Robert Haddad
Ashley Hughes
AmirAli Motamedi Masoudieh
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Size and Composition
Business and Economic Analysis
Financial Analysis
Valuation Analysis
Recommendation
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Composed of companies involved in the production and supply of energy 166 Energy Sector Stocks with >$1B Mkt Cap (non‐ADR)
39 “Energy Sector” Companies in S&P 500
10.69% of the S&P 500
$1.079 Trillion in Market Cap in S&P 500 ƒ
Composed of companies involved in the production and supply of energy
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166 Energy Sector Stocks with >$1B Mkt Cap (non‐ADR)
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39 “Energy Sector” Companies in S&P 500
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10.69% of the S&P 500
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$1.079 Trillion in Market Cap in S&P 500 Telecommunication Services, 3.00% Utilities, 3.76%
Materials, 3.44%
Consumer Discretionary, 10.12%
Consumer Staples, 11.53%
Information Technology, 18.69%
Energy Sector
S&P: 10.69%
SIM: 9.07%
1.61% Underweight
Energy, 10.69%
Industrials, 10.38%
Financials, 16.31%
Health Care, 12.09%
% SIM Under/Overweight S&P 500
As of 6/30/10
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
Currently Underweight in Energy by 1.61%
2.0%
3.0%
SIM Stocks / Our Stocks
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Oil & Gas Drilling
Noble Corp.
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Oil & Gas Equipment & Services
National Oilwell Varco Inc., Cameron Int’l, FMC Technologies
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Integrated Oil & Gas
Chevron
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Oil & Gas Exploration & Production
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Oil & Gas Refining & Marketing
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Oil & Gas Storage & Transportation
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Coal & Consumable Fuels
Largest Companies
Company
Exxon Mobil
Top Performers
Stock
Price
Rank
Market Cap
(billions)
59.72
1
305.3
Company
Pioneer Natural Resources
1 Yr Price Change
105.66%
Chevron
73.52
14
147.7
Smith International
58.17%
ConocoPhillips
53.79
29
80.1
FMC Technologies
54.11%
Schlumberger
59.35
34
70.8
Sunoco
37.08%
Occidental Petroleum
82.14
37
66.7
EOG Resources
37.01%
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Oil
Natural Gas
Fossil Fuels
Coal
Electric Power
Solar
Wind
Renewable
Hydropower
Nuclear
Geothermal
Bioenergy
Fusion
Hydrogen
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Current & Forecasted Oil Production Capacity
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Current & Forecasted World Oil Demand
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Current &Forecasted GDP Predominantly From Industrial & Agricultural Output
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Current & Forecasted Level of World Population and Number of Cars
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Current Estimates of World Oil Reserves
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The level of Political, Economical and Social Stability in Oil Producing Countries
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OPEC Decisions
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The Current and Projected Level of Investment Requirments Infrastructural Components of The Energy Sector
CIA‐Factbook
Argentina
Egypt
Malaysia
Qatar
Oman
Indonesia
Azerbaijan
Thailand
Kazakhstan
Libya
Kyrgyzstan
United Kingdom
Nigeria
Angola
Brazil
Venezuela
Algeria
Kuwait
United Arab Emirates
Norway
Iraq
European Union
Mexico
Canada
India
Iran
China
United States
Saudi Arabia
Russia
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
CIA‐Factbook
Malaysia
South Africa
Argentina
Turkey
Thailand
Egypt
Belgium
Venezuela
Taiwan
Singapore
Australia
Netherlands
Iran
Spain
Indonesia
Italy
United Kingdom
Mexico
France
Korea, South
Canada
Saudi Arabia
Brazil
Germany
India
Russia
Japan
China
European Union
United States
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Yemen
United Kingdom
Ecuador
Indonesia
Egypt
Vietnam
Oman
European Union
India
Norway
Sudan
Azerbaijan
Brazil
Mexico
Angola
Algeria
China
United States
Qatar
Kazakhstan
Nigeria
Libya
Russia
United Arab Emirates
Venezuela
Kuwait
Iraq
Iran
Canada
Saudi Arabia
300,000,000,000
250,000,000,000
200,000,000,000
150,000,000,000
100,000,000,000
50,000,000,000
0
OPEC Bulleting‐WWW.OPEC.ORG
2009 World Oil Outlook
World Oil Outlook‐2009
World Oil Outlook‐2009
World Oil Outlook‐2009
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Threat of Entry(Low):
Capital Intensive/ Regulations & Controls/OPEC power/Government oversights
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Threats of Rivalry(Medium):
Relatively low among OPEC members/ medium among publically traded or private companies
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Threats of Substitutes(Low‐Medium):
In large scale currently no substitute in current energy portfolio but more diversification in energy in coming future
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Threats of Suppliers(Low):
viewing suppliers as oil/petroleum equipment providers it is low to medium
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Threats of Buyers(Low):
buyers hold not much power, it is traded in free market
EPS
Revenue
50.0%
200.0%
150.0%
25.0%
100.0%
50.0%
0.0%
0.0%
‐50.0%
‐25.0%
‐100.0%
‐150.0%
‐50.0%
‐200.0%
Mean
Median 11.5%
8.9%
Note : Above mean calculated without outlier (950% on far left)
Mean
Median 2.6%
3.2%
Revenue
EPS
90.0%
450.0%
80.0%
70.0%
350.0%
60.0%
50.0%
250.0%
40.0%
30.0%
150.0%
20.0%
10.0%
50.0%
0.0%
‐10.0%
‐50.0%
‐20.0%
Mean
Median 12.2%
48.4%
Mean
Median 12.7%
15.9%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
‐10.0%
Cons Discr. Cons Stap.
