(JPM) EU Integrated Oil 2017 Outlook: Stay bullish

EU Integrated Oil 2017 Outlook: Stay bullish

OW BP (AFL), Shell, Statoil; UW ENI, Repsol, OMV

On the path to redemption: 2017 an inflection year, but the bar is higher
EU Oil’s risk/reward remains positively skewed and we expect
outperformance in 2017 will be led by a secular inflection in cashflows. We
raise our TPs by 7% implying 10% upside for our Buys plus a 5.7% dividend
yield. We highlight three themes in 2017: (1) de-leveraging (we model an
average 120bp ND/CE reduction 2017/16E, taking the sector average to 26%),
(2) improved capital efficiency – we forecast an 8% reduction in sector capex
2017/16E, (3) execution on production growth (JPMe: av. 4.1% growth
2017/16E). Against that backdrop our preferences are as follows:
* Overweight: BP (TP £5.60), Shell (TP £26.00), Statoil (NOK 175) should
outperform by offering the greatest rate of change in cost reduction/gearing,
upstream portfolios with attractive risk/rewards at $60/bbl long term and
adequate affordability to invest in future growth within the confines of
structurally lower gearing.
* Underweight: ENI (TP €13.5), Repsol (TP €13.5), OMV (€30.5) - we
view their asset bases as driving inferior risk/reward profiles, which
together with limited differentiation in cost reduction translates into a more
challenged path to de-gear and mid-ranked CF/share growth.
Look for positive de-coupling from oil in 2017: right for the right reasons
EU Oil’s 10% outperformance vs. the market in Q4 is broadly correlated with
oil moving higher following the OPEC cut late November. Our Post-Launch
Feedback suggests that Long Only Institutions appear generally underweight,
particularly in the US. We believe there is further scope for rotation into Big
Oil from generalist money if company managements can demonstrate capex
discipline, more efficient capital allocation and improved project returns.
History has shown that self-help can drive a positive de-coupling in oil equities
from range bound oil prices (e.g. 2000-03). To us, the burden of proof lies in
the positive trending of CFFO, FCF dividend coverage and gearing.
4Q ideas: Buy BP, STL on macro tailwinds, CFFO, production/execution
4Q earnings season begins with Shell on 2nd February. Improved macro
conditions (oil up 9% q/q, EU gas/refining and Fx) drive JPMe sector earnings
c.40% higher q/q (US terms) and cashflows c.30%. Amongst the majors we
see Statoil and BP as best placed. Macro tailwinds and seasonally strong
production in Norway make us positive on Statoil, while BP should offer
positive upstream momentum through its exposure to stronger Henry Hub
prices (as well as oil) and a reversal of 3Q US GoM downtime. Shell
performed well in 4Q and we remain fundamentally positive for 2017, but
highlight the risk of a pause in momentum with FY’s through both Upstream
and Oil Products. In the midcaps we anticipate a robust quarter for Galp,
taking it comfortably above FY16 EBITDA guidance, set against the risk of
weakening momentum at OMV. Evidence of continued capital discipline
through strategy updates will be a key input.

>>> Pre-Market Indications

Early indications:

CSFB
Cap Gem UNCH India peer Infosys Cuts Sales Forecast Again
Countrywide +3-5% Revs 737m, cons 712m, sticking to guidance
FCA +4.5/+5%
Flug Zuerich +1-2% Positive air traffic stats
Forterra +2% Net debt 93m cons 111m CS 117m
M&B +2-3% LFL over the festive period good
Miners -0.5% Copper -0.55%, Brent +0.35%, Iron Ore -1.05%, China +0.10%
Pennon -1% CS DOWNGRADE to UNDERPERFORM (Potential liability)
Renault +2% French Defence Min orders 3,700 vehicles
Schneider UNCH DTN unit said to draw interest from PE firms
Sig +1% Sales slightly light, profit to be inline with guidance
Technicolor -3-5% FY EBITDA guidance 1% lower, FCF inline
Thales +1% DefenseNews suggesting Canadian government to begin talks
XP Power +1% Q4 orders fine, dividend higher

