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Equity Research Weekly Report
November 17, 2014
Weekly Energy Watch
INVESTMENT VIEWS & HIGHLIGHTS
Weekly Highlights
Advantage Oil & Gas Ltd. (SO) released Q3/14 results ($0.22 CFPS and 22.1 mboe/d were in line). Glacier Phase VII remains on schedule, with no changes to growth, spending, or timing. The next hurdle
remains 183 mmcf/d in June 2015. AAV continues to drill some of the best Montney wells industry-wide and has 100+ mmcfe/d available for its next phase of growth to 183 mmcf/d (from 135 mmcf/d). The
Middle Montney continues to impress: the latest well tested at 11.4 mmcf/d and 31 bbl/mmcf free C5+ – a follow-up to AAV’s record 13 mmcf/d well (now producing at a restricted 5 mmcf/d). We think growth
to 183 mmcf/d is achievable, given all the strong wells to date, and we expect better valuations ahead. AAV is well positioned to navigate through low gas prices, given its strong hedges (2015E: 51% at
$3.90/mcf), low cost structure (all-in ~$0.90/mcf), and capex flexibility. At $3/mcf AECO, AAV trades at 6.9x 15E EV/DACF and delivers 15% debt-adjusted per-share growth, with D/CF at 2.1x. In this
environment, AAV could shave $100 million off growth capex in 2H/15E (essentially delaying Phase VIII) without affecting 2015E production, which would take D/CF to 1.5x and result in debt-adjusted growth of
26%. (Lee)
Birchcliff Energy Ltd. (SO) reported Q3/14 results; production of 34.2 mboe/d and CFPS of $0.48 were in line with our forecasts and consensus. BIR drilled its first Montney D4 wells at Pouce Coupe and
Sinclair. With its initial D4 tests exceeding early expectations, along with other industry players already drilling the layer, BIR sees enough potential to increase its estimated drilling inventory to 3,464.7 net
locations (from 2,234.3). BIR also noted that it was testing a Montney C interval and sees future potential in the D2 and D3 intervals. BIR’s preliminary 2015 program has a $450 million to $500 million budget
and an exit rate of 48-50 mboe/d. PCS plant expansions Phase V and Phase VI are planned for 2015 and 2016, respectively, adding 60 mmcf/d late in each year and increasing total capacity to 300 mmcf/d.
BIR has also increased its five-year plan to now see exit production targets of ~100 mboe/d for 2019. (Bean)
Kelt Exploration Ltd. (SO) announced Q3/14 results that saw CFPS of $0.25 in line with expectations and production of 13.9 mboe/d ~5% ahead of estimates. KEL plans to spend $103.6 million in Q4/14,
drilling 15 (10.5 net) wells that include four (1.8 net) Doig and Montney wells at Inga and two exploratory wells at Grand Cache. KEL also noted that it is currently testing its first Karr middle Montney well. KEL
has increased is 2014 average and exit guidance to 12.6 mboe/d and 15.8 mboe/d, respectively (from 12.3 mboe/d and 15.3 mboe/d), while maintaining its capital budget at $428 million (including A&D). The
2015 budget is expected on or around November 17, 2014. (Bean)
Currencies in Canadian dollars unless otherwise stated.
Jason Bouvier, CFA – (403) 213-7345
(Scotia Capital Inc. – Canada)
Patrick Bryden, CFA – (403) 213-7750
(Scotia Capital Inc. – Canada)
William S. Lee, P.Eng. – (403) 213-7331
(Scotia Capital Inc. – Canada)
Cameron Bean – (403) 218-6786
(Scotia Capital Inc. – Canada)
Gavin Wylie – (403) 213-7333
(Scotia Capital Inc. – Canada)
For Reg AC Certification and important disclosures see Appendix A of this report. Analysts employed by non-U.S. affiliates are not registered/qualified as research
analysts with FINRA in the U.S.
