAV discount to NAV will narrow. In this scenario, the Petrobras ADR could well rise to 22-23, still a 30 per cent NAV discount. The Sad Sack of Big Oil could well sizzle this autumn. Hence this "Samba Trade"!

 


Khaleej Times




  MENA News Headlines
 Jun 27 2016 - Brexit impact negative for DubaiThe Arabian Post
(MENAFN - The Arabian Post) A fall in the value of UK pound will adversely affect the demand of Dubai property emanating from UK nationals. Additionally, the weaker currency is expected to adversely ...

 Jun 27 2016 - UAE- Trojan wins USD272mn Emaar townhouses dealMENAFN
(MENAFN) UAE- Trojan General Contracting (TGC) proclaimed that it has been given an USD272mn contract by Emaar Properties for the building of Mira Oasis.The project will contains two phases, while ...

 Jun 27 2016 - Egypt to issue two treasury bonds at USD340mnMENAFN
(MENAFN) Egypt will finance two treasury bonds totaling USD340mn in order to help the country's state budget deficit.Moreover, the Ministry of Finance will raise the first treasury bonds value ...

 Jun 27 2016 - Massive tourism hub to be built at USD 1.01mn in DuqmMENAFN
(MENAFN) A massive tourism hub with hotels, residential and commercial complexes and an amusement park has been given to Al Khonji Real Estate and Development in Duqm.Moreover, the usufruct deal was ...

 Jun 27 2016 - Investigation into alleged killer of Russian jet pilot reopened in TurkeyThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) >The Chief Public Prosecutor’s Office in the western province of zmir has reopened an investigation into the alleged killer of a ...

 Jun 27 2016 - UK that Scotland voted to stay in 'does not exist anymore': SturgeonThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) >The Britain that Scotland voted to stay a part of in a 2014 referendum “does not exist anymore,” Scottish First Minister Nicola Sturgeon said on ...

 Jun 27 2016 - Nine days holiday for Eid Al Fitr in UAEKhaleej Times
(MENAFN - Khaleej Times) var doLoad = true; if (doLoad) { ...

 Jun 27 2016 - Halal tourism to enhance Oman's prospectsMENAFN
(MENAFN) Oman will do well by improving halal tourism, while in 2015 it initiated a number of development projects at different destinations in addition to building infrastructure.Accordingly, the ...

 Jun 27 2016 - Algeria's oil and gas output moves back to growMENAFN
(MENAFN) Algeria's oil and gas output will grow again after years of inactivity, supported by increased production at the N. African OPEC member's existing fields.However, the country struggled to ...

 Jun 27 2016 - UAE benefits from net global investment debtMENAFN
(MENAFN) The UAE benefits from a major net international investment position (IIP) that is higher than its total external debt.Additionally, the country's net IIP may be as high as 130 percent of its ...

more...


 





Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help