Shore Calls
MITCHELLS&BUTLER-Lfl sales +4.7%.Sees lower margin due to cost pressure.....-1%
LAVENDON-Sees FY results to be ahead of forecasts...........................+2%
MANX TELECOM-2016 trading in line with forecasts...........................UNCH
COUNTRYWIDE - FY market volumes -6% vs prev yr,in line with expectations.....-1%
XP POWER - strong finish to yr end,order intake and revs ahead of prev yr....+1%
SIG - sales+11.2%,PBT in line with ests but margins lower....................-1%

(TechCrunch) Tesla details how it’ll charge new owners to use Superchargers

For the past few years, anyone who owned a Tesla could charge it up at one of the company’s Supercharging stations free of charge.

But as we’ve known for a few months now, this all-you-can-eat setup is being phased out. While existing owners will still get to charge up for free, anyone who orders a Tesla after January 15th would get around 1,000 miles worth of charging credit each year then pay for anything beyond that.

But how much would they pay, exactly?

Turns out there’s not any single answer to that question — due to variations in regulations around the world, the pricing varies a bit depending on where you are.

Tesla started outlining how it works in a blog post tonight:

In most of the world, Tesla owners will pay per kWh — that is, you’ll be charged for the actual amount of electricity you receive.
In select places, however, Tesla will be required (by local regulations) to charge per-minute at the charging station. It’s a bit less accurate, but Tesla says they going to work with regulators in these regions; it’s also a good bit more complicated, with two different charging tiers based on how charged your battery is or whether or not yours is the only Tesla at the charging station.
In North America, you’ll pay the same price to charge up throughout any given state or province.
Outside of North America, pricing is set on a country-by-country basis.
So pricing will vary a bit depending on where you are — but within a state’s borders (or, outside of North America, a country’s borders), at least, you know you’d be paying the same amount at any given supercharger. Beyond that, Tesla says they’re doing this just to help cover costs of Supercharger expansion, and that it’ll “never be a profit center” for the company.

You can find the state-by-state charging cost breakdown here

Since most people think in MPG as opposed to kWh, Tesla broke things down by how much it would cost to use Superchargers for a handful of treks people might be familiar with. According to Tesla:

San Francisco to Los Angeles would cost about $15
Los Angeles to New York would cost about $120
Paris to Rome would cost about €60 (or ~$64)
Beijing to Shanghai would cost about ¥400 (or ~$60)
And remember: this is only for charging at one of Tesla’s Superchargers (as opposed to charging the car at home, on your own electric bill) and only after the owner has used up their 400 kWh of annual charging credits.

>>> Anadarko's Eagleford Shale assets to be acquired by Sanchez Energy, Blacksto

Anadarko's Eagleford Shale assets to be acquired by Sanchez Energy, Blackstone for USD 2.3bn
13 JAN 2017
Anadarko Petroleum Corporation [NYSE:APC] announced today it has agreed to sell its Eagleford Shale assets in South Texas for approximately USD 2.3 billion to Sanchez Energy Corporation [NYSE:SN] and Blackstone Group LP.
Anadarko's sponsored master limited partnership, Western Gas Partners, LP [NYSE:WES], will continue to own and operate its midstream assets in South Texas and is expected to benefit from drilling commitments made by the buyers in conjunction with this transaction.
"The ongoing success of our portfolio-management activities provides us with the flexibility to further accelerate capital investments in our higher-return oil opportunities in the Delaware Basin, the DJ Basin, and the deepwater Gulf of Mexico, which drive our ability to deliver a 12- to 14-percent five-year compounded annual oil growth rate," said Al Walker, Anadarko Chairman, President and CEO. "We are deeply grateful to the team at Anadarko, which has built the Eagleford Shale into a coveted asset that will continue to be an important domestic source of energy for our nation."
The divestiture includes approximately 155,000 net acres primarily located in Dimmit and Webb counties. At the end of the fourth quarter of 2016, sales volumes from these properties totaled approximately 45,000 barrels of liquids per day and approximately 131 million cubic feet of natural gas per day.
The transaction is expected to close in the first quarter of 2017, subject to customary closing conditions and adjustments.