Weekly Energy Watch
November 17, 2014
Legacy Oil + Gas Inc. (SO) announced Q3 volumes of 25.0 mboe/d and CFPS of $0.47, which were essentially in line (consensus 25.2 mboe/d, $0.53). Q3/14 Midale results showed IP-30s averaging 240
boe/d (LEG type curve 165 boe/d). Turner Valley results continue to be strong – three Q3 wells showed an IP-30 of 275 boe/d, above Sproule’s 90 bbl/d. In the Bakken, two extended-reach horizontal wells at
Taylorton produced 225 boe/d per well over the first 30 days. We continue to view LEG’s assets and operations favourably. Despite delivering solid results this year, LEG has a “broken” valuation as it trades at
4.1x 2015E EV/DACF at US$80/bbl WTI. The company is caught in no man’s land, in our view, as it doesn’t have the growth rate of RRX or SPE (~24+% versus LEG at 11%) nor does it enjoy the income
support of TOG or WCP. While D/CF at 2.2x (at US$80 WTI and $45 million disposition proceeds) is higher than the companies mentioned (all at <1.5x), we see the roughly 300 bp discount in valuation as too
wide. Gaining a premium multiple in this environment is not likely, but we feel patient investors should be rewarded. (Lee)
Northern Blizzard Resources Inc. (SO) announced third quarter production of 20,279 boe/d, which was 6% behind our estimate of 21,585 boe/d. CFPS was $0.64 – 19% below our estimate of $0.79. The
miss on cash flow was largely driven by lower realized prices and higher operating and transportation costs. Northern Blizzard has spent $48.2 million year-to-date on the Plover Lake SAGD project, with first oil
production occurring in August. Production at Plover Lake is currently exceeding 2,000 boe/d during the fourth quarter. The company has increased its 2014 capital budget from $255 million to $269 million, with
production staying in the range of 20,500-21,500 boe/d. We maintain our Sector Outperform rating and one-year target price of $23.50 per share. (Bryden)
Peyto Exploration & Development Corp. (SO) announced third quarter production of 77,592 boe/d, in line with our estimate of 75,577 boe/d and the consensus estimate of 77,562 boe/d. CFPS of $1.06
compares with our estimate of $1.07 and the consensus estimate of $1.11. The board of directors has approved a 10% monthly dividend increase ($0.01 per share), starting in November. This is the third
dividend increase that Peyto has approved in the last two years. The board has also approved a 2015 capital budget of $700 million to $750 million. The nine-to-ten rig drilling program is expected to result in
the drilling of 124 to 137 gross wells during 2015, adding 41,000-45,000 boe/d of production at a cost of ~17,000 boe/d. We maintain our Sector Outperform rating and one-year target price of $47.50 per
share. (Bryden)
RMP Energy Inc. (SO) reported Q3/14 results, with production modestly ahead of estimates at 13.1 mboe/d and CFPS 8% ahead of our forecast and 12% ahead of consensus at $0.38 per share. The CFPS
beat came on higher production and lower cash costs, of which opex was exceptional at $5.60/boe. Fourteen of 18 wells are currently onstream at Ante Creek and the company’s new 5-26 battery is on track
for late Q1/15. The battery will cost a total of $28 million and half of this cost will be spent in 2014; the battery will also add 20 mmcf/d of gas handling capacity, which we believe is enough for a material
increase to production from the pool going forward. RMP has conducted its first slickwater frac (well 12-9) at Waskahigan and also completed a hybrid-slickwater frac on its 12-25 Grizzly well. The company
noted that it wants at least six months of production data to properly assess the results; however, public data shows robust initial rates on the 12-9 well, which we take as a positive sign. (Bean)
Spartan Energy Corp. (SO) provided Q3/14 results, as well as an operations update. Production and CFPS of 7.4 mboe/d and $0.10, respectively, were in line with our estimates and consensus. SPE has
already met its previously announced exit guidance of 8.6 mboe/d, resulting in the company upping its guidance to 8.9-9.1 mboe/d. SPE continues to achieve strong well results as 30-day rates from its
southeast Saskatchewan open-hole wells have averaged well above the company’s internal/budgeted type curve. SPE has initiated its horizontal multi-frac Midale drilling program at Elcott and Pinto. The well
at Elcott had mechanical difficulties, but the Pinto well has shown encouraging initial results. (Bean)
TORC Oil & Gas Ltd. (SO) announced Q3/14 results (in line at $0.51 CFPS, 11.4 mboe/d). During and post-Q3, TOG completed several tuck-in acquisitions in the Cardium and SE Saskatchewan for a total of
$65 million (500 boe/d and 15 net sections Torquay exposure acquired), partially funded by a $19.7 million private placement. On the back of Monarch success, TOG will drill one additional well in Q4/14. With
