Barrons : If Oil Revives a Bit, BG Group Could Jump 35%


If Oil Revives a Bit, BG Group Could Jump 35%

Dow Jones Global Indexes|Global Stock Markets
With oil prices half of what they were 12 months ago, it may not seem like the best time to invest in an energy stock, but Britain’s BG Group has excellent prospects, and its shares look compelling.
BG Group’s American depositary receipts (ticker: BRGYY) could rise as much as 35% through 2016 as capital expenditures pass a peak, production ramps up in Brazil and Australia, and a chief executive with a track record for efficiency and value creation takes the helm.
The ADRs were trading on Friday at $14 and change, giving BG Group a market capitalization of almost $50 billion. At about 30 times forecast 2015 earnings, it seems pricey. However, the multiple has jumped on an anticipated drop in profits this year. BG’s earnings are expected to rebound next year, lowering the likely 2016 price/earnings ratio to a much more reasonable 17.
More than two-thirds of analysts who cover the stock are positive on it, even though it has shed 17% in value in the past year and trades almost 50% below its 52-week high of $21.88. Their estimates provide a consensus 12-month price target of $16.47, which suggests upside of about 11%. Some analysts offer price targets of as much as $20 or more, pointing to potential gains of 35%.
BG Group’s performance depends heavily on energy prices. On an annualized basis, a $1-per-barrel movement in oil prices could affect 2015 earnings by $60 million to $70 million. With oil currently around $50 a barrel, most analysts expect a recovery of sorts this year, which would be a positive for producers.
BG Group is expected to earn 47 cents a share in 2015, on sales of $16.85 billion, down from $1.18 on $19.29 billion last year. Earnings per share are forecast to hit 85 cents on sales of $22.89 billion in 2016.
The drop in prices forced BG, based in Reading, to book impairments of $8.9 billion in the fourth quarter of 2014, mostly relating to its Queensland Curtis liquefied-natural-gas project in Australia. It is the world’s first project to turn gas from coal seams into LNG, and BG has invested more than $20 billion in it since 2011. Production began in December and will ramp up during 2015. Optimum output should be reached by mid-2016.
In Brazil, two more offshore production facilities began operations in the vast Santos Basin. Both projects are key to driving BG Group’s production growth.
BG Group is expected to produce 650,000 to 690,000 barrels of oil equivalent per day in 2015, up from an average of 606,000 in 2014.
That figure is expected to climb to 816,000 barrels per day in 2016 and almost 900,000 in 2017. “By 2017-18, we expect BG to demonstrate one of the best production profiles in the sector,” says Asit Sen, an analyst at Cowen, who has a $19 price target on the stock.
With the start-up of the Queensland project, the company is coming to the end of a period of heavy spending. Capital expenditures are forecast to fall to $6 billion to $7 billion in 2015 from $9.4 billion in 2014. That could give earnings a lift.
In addition, BG Group is expected to reap up to $5.5 billion from asset disposals in 2015, including the sale of a pipeline network in Australia. Proceeds will go toward future investments and reducing its $12 billion in net debt.
The company has cash and equivalents of $5.3 billion and undrawn credit facilities of $5.2 billion, so investors’ concerns about the health of its balance sheet appear unfounded.
Another reason for optimism is the arrival next month of an industry heavyweight as CEO. Helge Lund spent a decade running Norway’s Statoil (STO), where he earned a reputation for strong production growth, with an emphasis on value creation. BG Group’s ability to attract a manager of Lund’s caliber speaks volumes.
GREEK DEMANDS to soften the terms of its 240 billion euro bailout ($274.92 billion) got short shrift last week, although a compromise still seems the most likely outcome.
The European Central Bank announced that it would no longer accept Greek government bonds from banks seeking funds, and a request to Germany for bridge funding to allow Athens’ new administration time to negotiate a new deal fell on deaf ears.
In response, Greek stocks slid, and the euro moved lower against the dollar. It was about $1.13 at midday on Friday. Volatility is likely to remain heightened until there is a resolution to the impasse. The danger of deposit outflows and of the nation running out of money are increasing the pressure on Greece’s new leftist government to quickly nail down a new deal.

