Patrick Maxwell
Marc Moreland
Victor Susantyo
Overview
Financial Analysis
Business Analysis
Valuation Analysis
Economic Analysis
Recommendation
Victor Susantyo
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
3rd Largest Sector in S&P500
$1.546 Trillion in Market
Capitalization
39 Energy Sector Companies in
S&P500
SIM Portfolio currently holds 3
Energy Sector Companies
S&P Sector breakdown
Overview
Consumer
Discretionary
Consumer Staples
2.98%
3.23%
3.66%
Business Analysis
Economic Analysis
Energy
10.60%
18.07%
10.42%
Consumer
Discretionary
Consumer Staples
2.26%
3.09%
Energy
10.61%
8.16%
Health Care
Financials
Health Care
22.75%
11.04%
Industrials
Industrials
11.23%
11.27%
Valuation Analysis
4.19%
Financials
13.09%
Financial Analysis
SIM Sector breakdown
15.47%
Information
Technology
Materials
13.62%
11.09%
10.39%
Telecommunicatio
n Services
Utilities
Recommendation
SIM Energy Sector is underweight by 205
Basis points
Information
Technology
Materials
Telecommunication
Services
Utilities
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
20.00%
15.00%
10.00%
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
MTD
5.00%
QTD
0.00%
YTD
-5.00%
s
-10.00%
Price Return by Sector
Energy
Materials
Industrials
Consumer Discretion
Consumer Staples
HealthCare
Financials
Info Tech
Telecom
Utilities
Performance
MTD
QTD
YTD
-7.47%
-6.11%
9.19%
-5.87%
-3.93%
-0.03%
-3.52%
-0.93%
7.19%
-0.77%
3.09%
7.58%
2.48%
7.66%
9.53%
2.12%
8.68%
14.11%
-4.14%
-4.24%
-1.59%
-2.91%
-7.00%
3.16%
0.90%
1.57%
5.14%
2.63%
6.55%
8.28%
 Oil & Gas Drilling
Overview
Business Analysis
 Oil & Gas Equipment / Service
 Oil & Gas Exploration / Production
Economic Analysis
Financial Analysis
 Oil & Gas Integrated
Valuation Analysis
 Oil & Gas Refining / Marketing
Recommendation
 Oil & Gas Storage
 Coal & Consumer fields
Overview
Business Analysis
Economic Analysis
Top 5 companies
Ticker Symbol
Stock Price
Market Cap
(Billion)
Industry
Exxon Mobil
XOM
$81.57
$401.82
Oil & Gas Integrated
Chevron
CVX
$102.57
$206.19
Oil & Gas Integrated
Schlumberger
SLB
$83.50
$113.30
Oil & Gas Equipment / Service
Conoco Philips
COP
$72.61
$102.63
Oil & Gas Integrated
Occidental Petroleum
OXY
$100.40
$81.61
Oil & Gas Integrated
Financial Analysis
Valuation Analysis
Recommendation
Other Energy Sector Companies in SIM Portfolio:
Murphy Oil
MUR
$66.88
$12.94
Oil & Gas Refining & Marketing
Transocean
RIG
$69.51
$22.21
Oil & Gas Drilling & Exploration
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Threat of New Entrants (LOW)
 High Capital Requirements
 Some threat of repatriating earnings
Power of Suppliers (HIGH)
 High firm concentration
Power of Buyers (LOW)
 Search for low cost but inelastic demand
Substitutes (Medium)
 Few cost effective alternatives
Competitive Rivalry (LOW)
 Similar product mix, No cost differentiation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
World Supply/Demand Factors
World Price of Oil
Economic growth
Middle East unrest
Money supply
Dollar strength/correlation with
equities
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
120
Global Demand Trends
Overview
100
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Millions of Barrels/Day
Business Analysis
80
Transition Economies
60
Developing Countries
OECD
40
20
0
2009
2010
2015
2020
2025
2030
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Recommendation
11/29/2008
11/29/2007
11/29/2006
11/29/2005
11/29/2004
11/29/2003
11/29/2002
11/29/2001
11/29/2000
11/29/1999