its AB Bakken and Torquay growth plays to complement yield-oriented assets, TOG has differentiated itself as a divvy payer – we like its sustainability, oil weighting, and optionality. Its moderate declines
(~27%, our estimate), top-tier netbacks, and strong balance sheet make TOG one of the most defensive stocks to own, in our view. At US$80/bbl WTI, we see ~45% of its facility undrawn at year-end 2015E,
placing TOG among the strongest in the space to continue making accretive acquisitions while keeping the dividend safe. (Lee)
Vermilion Energy Inc. (SO) announced third quarter production of 49,920 boe/d, which was modestly below our estimate of 52,281 boe/d and the consensus estimate of 50,588 boe/d. CFPS of $1.78 was
behind consensus of $1.85 and our estimate of $1.99 (although our forecast was high versus consensus). Vermilion announced a $11.1 million acquisition of 53,000 acres of land in the Powder River basin of
northeast Wyoming. The assets are focused on the Turner Sand tight oil project and add 2.2 mboe of 2P reserves to the reserve book. The company also purchased 15,000 net acres in southeast
Saskatchewan, adjacent to its current holdings in the area. We maintain our Sector Outperform rating and one-year price target of $77.50 per share. (Bryden)
2
Weekly Energy Watch
November 17, 2014
Athabasca Oil Corporation (SP). Operationally, Q3 was a neutral quarter, with ATH producing 6,381 boe/d. This was in line with guidance and 2% ahead of estimates, but with a 6% lower netback from NGL
pricing. Q4 is now guided at 5,500-6,000 boe/d, putting 2H/14 at the lower end of the previous 6,000-6,500 boe/d guidance range. Three rigs are active in the Duvernay winter drilling program, with a fourth
starting this week. No new well data were available, and we anticipate an update in the Q4/full-year release. Drilling (a mix of multi- and single-well pads) is focused on the de-risked Saxon, Kaybob West, and
Simonette areas, but the latter program could also see wells at Kaybob East and Two Creeks. Hangingstone is 94% complete and tracking to cost and timeline expectations. First production remains on track
for 2H/15. ATH de-emphasized near-term JV outcomes in Duvernay and Thermal. Meanwhile, a process has begun to optimize board composition, while also looking at ways to improve costs, potentially with
an update on the latter prior to year-end 2014. With ATH’s renewed focus on efficiency, we have nudged down our future G&A estimates. We have also adjusted 2015 interest capitalization to improve
operating cash flow. (Bouvier)
Bonterra Energy Corp. (SP) announced in-line third quarter results, with production of 13,355 boe/d versus our estimate of 13,464 boe/d and CFPS of $1.74, which was ahead of our estimate of $1.63. Our
estimate included a $7 million Canada Revenue Agency installment payment assumption that did not materialize in the actual financials this quarter. On a normalized basis, CFPS would have been 5.4%
behind our estimate of $1.84. We continue to regard Bonterra as a safe, financially flexible business in an uncertain market. We note that the company trades at a premium from a valuation standpoint;
however, its balance sheet remains strong, with 2015E D/CF of 1.0x in conjunction with an effective payout ratio of 121%. We maintain our Sector Perform rating and one-year price target of $62.50 per share.
(Bryden)
Canacol Energy Ltd. (SP) reported in-line Q1/F15 CFPS, and the company moderately trimmed its official production/capital guidance for calendar 2014 in response to lower crude oil prices. In our view, the
report highlighted what is likely to become a reality for many producers with capital spending reduced outside of core areas and lower netback production shut in. Official guidance now stands at 12,500-13,000
boe/d (versus 13,000-14,000 boe/d), which is in line with our calendar 2014 estimate of 12,629 boe/d. We see the reduction as prudent, given what is likely going to be a difficult financial market for smaller
names such as Canacol to access future funding, and appreciate the discipline being shown to focus on core activities at LLA-23, Esperanza, and tariff oil in Ecuador. Q1/F15 production of 13,256 boe/d was
pre-released and contributed to overall CFPS of $0.34 versus our estimate of $0.33 and consensus of $0.35. (Wylie)
Cequence Energy Ltd. (SP) announced Q3/14 results: production was in line at 9.7 mboe/d and CFPS of $0.06 was ~10% behind our estimate and consensus of $0.07. CQE has tested the first three wells
from its 1-32 pad and expects to have the wells onstream in late Q4/14. The wells were completed with zipper fracs, using tighter spacing and more tonnage than previous wells. CQE expects to complete five
additional Montney wells during Q4/14 and Q1/15. Its third Dunvegan well delivered a 30-day IP rate of 9.6 mmcf/d plus 160 bbl/d of condensate. CQE expects its 13-11 facility expansion to come online in
