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1、Hold,Deutsche BankMarkets Research,North AmericaUnited StatesIndustrialsIntegrated Oil,IndustryConocoPhillips&Occidental,Date31 January 2013ResultsPaul SankeyDavid T.Clark,CFA,Foxy News and COPs,Research Analyst(+1)212 250-6137,Research Analyst(+1)212 250-8163,david-,Oxy and COP,a tale of two perfor
2、mancesOxy stock was down-18%in 2012,an awful market-relative performance(S&P500+18%),while COP+4%under-performed the S&P but squeezed outout-performance vs XLE+3%.This year the opposite,XLE+8%is out-performing the market+5%,Oxy has soared 15%&COP is flat.Oil beta on/off?Partly,but the fact is that r
3、elative stock performance will be driven in thiselevated and range-bound oil market by internal rate of change and/or externalcorporate action.So improving organic performance,or activism/M&A.The keytoday was a greatly improved internal story at Oxy,and a questionable one atCOP.But then,longer term
4、COP could do shrink-to-grow,the sequel.Suddenly theres loads of management on the callOxy beat with lowered costs,raised volumes,good realisations and apositive 2013 outlook for oil growth and rising returns.There was an impliedtarget cut to overall 2013 volume growth,(previously 5%-8%annually),whic
5、hwill be more like 3%.CEO Chazen would question the relevance of a targetthat included uneconomic natgas,but in fact he has been negative natgas foryears,and he set the target.The same applies to the major$1.7bn impairmenton natgas reserves that took reported earnings down to just$364m.Capexwas rais
6、ed too,but not excessively,and will be down y-o-y.But the bottomline is,this was a strong call from Oxy that recalls the Oxy of old.Gone are themissed California volumes that under-mined our elaborate DCFs on long termvalue,with debates on permits and gas plants.We are back to good oldfashioned sque
7、eze the sponge,make acquisitions to boost volumes,generateoil growth at relatively high free cashflow,and bang out a 15%dividendincrease,maybe buy in stock.It took a brutal year or more of under-performance to get here,but Oxy finally seems back on track,notwithstanding,Silvio Micheloto,CFAResearch
8、Analyst(+1)212 250-Winnie NipResearch Associate(+1)212 250-Companies FeaturedConocoPhillips(COP.N),USD58.00 Hold2012A 2013E 2014EEPS(USD)6.10 5.64 6.53P/E(x)9.2 10.3 8.9EV/EBITDA(x)2.9 3.0 2.7Occidental Petroleum(OXY.N),USD88.27 Hold2011A 2012E 2013EEPS(USD)8.40 7.10 7.52P/E(x)11.4 12.4 11.7EV/EBITD
9、A(x)5.6 6.0 4.9Murphy Oil(MUR.N),USD59.522012A 2013E 2014E,the higher capex and implied cut to 2013 volume growth.The length of COPs presentations suggest the company should shrink againHaving taken 40 minutes on the quarterly earnings call to grind through a 35-,EPS(USD)P/E(x)EV/EBITDA(x),5.709.73.
10、4,4.8912.24.1,6.129.74.0,slide PPT,ConocoPhillips highlighted it plans a full analyst meeting nextmonth.One has to wonder how long&detailed that will be.That said,longterm a steady grind is preferable in oil management to wild excitement.AndCOP has also to be commended,on years of best-in-class disc
11、losure.Whatreally mattered though,is that the stock air-dropped on the day because of the2013 volume outlook.This is important for the analyst meeting,as there seemsto be a divergence between what the company thinks it said,and what themarket thinks it said,as regards volume/margin growth.There is n
12、oise fromdisposals,but it is clear no-one expected 2013 to be a down year for volumes,on an underlying basis.Why is a marginal cut to volume growth important?For the long term sustainability of the capex and dividend payments.COP haspromised to grow volumes&margins 3%-5%simultaneously to balance its
13、$3bn annual cashflow shortfall-on$3bn dividend.We perceived 2013 to bethe first year on that track.It will not be.However we believe that COP canalways do a second major disposal process,and that the dividend is more thansafe and will grow.We value on dividend yield,at that 5%would be attractive.Val
14、uation and RisksPTs=average of NAVs with 10%discount and target P/E(COP 8.5x,MUR9.5x,OXY 11x)applied on mid-cycle EPS estimates.Risks:poor execution,accidents,misguided acquisitions,and missed targets._Deutsche Bank Securities Inc.Deutsche Bank does and seeks to do business with companies covered in