FT : SpiceJet strikes $22bn leasing deal with Boeing

SpiceJet, one of India’s biggest budget airlines, has struck a $22bn deal for up to 205 new aircraft from US-based Boeing just two years after the low-cost carrier was rescued from the brink of bankruptcy by its former owner. Ajay Singh, the airline’s founder who took back control after a severe liquidity crunch brought it close to collapse, said that the deal – the biggest in SpiceJet’s history – will form part of a turnround plan to return the company to sustained profitability. “We came very close to [a] shut down on December 17,” said Mr Singh, who stumped up nearly $100m to keep the carrier aloft. “We informed the Indian government that no more flights would fly from the next date and employees were to receive a letter that they should not report to work the next day.” “Our turnaround story has been one which has very few parallels in the world today.” The move marks an ambitious step for the carrier, which faces fierce competition in India’s aviation market and has struggled with high costs. The planes will be delivered from 2018 and provide a much-needed boost to Boeing, which has been struggling to retake market share from its European rival Airbus.

>>> What to look at today - 13th of January 2017 (Friday 13th)

Dow -0.32% S&P -0.21% Nasdaq -0.29% Russell -0.89%
US Market closed lower, Risk off trade began. Financials led today's retreat, closing lower by 0.7%. The sector also sits in the red for the week (-0.7%), but will have an opportunity to change today as a batch of banks will be reporting their quarterly results before the opening bell, including JPMorgan Chase (JPM 86.24, -0.84), Wells Fargo (WFC 54.50, -0.30), and Bank of America (BAC 22.92, -0.15). WTI Closed higher +1.4% @ $53.03/bbl. IBB bounce back +0.4% after being down 3% yesterday. FCA-10.3% on EPA news. The 10-yr yield finished lower by two basis points at 2.36%. US After Hours P +7.5% following upside guidance/job cuts... URRE, FCEL, OOMA, TWO lower following offering news. Asian equity indices are mixed once again in the final session of the week; Nikkei225 is among the top performers thanks to weaker JPY, as USD/JPY is up for the first time in 5 trading sessions. China trade data saw mixed-negative results - both USD and CNY terms trade balance surplus slowed to 9-month low, but currency played a part in components; In USD terms, Exports fell more than expected at -6.1% v -4.0%e and imports were in line around +3%; In CNY, Exports were slightly better than expected at +0.6% v -0.1%e and Imports were even stronger at +10.8% v +4.2%e. China Customs officials noted there were uncertainties in trading conditions in 2016, and 2017 will retain big downward pressure on China's economy amid the threat of rising protectionism. BOJ Quarterly Public Opinion of Household Sentiment: Maintains view of 2% inflation in both 1-year and 5-year time frames.

Nikkei +0.80% HAng Seng +0.41% CSI +0.09% Shanghai -0.26%

Eur$ 1.0633 CNH 6.8282 CNY 6.8860 JPY 114.73 GBP 1.2162 CHF 1.0085 RUB 59.33 WTI$ 53.096 +0.15%

S&P +0.11% EuroStoxx +0.46% FTSE +0.35% Dax +0.40% SMI +0.70%

Macro :
- U.S. Dec. Budget Deficit at $27.5b; Est. $26b
- Bullard: B/Sheet Rolloff May Be Better Than Aggressive Hiking
- China Dec. Exports Rise 0.6% Y/y in Yuan Terms; Est. -0.1%