Energy
Financials
Healthcare Industrials
Info Tech
Telecom
Materials
Utilities
Relative to S&P 500
Energy Sector Valuation
Overvalued by >10%
Inline with S&P
Undervalued by >10%
Absolute
Basis
High
Low
Median Current % overvalued /
(undervalued)
P/Trailing E
24.7
6.1
13.6
15.2
11.8%
P/Forward E
23.9
7.8
13.3
11.2
‐15.8%
P/B
4
1.4
2.8
1.9
‐32.1%
P/S
1.4
0.5
1
0.9
‐10.0%
10.1
5
7.6
7.4
‐2.6%
P/CF
Relative to
SP500
High
Low
Median Current % overvalued /
(undervalued)
P/Trailing E
1.1
0.5
0.74
1
35.1%
P/Forward E
1.2
0.57
0.78
0.82
5.1%
P/B
1.4
0.7
0.9
0.9
0.0%
P/S
1
0.6
0.7
0.8
14.3%
0.9
0.6
0.7
0.8
14.3%
P/CF
Industry Valuations
Oil & Gas – Equipment/Services
Overvalued by >10%
Inline with S&P
Undervalued by >10%
Absolute Basis High
Low
Median
Current
% overvalued /
(undervalued)
P/Trailing E
107
6.5
28
22.5
‐19.6%
P/Forward E
32.9
7.8
21.3
18.7
‐12.2%
P/B
8.6
1.6
4.6
2.6
‐43.5%
P/S
3.5
1
2
2.1
5.0%
P/CF
23
5.5
13.3
12.7
‐4.5%
Relative to
SP500
High
Low
Median
Current
% overvalued /
(undervalued)
P/Trailing E
3.9
0.58
1.5
1.5
0.0%
P/Forward E
1.7
0.61
1.3
1.4
7.7%
P/B
2.8
0.9
1.4
1.3
‐7.1%
P/S
2.8
1
1.5
1.8
20.0%
P/CF
1.6
0.8
1.2
1.4
16.7%
Industry Valuations
Drilling
Relative to
SP500
High
Low
Median Current % overvalued /
(undervalued)
P/Trailing E
3.7
0.28
1.3
0.68
‐47.7%
P/Forward E
2.1
0.28
0.9
0.9
0.0%
P/B
1.7
0.4
0.7
0.6
‐14.3%
P/S
5.7
1.4
2.7
1.4
‐48.1%
P/CF
1.8
0.4
1.1
0.6
‐45.5%
Median Current
% overvalued /
(undervalued)
Exploration/Production
Relative to
SP500
High
Low
P/Trailing E
1.4
0.31
0.69
1.2
73.9%
P/Forward E
1.9
0.5
0.75
1.1
46.7%
P/B
1.3
0.5
0.7
0.8
14.3%
P/S
3.5
0.9
1.8
2.7
50.0%
P/CF
0.8
0.3
0.5
0.7
40.0%
Overvalued by >10%
Inline with S&P
Undervalued by >10%
Industry Valuations
Integrated
Relative to
SP500
High
Low
Median
Current
P/Trailing E
1.1
0.5
0.68
0.86
P/Forward E
1.2
0.46
0.73
0.7
P/B
1.4
0.7
1
0.9
P/S
0.8
0.5
0.6
0.7
P/CF
0.9
0.5
0.7
0.8
% overvalued /
(undervalued)
26.5%
‐4.1%
‐10.0%
16.7%
14.3%
Refining/Marketing
Relative to
SP500
High
Low
Median Current
% overvalued /
(undervalued)
P/Trailing E
7.6
0.23
0.53
-
-
P/Forward E
4.8
0.3
0.55
0.87
58.2%
P/B
1.3
0.2
0.5
0.4
‐20.0%
P/S
0.5
0.1
0.2
0.1
‐50.0%
P/CF
1.3
0.2
0.5
1.2
140.0%
Overvalued by >10%
Inline with S&P
Undervalued by >10%
Industry Valuations
Oil Storage
Relative to
SP500
High
Low
Median
Current
P/Trailing E
22
0.21
1.1
0.97
P/Forward E
1.3
0.69
1.1
1
P/B
1.1
0.6
0.9
0.9
P/S
2.2
0.4
0.9
1.6
P/CF
1.3
0.5
0.7
0.7
% overvalued /
(undervalued)
‐11.8%
‐9.1%
0.0%
77.8%
0.0%
Coal
Relative to
SP500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
23.3
2.1
2.1
0.45
0.39
0.7
1.3
0.99
1.5
1.3
0.88
1.5
4
0.3
1
1.4
2.1
0.5
0.8
1.1
% overvalued /
(undervalued)
0.0%
‐11.1%
0.0%
40.0%
37.5%
Overvalued by >10%
Inline with S&P
Undervalued by >10%
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Currently underweight by 161 basis points ƒ
Recommend increasing weight by 211 basis points to bring SIM overweight relative to S&P500 by 50 basis points
ƒ Demand for energy will increase with economic recovery, further growth in emerging market, expected reduction of energy sector systematic risk, still relatively cheap