early Q1/15, bringing processing capacity to 100 mmcf/d + 4,000 bbl/d from 70 mmcf/d + 2,500 bbl/d at a cost of $10.5 million. CQE has shifted ~$15 million of its planned Q1/15 capital program into 2H/14 and
has confirmed average and exit production levels for 2014 (11 mboe/d and 12 mboe/d) and Q1/15 (13.5 mboe/d and 15 mboe/d). (Bean)
Delphi Energy Corp. (SP) announced Q3/14 results; production of ~9,500 boe/d was pre-released while CFPS of $0.09 was in line. DEE brought two more Montney wells on production and is currently
equipping the recently completed 13-23 well. For 2015, DEE is guiding average and exit production of 12-12.5 mboe/d and 12.8-13.3 mboe/d on capital spending of $77 million to $82 million, which is below our
and consensus’ previous estimates on both. Guidance for 2014 was also updated, with a modest increase to the lower end of average production guidance to 10.3 mboe/d from 10 mboe/d and an increased
capital program of $100 million to $105 million (up from $90 million to $95 million). (Bean)
Encana Corporation (SP) CFPS of $1.09 was 5% above consensus. A higher liquids split helped propel Q3/14 cash flow above consensus estimates. The Deep Panuke platform was shut down in late
September for routine maintenance. Encana has stated that the shutdown will now extend into December for further investigation of ongoing water issues. Going forward, ECA anticipates rates of 140-180
mmcfd from Panuke. We have updated our Q4/14 forecast to account for the Panuke downtime, and have also decreased our 2015 Panuke forecast to 150 mmcf/d, down from 195 mmcf/d. ECA completed a
number of transactions in 2014, most notably the $7.1 billion Permian acquisition, which may close earlier than we anticipated. As a result, we have updated our Q4/14 forecast to include a portion of the
Permian production. Guidance for 2014 has been updated, with the 2014 CFPS range lowered from $4.60-$4.85 per share to $4.32-$4.45 per share, down roughly 6%-8% (updated guidance assumes $95/bbl
WTI and $4.40/mmbtu NYMEX). Previous guidance did not include the PrairieSky secondary offering and Bighorn divestitures, so the decrease in CF guidance was expected. (Bouvier)
3
Weekly Energy Watch
November 17, 2014
Freehold Royalties Ltd. (SP) announced third quarter production of 9,430 boe/d, which is behind our estimate of 9,964 boe/d and the consensus estimate of 9,984 boe/d. CFPS of $0.54 was in line with our
estimate of $0.53 and the consensus estimate of $0.55. Cash flow was in line, due to improved operating expenses and better-than-expected realized pricing. The board of directors approved a $30 million
capital budget for 2015, which will be evenly split between southeast Saskatchewan light oil plays and western Alberta Cardium oil plays. We maintain our Sector Perform rating and one-year target price of
$26.00 per share. (Bryden)
Parallel Energy Trust (SP) announced in-line third quarter results, with production of 7,422 boe/d versus our estimate of 7,341 boe/d and CFPU of $0.21 versus our estimate of $0.20. Parallel experienced
cost overruns and unexpected equipment overhaul costs during the quarter, which resulted in a $2.0 million increase to the full-year capital budget to $15.0 million. Parallel has reiterated its 2014 production
guidance of 7,100-7,300 boe/d. We maintain our Sector Perform rating but have opted to reduce our target price in light of weakness in commodity prices and energy equity markets. We have lowered our oneyear target price to $3.25 per unit (previously $4.50 per unit). (Bryden)
TransGlobe Energy Corporation (SP) announced a mixed Q3 that was further affected by ongoing pump issues at West Gharib and mixed drilling results at NW Gharib. In our view, the results from the NWG10 exploration well (targeting 33 mmbbl) represented a key catalyst and a prospect that would underpin the company’s ability to deliver goals of 7,000-10,000 bbl/d from NW Gharib. While it is likely premature
to write the prospect off, we see the well being drilled off structure and with only moderate oil shows as evidence of the potential geological complexities in the area. The area’s complexity is also highlighted by
the fact that only three (plus one appraisal) of 10 wells drilled thus far have resulted in new discoveries. With NWG production expected to be online in Q2/15 or Q3/15, ongoing pump issues (finding slow
resolution), and a more moderate pace of drilling at West Bakr, we also see the potential for at least two to three more quarters of limited growth. TransGlobe noted that production is expected to average
~15,000 bbl/d from Egypt in Q4/14. (Wylie)
Argent Energy Trust (SU) previously announced third quarter production of 7,264 boe/d, which was well ahead of guidance of 6,500 boe/d, but was in line with our estimate of 7,203 boe/d. CFPS of $0.38 was
ahead of our estimate of $0.23. Argent hired reserve engineers GLJ to provide the company with an interim reserve report. GLJ assessed 1P and 2P reserves of 22.4 mmboe and 39.1 mmboe, respectively.