Keep an eye on :
- ASRNL NA : Dutch Government Sells 20.4 Million ASR Nederland Shares
- ATLN VX : J&J, Actelion Deal Said Valued at $250-$260/Shr: StreetInsider
- BCP PL : Portugal Regulator CMVM Approves BCP Rights Offering Prospectus
- BMPS IM : Monte Paschi Handling in Keeping W/ Resolution Rules: Vestager
- EDF FP : EDF Gets Reprieve for Reactor Safety Checks Amid Cold Snap: ASN
- FCA IM : Fiat Chrysler Stock Reaction ‘Seems Overdone,’ BofAML Says
- FCA IM : Marchionne Says Fiat EPA Issues Have Nothing in Common With VW
- FCA IM : Fiat Chrysler to Be Investigated by N.Y.’s Schneiderman
- GEO IM : Geox Says Gregorio Borgo Named CEO With Immediate Effect
- IIA AV : Immofinanz Launches Incentivized Conversion Invitation
- JMT PL : J. Martins 2016 Sales Rise 6.5% Y/y to EU14.6b, Meets Estimates
- NOVOB DC : Novo Nordisk Sued by Pension Fund Over Alleged Price Fixing
- ORA FP : Orange Says CEO Richard Didn’t Confirm to Employees Canal+ Talks
- TCH FP : Technicolor Lowers FY2016 Adjusted Ebitda Outlook
- TEC FP : Mondi to Replace Technip in S&P Europe 350 Index
- TEL NO : Telenor CEO Says Denmark Business Model Not Sustainable: DN
- VOD LN : VOD LN (possible divestment of U.K. unit to Liberty Global) - FT
- VOLVB SS : Volvo Construction Moves HQ to Gothenburg From Brussels

>>> Europe : Brokers Upgrades & Downgrades - 13th of JAnuary 201

>>> Up
*Ageas Raised to Overweight at Morgan Stanley, PT EU43.90
*Agrana Raised to Buy at Berenberg, PT EU140
*BME Raised to Neutral at UBS, PT EU29.50
*Euronext Raised to Buy at UBS, PT EU51
*ING Raised to Outperform at Macquarie
*Ipsen Raised to Add at AlphaValue
*KBC Raised to Buy at SocGen, PT EU68.50
*ProSieben Raised to Buy at Goldman
*Randgold Raised to Buy at Berenberg, PT 7400p
*Randstad Raised to Buy at ABN Amro Bank, PT EU64
*Richemont Raised to Outperform at Main First Bank AG, PT CHF86
*RELX Raised to Buy at Goldman
*SGS Raised to Equal-Weight at Barclays, PT CHF2200
*Tiffany Raised to Market Perform at Wells Fargo

>>> Down
*A3M SM Raised to Buy at Goldman
*Aeroports de Paris Cut to Market Perform at Raymond James
*Auto Trader Cut to Neutral at JPMorgan, PT 440p
*Barclays Cut to Neutral at Macquarie
*Bureau Veritas Cut to Underweight at Barclays, PT EU18.50
*BW Offshore Cut to Hold at ABG Sundal, PT NOK30
*Credit Suisse Cut to Underperform at Macquarie
*Deutsche Boerse Cut to Hold at Bankhaus Lampe, PT EU83
*Direct Line Raised to Hold at HSBC, PT GBP3.50
*DNB Cut to Hold at Berenberg, PT NOK130
*Dunelm Cut to Hold at Peel Hunt
*Dunelm Cut to Underperform at Jefferies, PT 650p
*Geox Cut to Hold at Kepler Cheuvreux, PT EU2.30
*Hugo Boss Cut to Neutral at Citi, PT EU56
*ING Cut to Hold at SocGen, PT EU14.50
*JCDecaux Raised to Buy at Goldman
*KBC Cut to Neutral at Macquarie
*Lagardere Cut to Underweight at JPMorgan, PT EU24.50
*Mediaset Cut to Neutral at Goldman
*Metropole Television Cut to Sell at Goldman
*Metropole Television Cut to Neutral at JPMorgan, PT EU18.50
*Nokia Cut to Hold at Canaccord, PT $5
*Pennon Cut to Underperform at Credit Suisse, PT 680p
*PGS Cut to Hold at ABG Sundal, PT NOK30
*Premier Oil Cut to Equal-Weight at Barclays, PT GBP1
*Schneider Cut to Neutral at Oddo & Cie, PT EU69
*SFR Group Cut to Neutral at Macquarie
*Talanx Cut to Hold at HSBC, PT EU33.60
*UBM Cut to Neutral at Goldman
*Ubisoft Cut to Neutral at JPMorgan, PT EU33
*Vivendi Cut to Neutral at JPMorgan, PT EU19.70
*Volvo Cut to Hold at Nordea Securities, PT SEK113