11/29/1998
11/29/1997
11/29/1996
11/29/1995
11/29/1994
11/29/1993
11/01/1992
10/01/1991
09/01/1990
08/01/1989
07/01/1988
06/01/1987
Valuation Analysis
05/01/1986
Financial Analysis
04/01/1985
73
03/01/1984
Business Analysis
02/01/1983
78
01/01/1982
Overview
12/01/1980
Economic Analysis
Millions of Barrels/Day
Worldwide Crude Oil Production
68
63
58
53
48
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
04/01/2011
03/01/2011
02/01/2011
01/01/2011
12/01/2010
11/01/2010
10/01/2010
09/01/2010
08/01/2010
07/01/2010
06/01/2010
05/01/2010
04/01/2010
03/01/2010
02/01/2010
01/01/2010
12/01/2009
11/01/2009
10/01/2009
800
09/01/2009
Recommendation
08/01/2009
1000
07/01/2009
Valuation Analysis
06/01/2009
Financial Analysis
05/01/2009
Economic Analysis
04/01/2009
Overview
03/01/2009
Baker Hughs Rig Count
2000
1800
Business Analysis
1600
1400
1200
02/01/2011
01/01/2011
12/01/2010
11/01/2010
10/01/2010
09/01/2010
08/01/2010
07/01/2010
06/01/2010
05/01/2010
04/01/2010
03/01/2010
02/01/2010
01/01/2010
12/01/2009
11/01/2009
10/01/2009
09/01/2009
08/01/2009
Recommendation
07/01/2009
Valuation Analysis
06/01/2009
Financial Analysis
05/01/2009
360.0000
04/01/2009
Business Analysis
03/01/2009
370.0000
02/01/2009
Overview
01/01/2009
Economic Analysis
Millions of Barrels
U.S. Crude Oil Inventory
380.0000
350.0000
340.0000
330.0000
320.0000
310.0000
300.0000
02/01/2011
01/01/2011
12/01/2010
11/01/2010
10/01/2010
09/01/2010
08/01/2010
07/01/2010
06/01/2010
05/01/2010
04/01/2010
03/01/2010
02/01/2010
01/01/2010
12/01/2009
11/01/2009
10/01/2009
09/01/2009
08/01/2009
07/01/2009
06/01/2009
05/01/2009
Valuation Analysis
04/01/2009
Financial Analysis
03/01/2009
Business Analysis
02/01/2009
Overview
01/01/2009
Economic Analysis
Billions of Cubic Feet
Natural Gas Inventory
8500
8000
7500
7000
6500
6000
5500
Recommendation
5000
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Recommendation
-5
S&P500 Energy Stocks
-10
Crude Oil Price
05/20/2011
05/13/2011
05/06/2011
04/29/2011
04/22/2011
04/15/2011
04/08/2011
04/01/2011
03/25/2011
03/18/2011
03/11/2011
03/04/2011
02/25/2011
02/18/2011
02/11/2011
02/04/2011
01/28/2011
01/21/2011
01/14/2011
01/07/2011
12/31/2010
30
Crude Oil & Energy Sector, 2011
25
Overview
20
Business Analysis
15
Economic Analysis
10
Financial Analysis
5
Valuation Analysis
0
Contango – The futures price is above the current spot price.
102
WTI Futures Curve
101.5
Overview
101
Business Analysis
100.5
100
$
Economic Analysis
Financial Analysis
99.5
99
98.5
Valuation Analysis
98
97.5
Recommendation
97
Jul '11 Aug '11 Sep '11 Oct '11 Nov '11 Dec '11 Jan '12 Feb '12 Mar '12 Apr '12 May '12
-1.00%
04/01/2011
03/01/2011
02/01/2011
01/01/2011
12/01/2010
11/01/2010
10/01/2010
09/01/2010
08/01/2010
07/01/2010
06/01/2010
05/01/2010
04/01/2010
03/01/2010
02/01/2010
01/01/2010
2.00%
12/01/2009
Valuation Analysis
11/01/2009
3.00%
10/01/2009
Financial Analysis
09/01/2009
4.00%
08/01/2009
Economic Analysis
07/01/2009
5.00%
06/01/2009
Business Analysis
05/01/2009
6.00%
04/01/2009
Overview
03/01/2009
Increase in Money Supply
7.00%
1.00%
Recommendation
0.00%
Euro-Dollar Exchange Rate
Overview
155
150
Business Analysis
145
Economic Analysis
Financial Analysis
$ per Euro
140
135
130
125
Valuation Analysis
120
115
Recommendation
110
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
“OPEC has held its official output targets steady even as prices
surged, saying supply was sufficient.”- Reuters, May 19, 2011