RTR - Different delivery, one message to Greece's new leaders


Different delivery, one message to Greece's new leaders


ROME/PARIS (Reuters) - In Paris and Rome, it was sugar coated; in Berlin and Frankfurt unequivocal. But the message from European capitals to Greece's new leaders was the same at every stop on last week's tour - stick to your commitments.

Prime Minister Alexis Tsipras will head to his first European summit on Thursday duly warned that it will be near impossible, as Athens wants, to rip up pledges made during the country's four-year international bailout. Tsipras and his aides were also advised to learn the ways of diplomatic custom.

"Friendship requires telling things as they are," French Finance Minister Michel ‎Sapin told Reuters after meeting his Greek counterpart Yanis Varoufakis last Sunday. "We must avoid misunderstandings and make sure all, and especially the Greek side, understand how things are."

The positions taken this past week raise pressure on Tsipras to abandon the rhetoric that got him elected. Other European capitals must decide how much they are willing to compromise to keep Greece in the euro. France and Italy, widely perceived as Greece's natural allies, will have to think how far they want to go to facilitate a deal.

“I hope that this European tour has helped them see what others are prepared to do – and not do," said one European official in Brussels.

Tsipras and Varoufakis declined to comment for this article.

There isn't much time. Greece's bailout ends on February 28. Athens says it doesn't want an extension, rather a bridge loan from Europe while it comes up with a new plan for the country. So far, the answer has been no.

Yet without new aid, the Greek state will be starved of funds. Nine billion euros were slated to arrive this year, largely from the International Monetary Fund. Tax revenues are shrinking, and privatizations have been halted. Analysts at Unicredit say the state could run out of money by March.

DIPLOMATIC BALANCING-ACT

The clearest message to Greece this past week came, as expected, from Germany.

During a news conference with Greek Finance Minister Yanis Varoufakis in Berlin, German Finance Minister Wolfgang Schaeuble dismissed Greece's request for any bridge funding and insisted that Athens implement existing bailout agreements.

The news conference was marked by the absence of cordial chit chat or eye contact between the 73-year-old brown-suited German and his 53-year-old open-shirted Greek guest.

In Paris and Rome, the message was more nuanced.

Within southern Europe, France and Italy would appear to be Greece's natural allies. They are run by center-left governments and that have been pushing their European partners to adopt a more growth-oriented policy for the region.

Both have applauded Tsipras' victory as a triumph of the people's will over suffocating austerity.

French President Francois Hollande's administration has taken on the role of early facilitator for Tsipras: In Paris last Sunday, Finance Minister Michel Sapin, after meeting Varoufakis, sent a text message to Schaeuble asking him to meet the Greek finance minister, according to a French official.

During a lengthy news conference after they met in Rome on Tuesday, Italian Premier Matteo Renzi hailed Tsipras for bringing a "message of hope, not just fear" to Europe.

The news conference brimmed with mutual compliments and references to cultural similarities. Renzi referred to his high school ancient Greek classes and gifted Tsipras a tie. The two joked that the Greek leader would start wearing one once Greek's debt woes are over.

Both men are 40. They have taken their countries' political establishment by storm. They govern countries that have Europe's biggest and second-biggest debt as a percentage of output.

Crucially, both see themselves as champions of a lost generation. Italians born in 1970 will pay 50 percent more in taxes as a percentage of their lifetime income than those born in 1952, according to Bank of Italy research. They will receive half the pension benefits that current 60-somethings do now.

"We are the same age, and our generation has been the buffer of bad political choices," Tsipras said.

Yet for Italy and France, Syriza also poses a risk. Hollande and Renzi are center-left leaders who, under pressure from Europe and economic downturns, are trying to embark on market-friendly reforms. The success of Syriza, with its far-left, anti-market rhetoric, could undermine their efforts.