15、 its research reports.Thus,investors shouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors shouldconsider this report as only a single factor in making their investment decision.DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APP
16、ENDIX 1.MICA(P)072/04/2012.,0,3,31 January 2013Integrated OilConocoPhillips&OccidentalQ4 2012Earnings VarianceFigure 1:COP Earnings Variance,($m,except per share data andvolumes),Q4 2011Actual,Q4 2012Actual Estimate,VarianceAct vs Est,EPSImpact,E&P,Alaska,426,595,573,22,0.02,Lower 48 and Latin Ameri
17、caCanadaEuropeAsia Pacific and Middle EastOther InternationalTotal E&PCorporate&otherNet Clean Operating IncomeNon-recurring itemsNet Reported Operating IncomeClean Operating EPSReported EPSAvg Diluted Shares(mn),33992565845502,317(154)2,1631,2273,3901.642.561,323,15732388749111,932(177)1,755(329)1,
18、4261.431.161,231,269(29)3247541021,993(226)1,7661,7661.441.441,228,(112)6164(5)(91)(61)49(11)(329)(340)-0.01-0.28,(0.09)0.050.05(0.00)(0.07)(0.05)0.04(0.01)(0.27)(0.28)(0.01)(0.28)0.00,Cleaned for($121m)impairments,$236 tax loss carry forward realization and$201 pending claims and settmentBeat on hi
19、gher volumes and$7.70/bbl higher bitumen realization.Cleaned for($42m)impairmentCleaned for($80m)impairmentCleaned for($108m)impairmentMissed by 5c/sh primarily on L48 and LatAm,and Other International4c/sh positive impact vs DB.$177m in 4Q brings 2H12 to$200m below guidance.In lineCleaned for 10 sp
20、ecial itemsClean EPS of$1.43 vs.Street at$1.42 and DB at$1.44.In line.Average share count slightly up vs.Q3s 1229.3m,Ended quarter with 1,229m share count,Volumes,Q4 2011,Q4 2012,Variance,YoY,Actual,Actual Estimate,Act vs Est%Change,US Oil&NGLsUS Gaskboe/dInternational Oil&NGLsInternational Gaskboe/
21、d,4131,6066814432,841917,4361,5646974692,645910,4341,5676954532,575882,2(3)2167028,6%-3%2%6%-7%-1%,6kboe/d lower than expected in L48 offset by 8kboe/d higher in AlaskaEagle Ford 89kboed(+46kboe/d YoY),below our 93kboe/d;Bakken at 24kboe/d was also below our 27kboe/dHigher than expected Norway,UK,Ca
22、nada bitumen,slightly offset by lower Libya(45koeb/d)Much higher Norway(176mmcf/d vs 127mmcf/d in 3Q),higher UK,partially offset by lower Indonesia and Timor-Leste,1Q13 production guidance 1,580-1,600kboe/d(inc.40kboe/d disc.ops.)In line with DB expectation,Total kboe/d,1,597,1,607,1,577,30,1%,FY13
23、guidance 1,475-1,525kboe/d from cont.ops,-1.5%to+2%YoY vs.a normalized 1,497kboe/d in FY12,2012 organic reserve replacement 156%vs.120%in 2011,Cashflow from operationsCapexDividendCash flow(burn),5,8123,8728711,069,3,8703,452809(391),4,6854,000811(125),(815)(548)(2)(266),-33%-11%-7%n/a,-$372m workin
24、g capital swing,$4.24B of CFO ex-WCLower 4Q capex puts FY12 below their$15.5-16bn guidance given in 3Q12.,Source:Deutsche Bank,CompanySince at least 2011,ConocoPhillips has been pointing to 2013 as the point at which thecompany“re-bases”and henceforth grows at 3-5%per year.COP finally put some clear
25、numbers today around where the last round of disposals will leave production:around1.5Mbd(1,475-1,525kbd for continuing ops for FY13),the same number they cited inSept 2011.The market understood 2013 to be an absolute production trough due todisposals,however,and was surprised to find an organic gro
26、wth trough as well,withapple-to-apple production forecasted to be+/-1.5%from 2012s comparable 1,496kbd.We think the 5%decline in the stock was overkill however,as organic 4Q-to-4Q growthappears likely to be close to 3%.Production in 2Q&3Q will be well below our priorexpectation,but 4Q seems likely t
27、o be about the same,assuming growth projects stayon schedule.,Page 2,Deutsche Bank Securities Inc.,8,31 January 2013Integrated OilConocoPhillips&OccidentalFigure 2:OXY Earnings Variance,Q4 2011,Q4 2012,Variance,EPS,Actual,Forecast,vs Forecast,Im pact,Com m ents,($m,except where indicated),UpstreamCh
28、emicalsMidstreamOperating incom eCorporate&OtherIncome TaxClean Incom eNon-recurring ItemsGain on asset saleReported Incom e,2,537144702,751(161)9491,641701,634,2,253180752,508(164)8651,4791,1150364,2,0941401422,375(124)9121,340001,340,15940(67)133(40)(47)1391,1150(976),0.200.05-0.080.16-0.050.060.1
29、71.380.00-1.21,Strong volume-driven beat,production costs dow n$1.04/bbl sequentially vs our-$0.25/bblAnother strong quarter for chemicalsFell$81m QonQDriven by upstreamEffective tax rate of 37%low er than 3Qs 38%and 2Qs 40%,Reported EPS($),$2.01,$0.45,$1.66,Clean EPS($)Avg shares outstanding(m),$2.