These reserve values compare with year-end 2013 1P and 2P values of 42.0 mmboe and 25.9 mmboe, respectively. The board of directors has completed the strategic review process, concluding that the
most viable method of maximizing unitholder value lies in a transaction. The company has indicated that it is considering all options, including asset sales, sale of the Trust, joint venture agreements, or a
combination thereof. We maintain our Sector Underperform rating and have reduced our one-year target price to $1.75 per unit (previously $2.00 per unit). (Bryden)
Connacher Oil and Gas Ltd. (SU) Production at 14.1 mbbl/d was pre-released, an improvement over Q2 (13.7 mbbl/d) driven by start-up at five of the previously drilled nine Pod One locations. Pod One
September rates of 9,240 bbl/d were near the emulsion handling maximum capacity, a ceiling to be remedied by a Q2/15 turnaround. Until then, we model corporate production at 14-15 mbbl/d. Realized net
pricing at $56.05/bbl was ahead of our $52.97/bbl estimate. Marginally higher than anticipated royalties and opex offset the topline win, bringing field netbacks to $31.29/bbl ($30.41/bbl estimate). G&A and
realized hedging losses brought funds flow to $0.02 per share ($0.03 per share estimate). Connacher retains $83 million in cash and net working capital for the balance of the current capital program (we
estimate to cost ~$64 million by Q1/15), which includes SAGD+ at Algar and mini-steam expansion at Pod One. CLL has a further $30 million (undrawn) revolving credit facility. Primarily U.S. dollardenominated long-term debt stands at C$1.06 billion (1.0899 US$/C$). Despite some positive operational momentum, in the current price environment we view CLL’s ability to service interest on its debt as
challenging. While covenants on the term loans are primarily reserve based, sub-$80 WTI remains difficult territory for the company. We reiterate our Sector Underperform rating and reduce our target to $0.08
per share. (Bouvier)
Commodity inventories. The U.S. Department of Energy (DOE) reported a draw of 1.7 mmbbl, bringing crude oil inventories to 378.5 mmbbl (for the week ending November 7, 2014), a decrease of -2.5%
from last year. Motor gasoline saw a build of 1.8 mmbbl, with inventory levels at 203.6 mmbbl, down -2.7% from the previous year. Distillate fuel oil levels stand at 116.9 mmbbl, -0.4% lower than last year and a
2.8 mmbbl draw from last week. The DOE also reported an injection of 91 bcf in working gas storage. Total U.S. working gas in storage stands at 3,571 bcf, 6.4% below the prior-year level and 7.0% (269 bcf)
below the five-year average.
4
Weekly Energy Watch
November 17, 2014
Exhibit 4: Commodity Relative Performance (Last Three Months)
Exhibit 1: Events Calendar
November
December
20%
OPEC
Monthly Oil Market Report
10-Dec
IEA
Oil Market Report
12-Dec
HH: $4.01/mcf
15%
10%
HH: $3.83/mcf
5%
0%
Source: Company reports; EIA; IEA; OPEC.
-5%
WTI: $97.59/bbl
-10%
Exhibit 2: Weekly Commodity Prices
-15%
WTI (US$/bbl)
Brent (US$/bbl)
3-2-1 Crack Spread (US$/bbl)
Retail Motor Gasoline (US$/gal)
Western Cdn Select (C$/bbl)
Western Cdn Select Diff (US$/bbl)
13-Nov
$74.21
76.24
10.33
2.94
51.65
-15.50
6-Nov
$77.91
82.16
10.60
2.99
53.28
-17.05
W/W
Chg
-$3.70
-5.92
-0.27
-0.05
-1.63
1.55
YTD
Avg
$97.11
103.50
14.13
3.47
71.37
-18.79
H.H. Natural Gas (US$/mmBtu)
Alberta Spot (AECO) (C$/mmBtu)
H.H./AECO C Basis (US$/mmBtu)
Foreign Exchange (US$/C$)
3.98
4.07
0.40
0.88
4.40
3.69
1.17
0.88
-0.43
0.38
-0.78
0.00
4.34
4.60
0.15
0.91
SC Forecast
2014E 2015E
$97.85 $92.00
105.00 100.00
20.50
17.50
2.90
2.66
84.90
81.78
-20.70 -18.40
4.40
4.60
0.21
0.91
-20%
-25%
WTI: $74.21/bbl
-30%
Source: Bloomberg.
Exhibit 5: Energy Indices Relative Performance (Last Three Months)
4.00
4.00
0.40
0.90
Source: Bloomberg; Scotiabank GBM estimates.
10%
5%
Exhibit 3: M&A Activity
0%
Date
$M
2P Res.