"If Tsipras manages to push his programs against privileges, pressure on Renzi to pivot to the left may grow, shifting the focus to Italy's wealthier households and leaving his labor reforms in limbo," Francesco Galietti, chief executive of public policy analysis firm Policy Sonar, said in a research note.

The risks explain why Hollande and Renzi were guarded in their support for Tsipras. "We want to give Greece a hand, which doesn't mean we'll always agree with them," Renzi said.

EDUCATION

Ahead of Thursday's EU summit, Greece's new leaders also got no shortage of diplomatic education.

Several officials who attended the meetings commented on the lack of experience of international affairs exhibited by Greece's new ministers, and their entourages. Two said they were struck by the lack of knowledge of EU institutions and recent decisions.

"You have the impression that [the Greek delegations] are on quite a steep learning curve," said one top European official.

Tsipras and other Greek officials say they carry the democratic legitimacy of a resounding electoral victory. A government official said sometimes it was an advantage to be inexperienced.

Several European policymakers told the Greeks it was important to understand the views of populations in other European countries.

In Rome on Tuesday, Economy Minister Padoan lunched with Varoufakis. Over a meal of marinated anchovies and ring pasta with clams, the 65-year-old minister engaged his tablemate over the concept of trust and how trust can be gained, in part by communication, according to a person familiar with the meeting.

"We talked less about technical solutions and more about language and common values, and how to use European institutions to find a common solution," Padoan said in the interview with Italian daily L'Avvenire on Friday.

In Brussels, European Commission President Jean-Claude Juncker was affectionate toward Tsipras, kissing him on the cheek and taking the new Greek leader by hand.

Behind the cameras, the 60-year-old Juncker offered the younger Tsipras a tutorial on the ins and outs of the European Union, according to one European official.

"Tsipras was very receptive," the official said.

(Additional reporting by Paul Carrel, Alastair Macdonald and Jean-Baptiste Vey; editing by Janet McBride)

>>> US Close Dow-0,27% S&P-0,27% Nasdaq-0,43% Russell-0,27%

Closing Market Summary: Stocks End Strong Week on Cautious Note

The major averages capped a strong week with a defensive finish. The S&P 500 lost 0.3%, to narrow its weekly gain to 3.0% while the Nasdaq (-0.4%) underperformed, but managed to end the week higher by 2.4%.

Equities climbed at the open in reaction to the release of a better than expected Nonfarm Payrolls report for January. According to the Bureau of Labor Statistics, January payrolls increased by 257,000 ( consensus 235,000) while the December reading saw a large upward revision to 329,000 from 252,000. Hourly earnings (+0.5%; consensus +0.3%) surpassed estimates, which bolstered the report.

The gain in hourly earnings shaped a consensus view that the employment report showcased strong labor market conditions, but that analysis may not be completely correct. According to the National Conference of State Legislators, the minimum wage in 20 states increased on January 1, 2015. The change in state policies resulted in a 0.3% increase in the average minimum wage, with all of the states equally weighted. When weighted by state payrolls, the average minimum wage increased by a slightly less but still hefty 0.2%, which is not a trivial gain. Since the Bureau of Labor Statistics reports wages based on averages and not medians, the increase in the bottom of the wage spectrum caused an overall increase in average wages. Just about 0.2 percentage points of the 0.5 percentage point gain in hourly earnings came from the three lowest paid sectors -- retail trade, leisure and hospitality, and other services. Those three sectors are also the most likely to employ minimum wage workers.

That being said, the report caused participants to reassess their expectations for the timing of the first fed funds rate hike. On that note, The Wall Street Journal's Jon Hilsenrath said today's jobs report increased the chance that the Fed will alter the language that indicates plans to remain ‘patient' before hiking rates. In addition, this year's FOMC voting member and Atlanta Fed President Dennis Lockhart said liftoff should begin "around mid-year, or a little later."

