Energy Sector
Stock Presentation
Dan Geisler
Olga Boder(Firdman)
Fall 2009
Agenda
•
•
•
•
•
S&P 500 Energy Sector
–
–
–
–
–
–
% of index
top market cap
top performers
S&P 500 Energy Sector
Top Movers
industries within sector
SIM energy holdings
–
–
–
what companies and industries
percent of portfolio
performance
Sector/industry outlook
–
–
–
Oil supply/demand
Oil price forecast
Regression against stocks/sector
Valuation
–
–
–
Industries in SIM
sector as a whole
potential attractive industries
Recommendation
S&P Sector Breakdown
Industrials, 10.09%
Information Technology,
19.04%
Health Care, 12.65%
Materials, 3.39%
Telecommunication
Services, 3.09%
Financials, 14.66%
Utilities, 3.68%
Cash, 0.00%
Dividend Receivables,
0.00%
Energy, 12.35%
Consumer Discretionary,
9.11%
Consumer Staples, 11.94%
S&P 500 Top Market Cap
No
Stock
% Weight
in the
Index
1
ExxonMobil
3.77
3.77
2
Microsoft
2.36
6.13
3
Procter & Gamble
1.86
7.99
4
Apple
1.85
9.84
5
JPMorgan Chase
1.80
11.64
6
Johnson & Johnson
1.78
13.42
7
IBM
1.73
15.15
8
Chevron
1.68
16.84
9
General Electric
1.66
18.50
10
AT&T
1.66
20.16
Um %
S&P 500 Top Performers
Ticker
Name
Sector
YTD Return %
S&P 500 Best Returns YTD 2009
(NYSE:THC)
TENET HEALTHCARE CORP
Health
373.04%
(NYSE:XL)
XL CAPITAL LTD
Financials
363.78%
(NYSE:GNW)
GENWORTH FINANCIAL INC A
Financials
319.44%
(NYSE:F)
FORD MOTOR CO
Consumer Durable
218.34%
(NYSE:WDC)
WESTERN DIGITAL CORP
Technology
207.34%
(NYSE:MU)
MICRON TECHNOLOGY INC
Technology
206.82%
WHOLE FOODS MARKET INC
Consumer Services
204.77%
(NASDAQ:EXPE)
EXPEDIA INC
Transportation
184.83%
(NYSE:FCX)
FREEPORT-MCMORAN C & G
Basic Material
172.87%
(NYSE:AMD)
ADVANCED MICRO DEVICES
Technology
169.91%
(NASDAQ:WFMI)
Energy and S&P 500
S&P 500 Energy Sector
•
•
•
•
•
As of November 2 2009
Close : 424.18
Net Change: 1.96
% Change: 0.46
Year to_Date: 9.79
Top Movers
Gainers (% price change)
Last Trade
Change
Mkt Cap
Encore Acquisition Co.
EAC
44.67
+7.60 (20.50%)
2.36B
Harvest Natural Resources
HNR
5.73
+0.24 (4.37%)
190.07M
Stone Energy Corporation
SGY
15.95
+0.62 (4.04%)
766.14M
Comstock Resources, Inc.
CRK
42.72
+1.63 (3.97%)
1.99B
Intl. Coal Group, Inc.
ICO
4.25
+0.16 (3.91%)
655.15M
Top Movers
Losers (% price change)
Last Trade
Change
Mkt Cap
Denbury Resources Inc.
DNR
13.09
-1.51 (-10.34%)
3.27B
Global Partners LP
GLP
22.2
-2.01 (-8.31%)
295.28M
Rosetta Resources Inc.
ROSE
12.65
-0.88 (-6.50%)
662.30M
Bronco Drilling Co., Inc.
BRNC
5.91
-0.41 (-6.49%)
160.86M
Hercules Offshore, Inc.
HERO
4.8
-0.33 (-6.43%)
544.00M
Top Movers
Most Actives (dollar volume)
Last Trade
Change
Mkt Cap
Exxon Mobil Corporation
XOM
72.15
+0.48 (0.67%)
342.50B
Chevron Corporation
CVX
76.64
+0.10 (0.13%)
153.70B
Petroleo Brasileiro SA
PBR
46.71
+0.49 (1.06%)
204.92B
Occidental Petroleum Corp
OXY
76.82
+0.94 (1.24%)
62.28B
ConocoPhillips
COP
49.98
-0.20 (-0.40%)
74.12B
S& P 500 Industries Within Energy Sector
Price Changes (%)
5-Year
Std.