30、02812,$1.83808,$1.66808,Clean EPS of$1.83 vs.Street&DB at$1.66Beat w as solid,driven by upstream,w ith small benefit from low er clean effective tax rate,Concern w ill be capex:Mgmt said 4Q capex w ould be FY13 run-rate,implies$10B,Volum es,Q4 2011,Q4 2012,Variance,YoY,Actual,Actual,Forecast,vs Fore
31、cast,%Change,Liquids(mbbl/d),CaliforniaPermianMidcontinent/OtherTotal U.S.Total ForeignTotal,9917437310227537,11318643342229571,10818945342223565,5(3)(2)(0)66,14%7%16%10%1%6%,California oil up 4kbd QoQ(3Q 88kbd),total liquids up 7kbd(3Q 106kbd)Permian oil up 2kbd QoQ(3Q 144kbd),total liquids up 2kbd
32、(3Q 184kbd)Mid-Con liquids dow n 1kbd QoQ(3Q 44kbd)Total US liquids up 8kbd QoQ(3Q 334kbd),top of+6-8kbd guidanceUp 8kbd QoQ(3Q 221Kbd)vs.approximately flat guidance,Oman and Qatar grew QonQSolid beat vs guidance and our forecast,driven by California and international,Natural Gas(mmcf),CaliforniaPer
33、mianMidcontinent/OtherTotal U.S.Total ForeignTotalTotal(m boe/d)Cashflow from operationsCapexDividendCash generation(burn),2761673908334331,2667483,6432,549376718,2421623968004481,2487792,8002,510436(146),2331504057884481,2367712,8352,000879(44),912(9)12012(35)510(443)(102),-12%-3%2%-4%3%-1%4%-23%-2
34、%16%-120%,Reduced gas activity in CaliforniaReduced Mid-Con nat gas activityUS nat gas dow n only 12mmcfd QoQ(3Q 812mmcfd)inlineSmall nat gas beat w as due to California&PermianIn line cash generation in quarter.There w as a-$800m WC sw ing.Capex high,full year came in at$10.2B,much higher than mid-
35、year$9.2BDividend raised to$0.54 in 2QGood cash generation despite over-budget capex,Source:Deutsche Bank,Company,Deutsche Bank Securities Inc.,Page 3,kboe/d,kb/d,2013E,2014E,2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2012,31 January 2013Integrated OilConocoPhillips&OccidentalOperational
36、 PerformanceFigure 3:COP volumes actual vs guidance,2600,Asset sales from new strategy,reduce total production from2009 to 2012240022002000Ex disposals4Q12 call:FY13 will be,1800,1,475-1,525kboe/d from,continuing ops16001400,2008,2009,2010,2011,2012,2013,2014,2015,2016,2017,2018,March 12 guidance:3-
37、5%CAGR LT2008 Target2011 Shrink to grow II,COP Actual&DB COP forecast volumes2009 Target4Q 11 guidance,Lukoil stake2010 Shrink to grow,Source:Deutsche Bank,CompanyFigure 4:OXY volumes actual vs guidance,120011001000900800700600500400Source:Deutsche Bank,CompanyPage 4,2010 Analyst Meet Range HighProd
38、uction2007 Target,2009&later reflect new reportingmethods(pre-royalty volumes)2011 Q3 5%-8%Outlook2004 target2008 Target,Deutsche Bank Securities Inc.,kboe/d,Q202,Q402,Q203,Q403,Q204,Q404,Q205,Q405,Q206,Q406,Q207,Q407,Q208,Q408,Q209,Q409,Q210,Q410,Q211,Q411,Q212,Q412,31 January 2013Integrated OilCon
39、ocoPhillips&OccidentalFigure 5:MUR volumes actual vs guidance350300250200150100500,1999,2001,2003,2005,2007,2009,2011,2013e,2015e,MUR History+DB forecastGrowth Target 2009,Growth Target 2006Growth Target 2011,Growth Target 2007Current Target,Growth Target 2008,Source:Deutsche Bank,CompanyFigure 6:Up