>>> PT Change


>>> Initiation
*Dairy Crest Rated New Reduce at Kepler Cheuvreux, PT 560p
*GW Pharma Rated New Buy at Goldman, PT $189

>>> Call
>> Sector
*European Media Sector Attractive, M&A ‘Center Stage’: Goldman

>>> US After Hours Summary: P +7.5% following upside guidance/job

After Hours Summary: P +7.5% following upside guidance/job cuts... URRE, FCEL, OOMA, TWO lower following offering news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NEPT +17.2%, P +7.5% (expects to exceed Q4 guidance, citing subscription momentum and RPM growth; will undertake operational efficiency measures)

Companies trading higher in after hours in reaction to news: TBIO +23.2% (continued momentum), RXII +19.1% (OPKO Health increases stake), IMMU +4.3%, MRNS +3.6% and OPXA +3.5% (following late moves higher into the close), NVLS +3.2% (approved a restructuring plan as part of the Company's initiative to explore strategic alternatives; cutting 25 of 30 emplyees, including the CEO and CMO), ZIOP +2.9% (following Najarian mention on CNBC), OREX +1.8% (after spiking higher into the close), SKLN +1.4% (Skyline Medical will hold a conference call on January 19 at 4:30pm ET to provide a business update and a discussion on recent and upcoming milestones), FCAU +1% (modestly rebounding), SN +0.6% and APC +0.3% (Anadarko Petroleum to sell Eagleford Shale assets in South Texas for approx $2.3 bln to Sanchez Energy and Blackstone Group), WGL +0.3% (AltaGas confirms it is in discussions regarding a potential transaction with a third party)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: HMST -9.5%, (reports downside Q4 results and announces proposed settlement of SEC investigation),

Companies trading lower in after hours in reaction to news: URRE -21.7% (proposes public offering of common stock; actual size or terms of the offering not yet determined), FCEL -2.6% (files for $150 mln mixed securities shelf offering), OOMA -2.2% (announces that certain of its stockholders, consisting of entities affiliated with Worldview Technology Partners, intend to offer shares of common stock for sale in an underwritten secondary offering), WPX -2% (will acquire assets that are expected to increase its Permian operations; commences underwritten public offering of 42 mln shares of its common stock), IOTS -1.8% (after ~50% move higher on Thursday), TWO -1.6% (to offer up to $250 mln of convertible senior notes due 2022; issues statement on recent developments, sees year-ending book value per diluted common share of $9.73-9.83 following Q4 market volatility), GME -0.7% (downgraded to Neutral at Macquarie), ABT -0.7% (Muddy Waters' Carson Block said he was mulling short on CNBC FastMoney)



Click here to read the full comment.

Portfolio Ticker Matches:  WRAPX



This email was sent to you at: sgva@bloomberg.net. To ensure delivery to your Inbox and have images displayed properly, please add update@briefing.com to your Address Book or Safe Sender List.

Briefing.com sends these emails based on the preferences you set for your account. If you no longer wish to receive this email, unsubscribe here. To edit your email preferences, click here. Visit our Privacy Policy if you have any questions.

Briefing.com offers a wide range of premium services. Free trial requests can be made via our institutional sales or customer service departments.

401 N. Michigan Avenue, Suite 2950 Chicago, IL 60611

Copyright © 2017 Briefing.com, Inc. All rights reserved.

Available on the App Store  Get it on Google Play