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Premium member Presentation Transcript PrimeWest Energy Trust (PWI): PrimeWest Energy Trust (PWI) TD Ups PWI from reduce to hold 1 yr chart 3 mo chartEnergy Sector Outlook and News: Energy Sector Outlook and News Price of oil almost certain to stay above $60 a barrel Hurricane Katrina Crude Oil settled at $73.21 after an entire week of record breaking prices Royal Dutch Shell CEO said that the oil industry can expect to stay in Iran Noble Corporation (NE): Noble Corporation (NE) April 24th, 2005 Kenneth Wong What does Noble Corp do?: What does Noble Corp do? Performs contract drilling services in offshore markets Oil and gas producers don’t own drilling equipment/rigs Uses fleet of 62 offshore drilling units 91% of revenues Provides services to an international market (80%) Also provides labor contract drilling services, well site and project management services, and engineering services Locations: Locations Gulf of Mexico (12 units) Mexico (8 units) Middle East (14 units) West Africa (7 units) North Sea (9 units) China (5 units) Brazil (4 units) India (2 units) Canada (1 unit) Total: 62 unitsThe Energy Switch – Out of PWI and into NE: The Energy Switch – Out of PWI and into NE From Natural Gas to Oil End of winter heating season, start of summer driving season Warm winter increased natural gas inventories to record highs Crude oil and gasoline inventories dropping Even before driving season starts US Gulf production down by ~25% due to lingering Katrina effects Crude oil to break $80 a barrel Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Depleting reserves Current oil wells are depleting, leading to declining output Shortages caused by a failure to meet demand could actually cause oil and gas stocks prices to lag behind oil prices themselves So, a rush to find new increase production by constructing new wells leads to…Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Shortage of drilling equipment Oil and gas companies don’t own drilling equipment Oil companies are making amazing profits, so they want (and need to) reinvest that money back into exploration/drilling Shortage allows drillers to increase their contract rates – drillers are paid on a daily basis Effective rig utilization (% of actively marketed rig which are currently earning a day rate) is 100%Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Higher growth potential Oil services companies were hit pretty hard in the 1980s and 90s, when many companies made the mistake of overexpanding and were burned when oil prices fell. At current oil price, Oil and gas producers gains are priced in ExxonMobil stock trading in a $10 range since Jan 2005 Same with ConocoPhillips and ChevronRevenue Drivers: Revenue Drivers Rapid growth in the demand for drilling rigs Oil and gas producers don’t own these rigs Scarcity in equipment lets contract drillers raise their contract price Production declines from existing wells forcing producers to construct new wells Technology Noble already ready to do deep water drilling Lack of competition Sector has a whole has a shortage of equipment, negates the effects of competition US Govt. paying Noble to drill: US Govt. paying Noble to drill Deep Water Royalty Relief Act In 1996, this act intended to promote exploration and production of oil in the Gulf of Mexico Companies were given royalty relief to pump in the Gulf of Mexico for 5 years Noble has 20% of their units operating in the Gulf of Mexico “It's like subsidizing a fish to swim.” - Representative Edward Markey, Democrat of MassachusettsWhy Noble?: Why Noble? Financial Strength on par with competitors Much more profitable than competitors Gross, Operating, and Profit Margins all higher than the sector avg. Operating margins estimated to increase to 45% in 2006 from 28% Accelerating per-share earnings increase $2.16 in 2005 $5.87 in 2006 (est.) $8.45 in 2007 (est.) Lower Beta than competitors Undervalued S&P values each share at $111.40Ratios: Ratios Industry: Energy | Sector: Oil Well Services & Equipment1 year chart: 1 year chart3 months chart: 3 months chartRisks: Risks Oil prices going down dramatically Due to changes in the political atmosphere Hurricane Season Hurricanes can potentially cause extensive damages to the rigs Higher Volatility Conclusion: Conclusion 8-10% allocation Buy when stock breaks the $85 resistance level and holds above $85 for a little while Lower limit of $70 (~20% downside) You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