Beta
Dev.
Index
Value
% of
500 or
Sector
1 Wk.
YTD
2008
5-Yr CAGR
Coal & Consumable
Fuels
89.52
1.93%
3.30%
85.20%
-64.20%
N/A
N/A
N/A
Integrated Oil & Gas
424.69 59.02%
5.10%
0.30%
-23.50%
8.80%
0.7
20.7
Oil & Gas Drilling
Oil & Gas Equipment &
Services
Oil & Gas Exploration &
Production
Oil & Gas Refining &
Marketing
Oil & Gas Storage &
Transportation
531.17
1.96%
5.10%
75.00%
-62.00%
10.50%
1.3
33.8
445.8
14.61%
7.80%
67.30%
-59.50%
11.70%
1.4
35.3
482.39 18.32%
3.50%
42.10%
-35.00%
18.30%
1.1
31
189.55
1.43%
4.30%
-10.70% -64.70%
-4.80%
1.2
39
107.94
2.73%
3.90%
34.90%
-51.60%
N/A
N/A
N/A
Energy Sector
446.72 12.35%
3.80%
15.60%
-35.90%
9.90%
0.9
23.3
SIM and S&P 500
Sector
Energy
S&P 500 Weight
12.35%
SIM Weight
12.80%
+/0.45%
SIM Companies and Industries
Quantity
Security
Ticker
Industry
14,700
BP plc. - ADR
BP
Major Integrated Oil & Gas
12,300
ConocoPhillips Co.
COP
Major Integrated Oil & Gas
10,200
Transocean Ltd.
RIG
Oil & Gas Drilling & Exploration
SIM Percent of Portfolio
Information Technology,
21.97%
Industrials, 11.97%
Materials, 4.52%
Telecommunication
Services, 3.51%
Utilities, 3.19%
Cash, 2.51%
Dividend Receivables,
0.08%
Transocean Ltd., 4.75%
ConocoPhillips Co., 3.43%
Energy, 12.80%
BP plc. - ADR, 4.62%
Consumer Discretionary,
7.51%
Health Care, 13.13%
Financials, 6.59%
Consumer Staples, 12.23%
Industry
• Current Prices:
– Oil: $79.50
– BP: $57.55
– COP: $50.75
– RIG: $85.91
West Texas Intermediate Crude Oil Spot Price
TRANSOCEAN (RIG)
BP ADR (BP)
CONOCOPHILLIPS (COP)
ENERGY (SPENS)
$160
700
650
$140
600
$120
550
500
$100
450
$80
400
350
$60
300
$40
250
$20
08/31/2004
200
08/31/2005
08/31/2006
08/31/2007
08/31/2008
08/31/2009
Worldwide Crude Oil Production (Millions of Barrels/Day)
75
$125
74
$100
73
$75
72
$50
71
Dollars/Barrel
$150
$25
08/31/2004
08/31/2005
08/31/2006
08/31/2007
08/31/2008
70
08/31/2009
Millions of Barrels/Day
West Texas Intermediate Crude Oil Price/Barrel
Symbol
Date
Last
Rate
FUTURES CHAIN 10/30/2009 $76.99
CLZ09.NYM
Dec-09 $76.99 0.00%
CLF10.NYM
Jan-10 $77.64 4.87%
CLG10.NYM
Feb-10 $78.22 6.15%
CLH10.NYM
Mar-10 $78.85 7.14%
CLJ10.NYM
Apr-10 $79.30 7.05%
CLK10.NYM
May-10 $79.76 7.05%
CLM10.NYM
Jun-10 $80.10 6.75%
CLN10.NYM
Jul-10
$80.46 6.59%
CLQ10.NYM
Aug-10 $80.77 6.36%
CLU10.NYM
Sep-10 $81.10 6.20%
CLV10.NYM
Oct-10 $81.42 6.08%
CLX10.NYM
Nov-10 $81.86 6.10%
CLZ10.NYM
Dec-10 $82.18 6.00%
CLF11.NYM
Jan-11 $82.48 5.87%
CLG11.NYM
Feb-11 $82.69 5.68%
CLH11.NYM
Mar-11 $82.90 5.54%
CLJ11.NYM
Apr-11 $83.11 5.39%
CLK11.NYM
May-11 $83.31 5.25%
CLM11.NYM
Jun-11 $83.51 5.12%
CLN11.NYM
Jul-11
$83.70 5.01%
CLQ11.NYM
Aug-11 $83.87 4.88%
CLU11.NYM
Sep-11 $84.04 4.77%
CLV11.NYM
Oct-11 $84.22 4.67%
CLX11.NYM
Nov-11 $84.40 4.58%
CLZ11.NYM
Dec-11 $84.49 4.45%
CLF12.NYM
Jan-12 $84.72 4.40%
CLG12.NYM
Feb-12 $84.86 4.31%
CLH12.NYM