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Member Countries
Algeria
Angola
Ecuador
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
United Arab Emirates
“OPEC has held its official output targets steady even as prices
surged, saying supply was sufficient.”- Reuters, May 19, 2011
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
“OPEC has held its official output targets steady even as prices
surged, saying supply was sufficient.”- Reuters, May 19, 2011
2/11/2011:
President
Mubarak
Announces he is
stepping down
12/17/2011:
Bouazizi selfimmolation
Overview
5/2/2011:
President
Obama
announces Bin
Laden dead
Business Analysis
1/14/2011:
President BenAli Flees Tunisia
Economic Analysis
Change in Crude Price, Jan 1-present
Financial Analysis
30
25
Valuation Analysis
20
%
15
Recommendation
3/18/2011:
United Nations
backs no flyzone in Libya
10
5
0
-5
-10
03/01/2011
02/01/2011
01/01/2011
12/01/2010
11/01/2010
10/01/2010
09/01/2010
08/01/2010
07/01/2010
06/01/2010
05/01/2010
04/01/2010
03/01/2010
02/01/2010
01/01/2010
12/01/2009
11/01/2009
10/01/2009
09/01/2009
08/01/2009
Recommendation
07/01/2009
Valuation Analysis
06/01/2009
Financial Analysis
05/01/2009
Business Analysis
04/01/2009
Overview
03/01/2009
Economic Analysis
Billions$(2005)
Real Gross Domestic Product
13500
13400
13300
13200
13100
13000
12900
12800
Real GDP
12700
12600
12500
12400
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
• Energy Sector appears undervalued based on historical average
Energy Sector EARNINGS
16.0000
Overview
14.0000
Business Analysis
12.0000
Economic Analysis
10.0000
8.9200
8.0000
Financial Analysis
6.0000
2.0000
4Q2011e
3Q2011e
2Q2011e
1Q2011e
4Q2010
3Q2010
2Q2010
1Q2010
4Q2009
3Q2009
2Q2009
1Q2009
4Q2008
3Q2008
2Q2008
1Q2008
4Q2007
3Q2007
2Q2007
1Q2007
4Q2006
3Q2006
2Q2006
1Q2006
4Q2005
3Q2005
0.0000
2Q2005
Recommendation
4.0000
1Q2005
Valuation Analysis
90
80
Overview
70
Business Analysis
60
Coal and Consume Fuels
Economic Analysis
50
Oil and Gas Drilling
Oil and Gas Equipment
Financial Analysis
40
Oil and Gas Expl/Prod
Oil and Gas Integrated
30
Valuation Analysis
Recommendation
Oil and Gas Refin/MKTing
Oil and Gas Storage
20
10
0
2006
-10
2007
2008
2009
Industry EPS
2010
2011E
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Relative to SP500
High
Low
Median
Current
Valued
Business Analysis
P/Trailing E
1.1
0.5
0.74
1.1
Overvalued
Economic Analysis
P/Forward E
1.2
0.57
0.8
0.87
Inline
Financial Analysis
P/B
1.4
0.7
0.9
1
Overvalued
P/S
1
0.6
0.7
0.9
Overvalued
P/CF
0.9
0.6
0.7
0.9
Overvalued
Overview
Valuation Analysis
Recommendation
Overvalued > 10%
Inline With S&P
Undervalued > 10%
Overview
Business Analysis
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Oil and Gas Drilling Industry
OGDRL
Relative to SP500 High Low
Median Current Valued
P/Trailing E
3.7
0.28
1.2
1.5 Overvalued
P/Forward E
2.1
0.28
0.95
0.96
Inline
P/B
1.7
0.4
0.7
0.7
Inline
P/S
4.9
1.4
2.5
1.6 Undervalued
P/CF
1.8
0.4
1.1
1
Inline
Oil and Gas Integrated
OGINT
Relative to SP500 High Low
Median Current Valued
P/Trailing E
1.1
0.5
0.68
0.81 Overvalued
P/Forward E
1.2
0.46
0.73
0.61 Undervalued
P/B
1.4
0.7
1
1
Inline
P/S
0.8
0.5
0.7
0.7
Inline
P/CF
0.9
0.6
0.7
0.8 Overvalued
Overweight 100 bps relative to S&P
Overview
Business Analysis
Increase SIM weight 300 bps from
11.04% to 14.04%.
Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
Assumptions
Middle East turmoil will continue
Economy will continue slow growth
Loose monetary policy in US will
continue