4 24 06 NE Candelora Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 90 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: February 15, 2008 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript PrimeWest Energy Trust (PWI): PrimeWest Energy Trust (PWI) TD Ups PWI from reduce to hold 1 yr chart 3 mo chartEnergy Sector Outlook and News: Energy Sector Outlook and News Price of oil almost certain to stay above $60 a barrel Hurricane Katrina Crude Oil settled at $73.21 after an entire week of record breaking prices Royal Dutch Shell CEO said that the oil industry can expect to stay in Iran Noble Corporation (NE): Noble Corporation (NE) April 24th, 2005 Kenneth Wong What does Noble Corp do?: What does Noble Corp do? Performs contract drilling services in offshore markets Oil and gas producers don’t own drilling equipment/rigs Uses fleet of 62 offshore drilling units 91% of revenues Provides services to an international market (80%) Also provides labor contract drilling services, well site and project management services, and engineering services Locations: Locations Gulf of Mexico (12 units) Mexico (8 units) Middle East (14 units) West Africa (7 units) North Sea (9 units) China (5 units) Brazil (4 units) India (2 units) Canada (1 unit) Total: 62 unitsThe Energy Switch – Out of PWI and into NE: The Energy Switch – Out of PWI and into NE From Natural Gas to Oil End of winter heating season, start of summer driving season Warm winter increased natural gas inventories to record highs Crude oil and gasoline inventories dropping Even before driving season starts US Gulf production down by ~25% due to lingering Katrina effects Crude oil to break $80 a barrel Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Depleting reserves Current oil wells are depleting, leading to declining output Shortages caused by a failure to meet demand could actually cause oil and gas stocks prices to lag behind oil prices themselves So, a rush to find new increase production by constructing new wells leads to…Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Shortage of drilling equipment Oil and gas companies don’t own drilling equipment Oil companies are making amazing profits, so they want (and need to) reinvest that money back into exploration/drilling Shortage allows drillers to increase their contract rates – drillers are paid on a daily basis Effective rig utilization (% of actively marketed rig which are currently earning a day rate) is 100%Why a drilling company rather than an oil and gas producer?: Why a drilling company rather than an oil and gas producer? Higher growth potential Oil services companies were hit pretty hard in the 1980s and 90s, when many companies made the mistake of overexpanding and were burned when oil prices fell. At current oil price, Oil and gas producers gains are priced in ExxonMobil stock trading in a $10 range since Jan 2005 Same with ConocoPhillips and ChevronRevenue Drivers: Revenue Drivers Rapid growth in the demand for drilling rigs Oil and gas producers don’t own these rigs Scarcity in equipment lets contract drillers raise their contract price Production declines from existing wells forcing producers to construct new wells Technology Noble already ready to do deep water drilling Lack of competition Sector has a whole has a shortage of equipment, negates the effects of competition US Govt. paying Noble to drill: US Govt. paying Noble to drill Deep Water Royalty Relief Act In 1996, this act intended to promote exploration and production of oil in the Gulf of Mexico Companies were given royalty relief to pump in the Gulf of Mexico for 5 years Noble has 20% of their units operating in the Gulf of Mexico “It's like subsidizing a fish to swim.” - Representative Edward Markey, Democrat of MassachusettsWhy Noble?: Why Noble? Financial Strength on par with competitors Much more profitable than competitors Gross, Operating, and Profit Margins all higher than the sector avg. Operating margins estimated to increase to 45% in 2006 from 28% Accelerating per-share earnings increase $2.16 in 2005 $5.87 in 2006 (est.) $8.45 in 2007 (est.) Lower Beta than competitors Undervalued S&P values each share at $111.40Ratios: Ratios Industry: Energy | Sector: Oil Well Services & Equipment1 year chart: 1 year chart3 months chart: 3 months chartRisks: Risks Oil prices going down dramatically Due to changes in the political atmosphere Hurricane Season Hurricanes can potentially cause extensive damages to the rigs Higher Volatility Conclusion: Conclusion 8-10% allocation Buy when stock breaks the $85 resistance level and holds above $85 for a little while Lower limit of $70 (~20% downside)