$/boe
Range Royalty Ltd.
Donnycreek Energy Inc.
T. Bird Oil Ltd.
13-Nov-14
21-Oct-14
18-Jul-14
$699
$165
$88
n.a.
$15.5
n.a.
$233,428
$82,511
$125,714
60%
52%
n.a.
Asset
Undisclosed
Undisclosed
Bellatrix Exploration Ltd.
Ember Resources Inc.
Perpetual Energy (Heavy Oil Assets)
Penn West (South Central Alberta Assets)
Undisclosed (Ferrier Assets)
Encana
27-Oct-14
23-Oct-14
15-Oct-14
8-Oct-14
$22
$355
$14
$605
$24.83
n.a.
$2.96
n.a.
$53,006
$47,333
$46,333
$20,167
0%
80%
76%
99%
U.S. Transactionsa
Carrizo Oil & Gas
Dome Energy AB
Oak Valley Energy Resources; Earthstone Energy
Southwestern Energy Company
Mid-Con Energy Partners
Eagle Ford Minerals
GAS Ventures
Flatonia Energy
Chesapeake
Undisclosed
24-Oct-14
20-Oct-14
17-Oct-14
16-Oct-14
13-Oct-14
$243
$24
$66
$5,375
$120
$14.55
n.a.
n.a.
$24.32
$19.67
$91,028
$120,000
$61,270
$95,982
$100,251
15%
0%
10%
55%
11%
Acquiror
Canadian Transactions
Corporate
PrairieSky
Contact Exploration Inc.
Crescent Point Energy
Target/Vendor
Production
$/boe/d
% Gas
-5%
-10%
-15%
-20%
-25%
a - U.S. transactions include only proven resources in calculation of reserve per $/boe, reported in US$
Source: Company reports; IHS Herold; Scotiabank GBM.
5
S&P 500 E&P
S&P/TSX E&P
U.S.: Integ. Index
CAD: Integ. Index
U.S.: Services Index
CAD: Services Index
-30%
Source: Bloomberg.
Weekly Energy Watch
November 17, 2014
Relative Share Price Performance
Exhibit 6: Relative Share Price Performance – Top and Bottom 20 (Three-Month)
10%
LEG
DEE
OIL
LTS
TET
PRY
ALV
CLL
ARN
NKO
OIL
PWT
TET
ALV
AOI
LTS
CLL
PRY
ARN
NKO
AOI
LRE
TLM
PWT
CNE
SGL
TGL
PGF
PMT
PRE
HSE
TBE
FRU
POU
AET-UN
-20%
CVI.a
CJ
LUP
VET
WCP
ARX
PSK
CNQ
AAV
OXC
SU
PPY
BIR
IMO
PEY
NVA
0%
-10%
-30%
-40%
-50%
-60%
-70%
-80%
-90%
Source: Bloomberg.
Exhibit 7: Relative Share Price Performance – Top and Bottom 20 (Six-Month)
10%
-30%
-40%
-50%
-60%
-70%
-80%
-90%
-100%
Source: Bloomberg.
6
CNE
BXE
LEG
AET-UN
LRE
TLM
SGL
CQE
DEE
PLT-UN
SUO
PMT
POU
CVE
VET
AAV
GPRK
FRU
BNE
ARX
BIR
PEY
SU
SGY
CNQ
WCP
CJ
NVA
-20%
IMO
PPY
0%
-10%
Weekly Energy Watch
November 17, 2014
Comparative Valuation Analysis
Exhibit 8: Comparative Valuation Analysis
Institutional Sales - Energy Specialists
Derek Wheatley, CFA
(403) 218-3259
Paul Lee, CA, CFA
(403) 213-7774
Institutional Equities - Energy Team
Calgary, Alberta
Contact
Jason Bouvier, CFA
(403) 213-7345
Patrick Bryden, CFA
(403) 213-7750
Cameron Bean
William S. Lee, P.Eng
Gavin Wylie
(403) 218-6786
(403) 213-7331
(403) 213-7333
Ryan Galloway, CFA, CMA
Jason McDougall, P.Eng., MBA
Riley Hicks, CA, MBA
Justin Strong, MBA
Erik Kuhn, MM
Jennifer Dowdell
Jenna Halwa
(403) 213-7768
(403) 213-7329
(403) 213-7760
(403) 213-7328
(403) 213-7349
(403) 213-7754
(403) 213-7762
Overview
Sector
No.
