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EnerCom The Oil and Gas Conference – DNB Markets Inc.

DNB Markets Inc. · Aug 14, 2017 · 36 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 1
    Oil Market Outlook An overshoot in the cards for 2020, then back down - Bunker spec change plus the effect of CAPEX cuts in 2015-16 makes for a potent mix DNB oil story in pictures & graphs August 2017 - Torbjrn Kjus
  2. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 2
    Libya & Nigeria Increased Production More Than Anticipated - Difficult to know what to assume going forward Libyan Oil Production 2.0 1.8 1.6 1.4 Million b/d 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09…
  3. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 3
    The Supply Risk Is Now To The Upside - Unplanned global oil supply outages are at the lowest since early 2011 Global Unplanned Supply Outages 4.0 Venezuela 3.5 UAE Nigeria 3.0 Neutral Zone Libya 2.5 Kuwait Million b/d…
  4. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 4
    OPEC Has Until May Cut Production More Than Exports - Some exports has been drawn from inventory, this has not been taken easily by the market who wants to see lower exports Diff YOY OPEC Crude Production vs Exports 2.0 Exports cut…
  5. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 5
    OPEC Has Exported From Inventory - This is not what the market wanted to see. The market wanted to see lower OECD inventories. OPEC Crude Oil Stocks (Algeria, Angola, Ecuador, Iran, Iraq, Kuw ait, Nigeria, Qatar, Saudi, UAE,…
  6. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 6
    The US Oil Rig Count Increase Surprised To The Upside In Q2 - It has now fallen below the base case as a reaction to sub-50 /b oil prices US Horizontal Oil Rigs Weekly Change 20 (Baker Hughes - 4 week moving average) 15 10 5…
  7. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 7
    Immense Difference In OPEC Cuts Depending On Season - Effect of OPEC cuts on inventories cannot be large in 1H-2017 because 2H-2016-demand was higher than 1H-2017 demand Global Oil Demand By Half Years 100 98 96 Million b/d 94…
  8. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 8
    Net Speculative Brent Positions Increased In Q2 Brent vs Total Non-Commercials crude exposure only SUM: Non-Commercials Net Crude Futures Weekly change in futures exposure MB 400 (Diff to last 25-weeks average) Weekly Change Long futures…
  9. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 9
    OPEC Waterborne Crude Exports Now Coming Down - OPEC exports from the participating countries is down 1.7 million b/d since October and down 0.9 million b/d YoY in July The table below is from Platts cFlow OPEC exports tracking.…
  10. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 10
    Saudi Arabia Has Drawn Down 33% Of Its Foreign Reserves - The platform is on fire Saudi Arabia Foreign Reserves (Source: IMF) 800 700 Billion USD 600 500 400 300 200 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 10…
  11. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 11
    Strong Price Response To Demand In Key Countries - Total oil demand growth up to 2.0 mbd in 2015, YoY demand growth still decent if we adjust for India Demand change in % Change 2013 Change 2014 Change 2015 Change 2016 YoY Last 3 mts…
  12. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 12
    Chinese Oil Demand Growth Very Decent So Far In 2017 - YoY demand growth Jan-May is 455 kbd and crude imports is up even more at 965 kbd YoY Chinese Oil Demand Growth YoY Chinese Net Crude Oil Imports (refinery throughput plus net…
  13. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 13
    Oil Demand Weakness In India Was Likely Only Temporary - Demonitization in November 2016 invalidation of the two largest banknotes in use 13 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  14. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 14
    Oil Demand Is Normally Revised Higher From Initial Take IEA Change In Demand Projections From Initial Take 3.5 3.0 2.5 2.0 Million b/d 1.5 1.0 0.5 0.0 -0.5 -1.0 2010 2011 2012 2013 2014 2015 2016 2017 14…
  15. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 15
    Stock Draws If OPEC Deliver According To Our Base Case Non-OPEC Production (excl. biofuels) OPEC Crude Production 34.0 58.0 33.5 57.5 57.0 33.0 56.5 32.5 Million b/d Million b/d 56.0 55.5 32.0 55.0 31.5 54.5 31.0…
  16. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 16
    Global Onshore Stocks Are Not Building Anymore - JODI stocks data suggest the global onshore stock build is over Global Oil Stocks Global Oil Stocks In Days Of Demand Coverage (Includes SPR but not for China) (Includes SPR but not…
  17. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 17
    The Oil Market Is Now In Phase 2 Of The Recovery - Phase 2 will last for 2-3 quarters, then phase 3 starts (the backwardated market) Time Spread vs Brent Flat Price OECD Total Oil Industry Stocks 4 Differential to the 5-year average…
  18. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 18
