Produced by The horizon brightens An improving outlook for gas Jeb S Armstrong Senior analyst US Exploration & Production August 2012 The group of companies that comprise CLSA are affiliates of Credit Agricole Securities (USA)…
The horizon brightens Gas price outlook Forecasts & our view on equities North American demand Power generation and weather North American supply The rig count and efficiency gains Global gas markets Potential for shale and the…
Gas price outlook 2012: 2.65/MMBtu Near-term swoon possible as fall shoulder season approaches Looking for 3.35/MMBtu in 4Q12 2013: 4.00/MMBtu Dependent upon return of normal winter temperatures Long-term equilibrium: 5.00/MMBtu…
Gas price outlook The near-term key is unwinding the storage overhang Overhang is now less than half of what it was in early April Inventory overhang Inventory projections Bcf Storage overhang to 5-yr average (lhs) Bcf 4,500 Bcf…
View on equities Favor gas-levered names to oil-levered E&P names The space is trading roughly in line with the rolling 12- month oil and gas forward curves Regression analysis 575 EPX 550 525 Predicted 500 Actual 475 450…
View on equities 52-week correlation comparison High correlations stress 20 Number of companies the importance of macro 15 and commodities view 10 75% of stocks have a 5 correlation of 0.75 or higher 0 < 0.65 0.70 0.75…
North American demand drivers The warm winter was the other shoe that needed to drop 13% warmer than average and the warmest since 2002-03 Heating-related demand plummeted 17% from the prior winter Coal-to-gas switching has come to…
North American demand potential Power generation key to long-term growth demand Secular growth provides some insulation to changes in GDP Modest growth in industrial demand: chemicals, refinery exports Transportation not likely to be…
North American supply growth In our view supply growth Adjusted gas rig count 2,800 Gas rig count is beginning to slow Oil rig count adjustment Horizontal rig adjustment Domestic growth slowing from 2,400 Onshore production 8% in…
North American supply cost curve Domestic natural gas supply cost curve Incremental dry gas 100% %-age of total production activity requires a 90% much higher price 80% Strong economics drilling for oil at 90/Bbl serves 70%…
Global shale potential China shale basins The promise of a global shale gas revolution is probably overstated Argentinas Neuquen Basin is the most prospective Targeting oil in Vaca Muerta formation Jury is still out on Poland…
Global LNG market LNG facing oversupply Mozambique, Canada, and Qatar could flood the market Bad news for high-cost Australia US likely to remain a marginal player The push for Energy Independence likely to be a hurdle to export…
Upcoming CLSA Forums Investors Forum 2012 10-14 September, Hong Kong India Forum 2012 5-7 November, Gurgaon Japan Forum 2013 25-28 February, Tokyo 2012 Credit Agricole Securities (USA) Inc. IMPORTANT: Please refer to…
Important notices 2012 CLSA Asia-Pacific Markets (CLSA) and/or Credit Agricole Securities (USA) Inc (CAS). This publication/communication is distributed for and on behalf of CLSA Limited (for research compiled by non-US analyst(s))…
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