Companies
2014E
Yield
Analyst(s)
Total
Return
Mkt. Cap
($M)
EV
($M)
EV/DACF
2014E
2015E
D/CF
2014E
2015E
1P
2P
P/NAV**
Risked(1)
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
Integrated
4
Jason Bouvier
3.0%
38%
$37,998
$43,516
7.4x
6.9x
1.1x
1.0x
150%
101%
74%
50%
37.3
$118,199
$11.90
16%
Senior Independent
3
Jason Bouvier
2.8%
73%
$21,343
$29,986
5.7x
5.8x
2.1x
2.3x
122%
91%
62%
46%
18.7
$48,537
$15.11
54%
Oil Sands
5
Jason Bouvier
2.0%
74%
$3,916
$5,369
8.9x
7.1x
2.6x
2.5x
89%
67%
29%
28%
81.9
$103,946
$13.79
13%
Junior E&P
15
Cameron Bean, Patrick Bryden, William Lee
9.1%
39%
$258
$434
4.9x
4.9x
3.0x
3.3x
112%
61%
42%
33%
19.5
$52,275
$16.16
34%
Junior/Intermediate E&P
16
Cameron Bean, Patrick Bryden, William Lee
3.2%
52%
$1,232
$1,551
7.2x
6.1x
1.4x
1.2x
160%
115%
70%
56%
17.5
$101,768
$28.68
39%
Intermediate E&P
15
Cameron Bean, Patrick Bryden, William Lee
6.2%
54%
$5,248
$6,693
9.7x
7.5x
2.5x
2.0x
244%
172%
72%
56%
13.8
$112,595
$38.50
46%
International E&P
15
Gavin Wylie
0.5%
102%
$1,194
$1,521
2.9x
2.9x
0.8x
1.4x
n/a
62%
51%
17%
18.7
$60,930
$18.33
11%
2015E
Gas Prod.
Integrated
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
1P
2P
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
Cenovus Energy
CVE
JB
SO
$28.07
$40.00
3.8%
46%
$21,277
$25,200
6.1x
6.2x
1.1x
1.1x
211%
113%
69%
45%
31.3
$89,813
$9.51
26%
Husky Energy
HSE
JB
SP
$26.95
$40.00
4.5%
53%
$26,557
$30,762
5.3x
5.0x
0.7x
0.8x
149%
90%
67%
42%
25.1
$90,011
$11.92
32%
Imperial Oil
IMO
JB
SP
$54.25
$60.00
1.0%
12%
$46,150
$54,393
11.8x
10.7x
1.9x
1.7x
134%
114%
88%
59%
53.7
$175,297
n/a
7%
Suncor Energy
SU
JB
SO
$39.57
$54.00
2.8%
39%
$58,010
$63,709
6.3x
5.8x
0.7x
0.5x
108%
87%
72%
55%
39.0
$117,674
$14.26
0%
3.0%
38%
$37,998
$43,516
7.4x
6.9x
1.1x
1.0x
150%
101%
74%
50%
37.3
$118,199
$11.90
16%
2015E
Gas Prod.
Company
Average
EV/DACF
2014E
2015E
D/CF
2014E
2015E
P/NAV**
Risked(1)
Oil Sands
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
1P
2P
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
Canadian Oil Sands
COS
JB
SU
$17.34
$22.00
8.1%
35%
$8,403
$10,189
7.8x
5.4x
1.0x
1.1x
121%
115%
90%
71%
46.2
$103,619
$12.43
0%
Athabasca Oil Corp.
ATH
JB
SP
$3.11
$9.00
0.0%
189%
$1,249
$810
n/a
n/a
n/a
n/a
172%
130%
35%
8%
n/a
n/a
n/a
52%
Company
EV/DACF
2014E
2015E
D/CF
2014E
2015E
P/NAV**
Risked(1)
Connacher Oil & Gas
CLL
JB
SU
$0.09
$0.08
0.0%
-6%
$39
$1,048
9.9x
7.6x
n/a
n/a
-32%
-56%
-61%
7%
87.0
$74,540
$25.70
0%
MEG Energy
MEG
JB
SO
$26.53
$47.00
0.0%
77%
$5,973
$9,428
8.9x
8.2x
4.1x
4.0x
95%
77%
53%
27%
112.5
$133,678
$3.25
0%
Sunshine Oilsands
SUO
JB
R
R
R
Average
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
2.0%
74%
$3,916
$5,369
8.9x
7.1x
2.6x
2.5x
89%
67%
29%
28%
81.9
$103,946
$13.79
13%
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
1P
2P
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
Senior Independent
Company
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
EV/DACF
2014E
2015E
P/NAV**
Risked(1)
Canadian Natural
CNQ
JB
SO
$40.65
$55.00
2.2%
38%
$44,827
$59,427
6.0x
5.8x
1.5x
1.5x
114%
77%
73%
61%
27.6
$74,896
$10.31
35%
Encana*
ECA
JB
SP
$17.91
$28.00
1.6%
58%
$13,278
$19,622
5.8x
5.0x
2.1x
1.7x
149%
109%
66%
42%
16.4
$40,916
$6.85
67%
Talisman*
TLM
JB
SP
$5.69
$12.50
4.7%
124%
$5,923
$10,909
5.4x
6.6x
2.7x
3.8x
102%
88%
47%
35%
12.3
$29,799
$28.16
59%
2.8%
73%
$21,343
$29,986
5.7x
5.8x
2.1x
2.3x
122%
91%
62%
46%
18.7
$48,537
$15.11
54%
Average
Notes:
* Figures reported in US$. **Estimated P/NAV
Legend: CB=Cameron Bean, JB=Jason Bouvier, PB=Patrick Bryden, WL=William Lee, GW=Gavin Wylie
(1) Risked NAV: NAV + Risked Upside or 2P+2C NAV.
