Energy Stocks Screening

Energy Prices forecast*

	2012	2013	2014	2015	2016	2017
Oil $/bbl (Brent)	112	109.5	101	99.5	96	92
Oil $/bbl (WTI)	94.2	98	94.4	93.1	89.5	85.5
Gas $/mcf	2.8	3.7	4	4.15	4.6	5

*The prices are in 2013 money

mcf - hundreds cubic feet.

The prices are a little bit  higher from the previous forecast, either because inflation projected to be much higher or demand stronger.

May 2014 major Energy Companies analysis:

Remaining Reserves	Gazprom*	Exxon Mobil	PetroChina	Shell	Chevron	BP	ENI	Total	Statoil	Rosneft
Oil, mmbbl	11,940	19,700	15,430	13,650	14,220	16,500	6,560	10,190	8,030	42,120
Gas, bcf	547,980	131,620	79,000	83,160	86,500	72,250	35,300	58,950	46,440	71,550
Total, mmboe	100,040	41,630	28,600	27,500	28,700	28,530	12,440	20,000	15,770	52,300
Production Oil, mmboe	990	2,200	2,560	1,540	1,730	2,014	830	1,170	960	4,190
Production Gas, mmscfd**	47,100	11.820	7,680	9,600	5,190	7,020	4,320	6,180	4,740	3,780
Production Total             '000 boe/d	8,830	4,170	3,830	3,150	2,600	3,100	1,550	2,200	1,750	4,860
Reserves, years	31	27	20.5	24	30	25	22	25	25	29
Market Capitalization, USD bn	89	430	222	246	235	150	94	161	93	69
Dividends paid in 2013, %	5.4	2.5	4.5	4.5	3.2	4.5	5.8	4.8	3.9	3.8
US/boe	0.89	10.3	7.8	8.9	8.2	5.25	7.6	8.05	5.90	1.31

* Gazprom has big exposure to one country only - Russia

** 6mscf -1boe

For an energy company the most vital source - it is the mineral base it has and the replacement ratio.  It depends how long the  company could sustain its production at current rate. We cannot possible predict what the replacement ratio is going to be tomorrow.

It is clear how big companies are trying to balance oil and gas production in the oil equivalent, making it always the same. There is several main drivers: hedge the risks, as with LNG market growing, the prices are getting exciding volatile and aggressive. At the moment this only noticeable on the balance sheets and  households in Asia.  In the long term Western Europe and USA will feel at as well, if decide to witch to LNG market, or their suppliers will.

Company	Gazprom	Chevron*	Rosneft	Exxon Mobil*	BP**	Total	Statoil	Shell*	ENI	Petrochina
Reserves, years	31	30	29	27	25	25	25	24	22	20.5
Dividends for  2013, %	5.4	3.2	3.8	2.5	4.5	4.8	3.9	4.5	5.8	4.5
US/boe	0.9	8.2	1.3	10.3	5.2	8	5.9	8.9	7.6	7.8

*ExxonMobil &  Chevron has approximately 20% of the booked reserves as shale gas. A lot of producers struggling to make any money, developing shale gas and oil. Shell  has about 10% reserves in it.

** BP is overexposed to USA and has potentially very expensive resolution in US courts for long time.  As an indication the company was forced to pay over $ 1bn for study on the damage done, which BP is not allowed to see.  Company will be milked for a long time.

Based on this analysis I decided not to buy ExxonMobil, as it is more than generously priced already, while dividends paid are very low, in spite of the favorable oil prices.

There is four candidates for short investment : Gazprom, ENI, Petrochina and Shell, dividends wise. 

Long term :  Gazprom, Total, Statoil and Rosneft.

Gazprom and Rosneft not only have plenty of conventional reserves for the years to come, but currently paying dividends to 25% Russian accounting standards. It is intention that they are going to switch to western standards and policies, which will let dividends go up by 30-50% to the current level.

PetroChina pays handsome dividends but with 20 years left booked resources it is likely that they will start spending increasingly more either on exploration or acquisitions to guarantee their future.