Accordingly, the Treasury complex responded with a slide led by the 5-yr note. The 5-yr yield surged 17 basis points to 1.48% while the benchmark 10-yr yield climbed 12 basis points to 1.94%, representing a 27-basis point rally since last Friday.

Equities held modest gains through the first half of the session, but market breadth never turned positive, which hinted at a potential reversal. That reversal materialized after Standard & Poor's downgraded Greece to ‘B-‘ and said another downgrade could be in the cards. Later in the day, Eurogroup Chief Jeroen Dijsselbloem said Greece must apply for a bailout extension by February 16 in order to maintain financial backing from the eurozone.

The downgrade and subsequent comments from Mr. Dijsselbloem sparked some profit taking after a strong run earlier this week; however, it is worth mentioning that the market was probing a resistance level and its failure to clear that area could signal more downside in the near term. Despite the afternoon slip, nine sectors posted weekly gains between 0.7% (health care) and 7.0% (telecom services), while the rate-sensitive utilities sector lost 4.1% today to end the week lower by 3.7%.

Outside of utilities, the health care sector (-0.8%) was the only group that lost more than 0.6%. Biotechnology contributed to the relative weakness with the iShares Nasdaq Biotechnology ETF (IBB 315.59, -4.32) falling 1.4% to end the week lower by 1.9%.  

On the upside, telecom services (+1.9%) and financials (+0.7%) held gains throughout the session. The telecom sector was underpinned by Verizon (VZ 49.33, +1.47), which surged 3.1% after confirming a sale of its wireless assets in three states to Frontier Communications (FTR 7.93, +0.23) for $10.54 billion, leasing the rights to over 11,300 wireless towers to American Tower (AMT 95.73, -3.86) for about $5 billion, and entering into an accelerated $5 billion share repurchase program.

Meanwhile, financials benefited from the rise in short-term interest rates with the sector adding 4.8% for the week. Elsewhere among cyclical groups, the energy sector lost 0.3%, but jumped 5.4% for the week as crude oil rallied 2.4% to $51.67/bbl. The energy component spiked more than 9.0% since last Friday.

Also of note, the top-weighted technology sector (-0.6%) settled a bit behind the broader market. Earnings were in focus today with LinkedIn (LNKD 263.40, +25.43) and Twitter (TWTR 48.01, +6.75) soaring 10.7% and 16.4%, respectively, after beating estimates. On the flip side, GoPro (GPRO 47.12, -7.25) and Yelp (YELP 45.11, -12.36) stumbled. GoPro slid 13.3% in reaction to cautious guidance while Yelp tumbled 21.5% after its report revealed a slowdown in user growth.

Today's participation was ahead of average with more than 900 million shares changing hands at the NYSE floor.

Economic data was limited to Nonfarm Payrolls and Consumer Credit:

* Nonfarm payrolls added 257,000 new jobs in January after adding an upwardly revised 329,000 (from 252,000) in December while the consensus expected a reading of 235,000 

* Private payrolls increased by 267,000 in January, down from an upwardly revised 320,000 (from 240,000) in December while the consensus an increase of 225,000  * The decline in the average hourly wage in December (-0.2%) was more than offset by a surge in wage growth (0.5%) in January, which easily topped the consensus forecast of a 0.3% gain. However, the sustainability of this growth remains in question considering 20 states raised their minimum wage in January  * The unemployment rate ticked up to 5.7% in January from 5.6% in December as a result of an uptick in the labor force participation rate 

* Consumer credit increased by $14.80 billion in December, up from a downwardly revised $13.50 billion in November while the consensus expected an increase of $15.00 billion 

Monday's session will be free of economic data.