Mar-12 $85.00 4.24%
CLJ12.NYM
Apr-12 $85.13 4.15%
CLK12.NYM
May-12 $85.27 4.08%
CLM12.NYM
Jun-12 $85.40 4.00%
CLN12.NYM
Jul-12
$85.53 3.94%
CLQ12.NYM
Aug-12 $85.67 3.88%
CLU12.NYM
CLV12.NYM
CLX12.NYM
CLZ12.NYM
CLF13.NYM
CLG13.NYM
CLH13.NYM
CLJ13.NYM
CLK13.NYM
CLM13.NYM
CLN13.NYM
CLQ13.NYM
CLU13.NYM
CLV13.NYM
CLX13.NYM
CLZ13.NYM
CLF14.NYM
CLG14.NYM
CLH14.NYM
CLJ14.NYM
CLK14.NYM
CLM14.NYM
CLN14.NYM
CLQ14.NYM
CLU14.NYM
CLV14.NYM
CLX14.NYM
CLZ14.NYM
CLM15.NYM
CLZ15.NYM
CLM16.NYM
CLZ16.NYM
CLM17.NYM
CLZ17.NYM
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
$85.81
$85.96
$86.10
$86.24
$86.38
$86.53
$86.66
$86.80
$86.94
$87.08
$87.22
$87.36
$87.51
$87.65
$87.79
$87.94
$88.09
$88.24
$88.40
$88.56
$88.72
$88.88
$89.04
$89.20
$89.36
$89.52
$89.68
$89.84
$90.84
$91.84
$92.95
$94.06
$95.23
$96.39
3.82%
3.77%
3.72%
3.67%
3.62%
3.58%
3.55%
3.50%
3.47%
3.43%
3.40%
3.36%
3.33%
3.31%
3.28%
3.25%
3.23%
3.20%
3.19%
3.17%
3.15%
3.13%
3.11%
3.10%
3.08%
3.06%
3.05%
3.03%
2.96%
2.90%
2.86%
2.82%
2.80%
2.78%
Futures Chain (Source: Finance.yahoo.com, 10/30/2009)
$100.00
$95.00
$90.00
$85.00
$80.00
$75.00
10/30/2009
10/30/2010
10/30/2011
10/29/2012
10/30/2013
10/30/2014
10/30/2015
10/29/2016
10/30/2017
Crude Oil vs. Sector Performance
Scatterplot of ENERGY (SPENS) vs Crude Oil Price: West Texas
Intermediate
Units: $ Per Barrel of Data Set #1
Scatterplot of TRANSOCEAN (RIG) vs Crude Oil Price: West Texas
Intermediate
Units: $ Per Barrel of Data Set #1
700
1
#
t
eS
at
a
D
)/S
N
E
SP
(
Y
G
R
E
N
E
180
1
#
t
eS
at
a
D
/)
G
I
(R
N
A
E
C
O
S
N
A
R
T
600
500
400
300
200
100
0
160
140
120
100
80
60
40
20
0
0
20
40
60
80
100
120
140
160
0
20
40
Crude Oil Price: West Texas Intermediate
Units: $ Per Barrel / Data Set #1
Correlation
0.829
Correlation
Scatterplot of BP ADR (BP) vs Crude Oil Price: West Texas Intermediate
Units: $ Per Barrel of Data Set #1
80
1
#
t
Se
at
a
D
/)
P
O
C
(
SP
IL
LI
H
P
O
C
O
N
O
C
70
60
50
40
30
20
10
0
0
20
40
60
80
100
0.291
100
120
140
160
120
140
0.902
100
90
80
70
60
50
40
30
20
10
0
160
0
20
Crude Oil Price: West Texas Intermediate
Units: $ Per Barrel / Data Set #1
Correlation
80
Scatterplot of CONOCOPHILLIPS (COP) vs Crude Oil Price: West Texas
Intermediate
Units: $ Per Barrel of Data Set #1
90
1
#
t
eS
at
a
D
)/
P
B
(
R
D
A
P
B
60
Crude Oil Price: West Texas Intermediate
Units: $ Per Barrel / Data Set #1
40
60
80
100
Crude Oil Price: West Texas Intermediate
Units: $ Per Barrel / Data Set #1
Correlation
0.761
120
140
160
Regression Analysis
Summary
ANOVA Table
Explained
Unexplained
Regression Table
Constant
Crude
Oil Price:
West Texas
Summary
ANOVA Table
Explained
Unexplained
Regression Table
Constant
Crude
Oil Price:
West Texas
Multiple
R
R-Square
Adjusted
R-Square
StErr of
Estimate
0.8292
0.6875
0.6820
56.09811657
Degrees of
Freedom
Sum of
Squares
Mean of
Squares