40、stream Net Income per Barrel Produced,$60$50$40$30$20$10$0-$10,$140$120$100$80$60$40$20$0,High Low Range,ConocoPhillips,Occidental,WTI(RHS),Source:Deutsche Bank,Companies,Deutsche Bank Securities Inc.,Page 5,31 January 2013Integrated OilConocoPhillips&OccidentalFinancial StatementsFigure 7:COP P&L S
41、tatement,Millions$,2010,2011,1Q-12,2Q-12,3Q-12,4Q-12,2012,1Q-13E,2Q-13E,3Q-13E,4Q-13E,2013E,2014E,Exploration&Production,U.S.E&PInternational E&PTotal E&PCorporate&OtherClean Net IncomeTotal non recurring charges&disc.opsReported Net IncomeReported Operating EPSClean Operating EPSDividend per ShareP
42、ayout ratioShares(million),2,5254,2676,792(1,144)8,8772,48111,3587.615.952.1528%1,491,3,2066,0839,290(928)11,97845912,4378.988.632.6429%1,387,8701,2612,132(265)2,6083302,9382.272.020.6629%1,293,6551,1051,760(225)1,5357322,2671.801.220.6637%1,258,6801,2311,911(139)1,772261,7981.461.440.6645%1,229,742
43、1,1901,932(177)1,755(329)1,4261.161.420.6657%1,231,2,9474,7877,734(806)7,6697598,4286.696.102.6439%1,253,8001,1841,983(258)1,72601,7261.401.400.6647%1,231,7721,1191,891(258)1,63301,6331.331.330.6650%1,231,7101,1681,878(258)1,62001,6201.321.320.6650%1,231,8601,3622,222(258)1,96401,9641.591.590.6641%1
44、,231,3,1414,8337,974(1,031)6,94306,9435.645.642.6447%1,231,3,2075,7918,998(956)8,04108,0416.536.532.9044%1,231,Source:Deutsche Bank,CompanyFigure 8:COP Cashflow Statement,2010,2011,1Q,2Q,3Q,4Q,2012,1Q,2Q,3Q,4Q,2013E,2014E,Cash Flow From Operations:,Income from continuing operationsDepreciationProper
45、ty ImpairmentsDry hole costsMinority InterestDeferred Taxes and provisionsAccretion on discounted liabilitiesUndistributed equity earningsAsset sales gainsOtherChange in Working CapitalDiscontinued operationsCash flow from operations,11,4179,0601,7804770(878)447(1,073)(5,803)(249)1,867017,045,12,502
46、7,93479247001,287455(1,077)(2,007)(359)(351)019,646,2,9551,8382595180258114(423)(942)(404)904,182,2,2671,6268211622301105(178)(583)(807)(752)1512,350,1,7981,69906915431102(150)(118)44(412)423,520,1,4261,7793841711558686(187)(16)(403)(372)4013,870,8,4466,942725874521,576407(938)(1,659)(1,570)(1,527)5
47、9413,922,1,7401,808200195025099(125)(50)0004,118,1,6471,721200195025094(125)(500)0003,483,1,6341,661200195025093(125)(1,254)0002,654,1,9811,8272001950250113(125)(186)0004,255,7,0027,01780078001,000400(500)(1,990)00014,509,8,1107,45480078001,000463(500)(186)00017,922,Cash Flow From Investing:,Capital
48、 expenditureProceeds from asset salesAcquisitions,net of cash acquiredAdvances to affiliatesCollections from affiliatesOther investing cash flowsCash flow from investing,(9,761)15,3720360(982)4,665,(13,266)4,82001,0310400(7,015),(4,260)1,109049092(3,010),(3,817)4640250413(2,915),(3,479)522018400(2,7
49、73),(3,452)4406600(181)(2,929),(15,008)2,13909180324(11,627),(3,950)1,5000000(2,450),(3,950)5,00000001,050,(3,950)2,7000000(1,250),(3,950)4000000(3,550),(15,800)9,6000000(6,200),(16,000)400(400)000(16,000),Cash flow from financing:,Issuance of debtRepayment of debtIssuance of common stockRepurchase
50、of common stockRedemption of preferred stockDividends paidOtherCash flow from financingExchange rate effectNet change in cashOpening cashClosing cash,347(5,549)133(3,866)0(3,175)(709)(12,819)218,9125429,454,0(961)96(11,123)0(3,632)(685)(16,305)0(3,674)9,4545,780,05,74036(1,899)0(843)(6,304)(3,270)25