* Nasdaq Composite +0.2% YTD  * Russell 2000 +0.2% YTD  * Dow Jones Industrial Average UNCH YTD  * S&P 500 -0.2% YTD

>>> Goldman Sachs Chief Economist Hatzius: Even with today's data, wages are sti

Goldman Sachs Chief Economist Hatzius: Even with today's data, wages are still growing around 5 year average, haven't made any real headway - CNBC interview 
- The case for 'patience' is still quite strong
- Broad employment to population ratio is still 4% below where we were in 2006
- We are modeling a modest increase in consumption growth
- Haven't yet changed growth forecast of about 3% in 2015; dollar strength could force us to shave that forecast, FX impact has been offset by lower oil so far

>>> Vinci Park submits EUR 800m offer for Empark

Vinci Park submits EUR 800m offer for Empark

Vinci Park, the Spanish parking company, has submitted a EUR 800m offer for the whole of Empark, a source and a banker close to the situation said.

The original plan of the auction, advised by JPMorgan and Caixa BI, was to sell Portuguese holding company A Silva & Silva, which included a 50.34% stake in Empark. However, Vinci also wants to buy out the remaining shares held by a group of minority shareholders, several sources said. The proposal was submitted last week, a minority shareholder source said, adding that the minority shareholders are expected to reach a decision about whether to accept it or not by the end of this month. A sector banker believes that minority shareholders will accept Vinci’s bid.

Vinci Park is competing against Eugenio Hinojosa, a Spanish investor with businesses in the parking sector, which is thought to have made an offer of more than EUR 800m, the banker close to the situation said. This could mean Vinci will likely have to increase its offer for Empark if it wants to succeed, he added.

Empark's minority shareholders are ES Concessions International Holding (22.21%); Transport Infrastructure Holding Company (8.27%); Ahorro Corporacion - AC Desarrollo (8.27%); Espirito Santo Infrastructure Fund I (8.27%); Mellopark (2.58%); and other shareholders (0.06%).

According to the minority shareholder source, Vinci Park wants at least a 95% stake of Empark, though a second source said that Vinci is expecting to own at least a 90% stake.

Vinci Park is owned by Ardian (37.5%), Credit Agricole Assurances (37.5%), and the French group Vinci (25%). Vinci is using Rothschild as advisor, the minority shareholder source said.

Eugenio Hinojosa and Vinci Park did not respond to requests for comment. Empark declined to comment.

Empark closed the last 12 months to end-September 2014 with adjusted revenues of EUR 178.0m and adjusted EBITDA of EUR 65.5m, 3.5% above the 2013 figure. The adjusted EBITDA margin of its operations was 36.8%. Empark refinanced its debt with a EUR 385m high-yield bond issued on 18 December 2013, as reported.

>>> GFI talking to other potential buyers

GFI talking to other potential buyers

GFI Group Inc., an intermediary and provider of trading technologies and support services to the global OTC and listed markets, filed an SC 14D9/A document on Thursday evening with the US Securities and Exchange Commission in which it updated investors on its takeover situation.

An excerpt from page 10 of the filing follows:

'GFI has been approached by parties expressing interest in exploring transactions that could include a potential sale of GFI. The Board has authorized GFI management to explore these potential transactions as well as to engage in discussions with other parties that could lead to other potential transactions. The Board has not made a determination to enter into any transaction at this time or in the future, and there can be no assurances that any such transaction can or will be completed. GFI does not intend to provide updates unless and until the Board approves a specific transaction or otherwise determines that disclosure is appropriate or necessary.'

(BFW) Pictet FY Assets Under Management Chf435b, Up Chf44b

CORRECT: Pictet FY Assets Under Management Chf435b, Up Chf44b
2015-02-06 10:24:27.989 GMT


By Paul Verschuur
(Bloomberg) -- (Corrects net new money in second bullet)
Swiss private bank reports earnings for 1st time under new legal
structure.
* FY net Chf459m
* FY net new money CHF17b
* Statement


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To contact the reporter on this story:
Paul Verschuur in Zurich at +41-44-224-4103 or
pverschuur@bloomberg.net
To contact the editors responsible for this story:
Mariajose Vera at +49-89-244478-803 or
mvera1@bloomberg.net
Paul Verschuur