F-Ratio
p-Value
123.2229
< 0.0001
1
56
Coefficient
387782.1552 387782.1552
176231.9262 3146.998682
Standard
Error
180.4599063 24.21859216
3.626348692 0.326681042
Summary
t-Value
p-Value
Confidence Interval 95%
Lower
Upper
Regression Table
7.4513
11.1006
< 0.0001
< 0.0001
131.9442364 228.9755763
2.971927927 4.280769458
Constant
Crude
Oil Price:
West Texas
R-Square
Adjusted
R-Square
StErr of
Estimate
0.9025
0.8144
0.8111
14.22309978
Degrees of
Freedom
Sum of
Squares
Mean of
Squares
F-Ratio
p-Value
245.7688
< 0.0001
Coefficient
49718.18213 49718.18213
11328.60777 202.2965673
Standard
Error
-8.732094167 6.140374649
1.298474042 0.082826614
Explained
Unexplained
Multiple
R
1
56
ANOVA Table
Summary
ANOVA Table
Explained
Unexplained
t-Value
p-Value
Confidence Interval 95%
Lower
Upper
Regression Table
-1.4221
15.6770
0.1605
< 0.0001
-21.03274269 3.568554359
1.132552396 1.464395688
Constant
Crude
Oil Price:
West Texas
Multiple
R
R-Square
Adjusted
R-Square
StErr of
Estimate
0.2915
0.0850
0.0686
7.683778595
Degrees of
Freedom
Sum of
Squares
Mean of
Squares
1
56
Coefficient
307.0074607 307.0074607
3306.265396 59.0404535
Standard
Error
56.26309385 3.317229017
0.102035223 0.044745616
F-Ratio
p-Value
5.2000
0.0264
t-Value
p-Value
Confidence Interval 95%
Lower
Upper
16.9609
2.2803
< 0.0001
0.0264
49.61788561 62.90830209
0.012398982 0.191671463
Multiple
R
R-Square
Adjusted
R-Square
StErr of
Estimate
0.7607
0.5786
0.5711
9.665865551
Degrees of
Freedom
Sum of
Squares
Mean of
Squares
1
56
7184.333123 7184.333123
5232.021583 93.42895685
F-Ratio
p-Value
76.8962
< 0.0001
Coefficient
Standard
Error
t-Value
p-Value
Confidence Interval 95%
Lower
Upper
29.73507724
0.493592875
4.172932533
0.056288076
7.1257
8.7690
< 0.0001
< 0.0001
21.37568888 38.09446561
0.38083431 0.60635144
West Texas Intermediate Crude Oil Spot Price
TRANSOCEAN (RIG)
BP ADR (BP)
CONOCOPHILLIPS (COP)
RIG Reg
BP Reg
COP Reg
ENERGY (SPENS)
Energy Reg
$160
700
650
$140
600
$120
550
500
$100
450
$80
400
350
$60
300
$40
250
$20
08/31/2004
200
08/31/2006
08/31/2008
08/31/2010
08/31/2012
08/31/2014
08/31/2016
Valuation Ratios
COP Absolute
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
13.6
11.3
2.3
0.9
8.2
Low
3.5
5.3
0.8
0.2
2.3
Median
7.6
8.0
1.5
0.6
5.2
Current
13.6
8.9
1.3
0.6
5.1
Overvalued by >20%
Inline within 20%
Undervalued by >20%
BP Absolute
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
16.0
13.8
3.3
1.1
9.7
Low
4.5
4.7
1.4
0.3
3.3
Median
10.7
10.3
2.6
0.8
7.6
Current
13.4
10.5
1.8
0.8
7.1
Overvalued by >20%
Inline within 20%
Undervalued by >20%
RIG Absolute
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
160.8
49.0
4.7
9.4
33.8
Low
3.4
3.1
0.9
1.3
2.8
Median
25.2
12.1
2.8
6.8
18.4
Current
6.4
8.2
1.5
2.2
5.1
Overvalued by >20%
Inline within 20%
Undervalued by >20%
Valuation Ratios (cont.)