    Time Spreads Leads The Brent Price - Tightening time spread in the front of the market is the best real-time symptom of supply vs demand Time Spread vs Brent Flat Price 3 130 2 110 1 Brent 1st month Brent 1 vs3 90 0…
  19. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 19
    The CAPEX Cuts From 2014-2016 Will Hit Future Production - This means that OPEC has achieved to push long lead time expensive resources out of the market for a while 2016 Upstream E&D Midpoint: 2017 Upstream y-o-y change in upstream…
  20. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 20
    Oil Majors Growth Is Gone - Oil Majors are struggling to keep the growth rates from 2014-16 - 1.1 trillion USD is invested since 2011 without any payback with respect to production growth Oil Majors Oil Output Oil Majors Accumulated…
  21. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 21
    Net Need For Shale Of 5.1 mbd From 2017-2020 - Average growth of 1.3 mbd per year required by 2020 - US shale must grow from 4.3 mbd to 9.4 mbd Net Oil Need Of 11.5 Million b/d Before 2020 2016 vs 2020 Global Oil Balance (Assuming 2%…
  22. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 22
    What Kind Of Brent Price Is Required For Economic Barrels - Our call on US shale in 2020 is 9.4 million b/d. The Brent price must then be higher than the 50-60 range to be economical. Source for break even calculations: PIRA Energy -…
  23. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 23
    If WTI Drops Towards 40 /b The High Yield Market Close - And high yield US oil companies are behind 2 mbd (about 40%) of the US shale production Yield For US High Yield Shale Players vs US 5 Year Interest Rate (Continental Resources,…
  24. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 24
    Lag Time Of 3-4 Months From Price Signal To Rig Count - Rig additions set to decrease this summer based on the price drop in Q2, maybe turn negative US Oil Rig Count vs WTI Price 1800 (Baker Hughes) 120 1600 110 1400 100 90…
  25. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 25
    US Shale Output If The Rig Count Continue To Grow For Years Oil Rigs In 7 Shale Regions Contribution Per Working Oil Rig In Start Up Month 800 Contribution per working oil rig in start up month, b/d 1,400 700 Oil rigs in 7…
  26. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 26
    Increasing DUCs Translates To Lower Official Productivity - There seems to be a higher capacity for available oil rigs vs available completion services, hence DUCs are growing - Note that since legacy production now increases again there…
  27. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 27
    Costs Have Come Down How Much is Structural - Will a higher oil price again unleash higher costs 27 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  28. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 28
    Break Even Costs Have Come Down But Are Now Rising - Dave Lesar, Halliburton: I dont see that there is going to be the ability for the customers to hold prices down 28 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  29. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 29
    Longer Term Oil Price Forecast (The forecast is for the rolling 1st month ICE Brent future contract) Historical Real /b DNB Markets Brent Price Forecast In Real Terms 2000 39.8 Global bunker spec change coming 150 at the same time as…
  30. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 30
    Bunker Fuel Specs Are Changing - Gasoil will likely be a large part of bunker fuel in the future, ref new IMO regulations Source: PIRA Energy 30 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  31. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 31
    Enough Gasoil/LSFO But What About LSFO Destruction - Difficult for refiners to achieve enough fuel destruction by 2020, and will they be able to produce enough gasoline/naphtha 2020 vs 2016 - All assumed capacity additions Mogas/Naphtha…
  32. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 32
    Crude Oil Refining 32 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  33. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 33
    What Will Happen To The Gasoil vs Fuel Oil Spread - Gasoil vs fuel oil spreads set to blow out significantly & a repetition of the 2008-diesel squeeze or in 2020 gasoline squeeze Gasoil crack & Resid Fuel crack Gasoil vs Fuel Oil 3.5%…
  34. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 34
    Crude Oil Contain A Variety Of Hydrocarbons 34 Torbjrn Kjus torbjorn.kjusdnb.no Telephone: +47 24 16 91 66
  35. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 35
    10 0 2 3 4 5 7 8 9 1 6 Jan-20 15 0% 100% 10% 20% 40% 50% 60% 70% 90% 30% 80% Jan-20 15 Feb-20 15 Feb-20 15 Mar-20 15 Mar-20 15 Apr -2015 - US shale is almost all light sweet crude…
  36. EnerCom The Oil and Gas Conference – DNB Markets Inc. – slide 36
    DNB Markets Commodities DNB Markets Commodities in brief Oil & Gas - Research and reports DNB Markets Commodities serves corporate clients of DNB Bank ASA globally with advisory, market analysis, hedging, and origination within…

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