Energy Absolute
High
Low
Median
Current
P/Trailing E
14.9
6.1
11.7
12.1
P/Forward E
16.2
7.8
11.5
15.4
P/B
3.8
1.4
3.0
2.1
Overvalued by >20%
P/S
1.4
0.5
1.1
1.0
Inline within 20%
P/CF
9.4
4.1
7.3
5.4
Undervalued by >20%
High
Low
Median
Current
P/Trailing E
0.88
0.53
0.70
0.68
P/Forward E
1.20
0.57
0.74
0.91
P/B
1.40
0.80
1.10
1.00
Overvalued by >10%
P/S
1.00
0.60
0.80
0.9
Inline within 10%
P/CF
0.90
0.50
0.70
0.50
Undervalued by >10%
Oil Drilling Relative to S&P
500
High
Low
Median
Current
P/Trailing E
3.70
0.28
0.98
0.41
P/Forward E
2.00
0.28
0.68
0.79
P/B
1.70
0.50
1.00
0.80
Overvalued by >10%
P/S
4.30
1.40
2.90
1.80
Inline within 10%
P/CF
1.80
0.40
1.00
0.50
Undervalued by >10%
Energy Relative to S&P 500
Valuation Ratios (cont.)
Oil Integrated Relative
to S&P 500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
0.79
1.20
1.40
0.80
0.80
0.51
0.46
0.90
0.50
0.50
0.61
0.68
1.00
0.60
0.60
0.64
0.78
1.00
0.80
0.50
Oil Exploration
Relative to S&P 500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
1.10
1.90
1.30
3.50
0.80
0.55
0.51
0.70
1.50
0.40
0.70
0.73
0.80
2.20
0.60
1.00
1.20
0.80
2.50
0.50
Oil Equipment Relative
to S&P 500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
1.90
1.70
2.80
2.80
1.60
0.58
0.61
1.00
1.20
0.70
1.30
1.20
2.00
1.80
1.30
0.77
1.40
1.30
1.60
0.80
Overvalued by >10%
Inline within 10%
Undervalued by >10%
Overvalued by >10%
Inline within 10%
Undervalued by >10%
Overvalued by >10%
Inline within 10%
Undervalued by >10%
Valuation Ratios (cont.)
Oil Refining Relative
to S&P 500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
1.00
3.90
1.30
0.50
0.70
0.23
0.39
0.30
0.10
0.20
0.50
0.55
0.80
0.20
0.50
0.31
3.90
0.30
0.10
0.30
Coal Relative to S&P
500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
23.30
2.10
1.90
4.00
2.10
0.55
0.39
0.70
0.90
0.50
1.40
0.95
1.10
1.30
0.70
0.74
1.20
1.90
1.40
0.80
Overvalued by >10%
Inline within 10%
Undervalued by >10%
Price/Oil
Energy Sector
BP (BP)
ConocoPhillips (COP)
Transocean (RIG)
High
10.1
1.3
1.4
1.6
Low
4.1
0.5
0.6
0.7
Median
6.3
1.1
1.0
1.2
Current
5.9
0.8
0.7
1.2
Overvalued by >20%
Inline within 20%
Undervalued by >20%
Overvalued by >10%
Inline within 10%
Undervalued by >10%
Recommendation
• Hold the overall % for the sector.
• Hold Transocean Ltd. since it’s a buy right now.
• Reduce the % of BP plc. – ADR and
ConocoPhillips Co.
• Diversify our energy sector by purchasing a stock
with an exposure to a non-oil energy type, like
natural gas companies.
• Possible purchases: Chesapeake Energy the
largest producers of natural gas in the nation.
Questions?