(2) Unrisked NAV: NAV + UnRisked Upside.
(3) U.S. company data using 1P reserves, Canadian company data using 2P reserves, includes Future Development Costs.
(4) Scotiabank GBM Ratings: Focus Stock (FS); Sector Outperform (SO); Sector Perform (SP); Sector Underperform (SU); Tender (T); Under Review (UR); R=Restricted.
Risks include: lower realized crude oil and gas prices, general market conditions, and project timing and execution.
Source: Scotiabank GBM estimates; company reports; Bloomberg.
7
D/CF
2014E
2015E
Commodity assumptions
WTI crude oil [US$/bbl]
WCS - WTI Differential
NYH 3-2-1 Crack [US$/bbl]
HH natural gas [US$/mmbtu]
US$/C$
2014E
$98.06
-21.1%
$20.50
$4.40
0.911
2015E
$92.00
-20.0%
$17.50
$4.00
0.900
2016E
$91.00
-20.0%
$17.50
$4.00
0.900
Weekly Energy Watch
November 17, 2014
Exhibit 8: Comparative Valuation Analysis (Continued)
International E&P
Company
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
EV/DACF
2014E
2015E
D/CF
2014E
2015E
1P
2P
P/NAV**
Risked(1)
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
0%
Alvopetro Energy
ALV
GW
SP
$0.48
$1.50
0.0%
216%
$40
-$61
n/a
n/a
n/a
n/a
n/a
46%
30%
12%
45.1
n/a
n/a
Africa Oil Corp
AOI
GW
SO
$3.63
$8.00
0.0%
120%
$1,194
$741
n/a
n/a
n/a
n/a
n/a
44%
45%
9%
n/a
n/a
n/a
0%
Bankers Petroleum
BNK
GW
SO
$4.45
$8.50
0.0%
91%
$1,162
$1,125
2.8x
2.5x
-0.2x
-0.3x
n/a
64%
53%
14%
28.3
$53,422
$14.84
0%
25%
Canacol Energy
CNE
GW
SP
$3.82
$8.00
0.0%
109%
$412
$496
4.5x
3.0x
0.8x
1.0x
n/a
79%
46%
9%
7.9
$47,417
$22.78
Calvalley Petroleum
CVI.a
GW
SP
$1.14
$2.00
0.0%
75%
$89
-$1
-1.1x
0.2x
-8.8x
-1.4x
n/a
35%
49%
9%
29.7
($779)
$4.17
0%
GeoPark Limited*
GPRK
GW
SO
$7.85
$14.50
0.0%
85%
$454
$662
2.2x
2.3x
0.9x
0.9x
n/a
75%
55%
20%
8.2
$32,203
$16.18
26%
Gran Tierra Energy
GTE
GW
SO
$5.17
$11.00
0.0%
113%
$1,427
$1,174
3.0x
2.8x
-0.7x
-0.4x
n/a
62%
47%
22%
14.6
$60,747
$11.13
1%
Lundin Petroleum AB
LUP
GW
SP
$17.19
$24.00
0.0%
40%
$5,347
$6,741
5.7x
6.3x
2.6x
2.9x
n/a
134%
72%
33%
20.4
$268,542
$51.96
14%
Niko Resources
NKO
GW
SU
$0.29
$0.55
0.0%
93%
$27
$378
3.8x
4.0x
12.4x
11.3x
n/a
29%
54%
4%
20.3
$19,875
$9.45
95%
Oryx Petroleum
OXC
GW
SO
$9.44
$20.00
0.0%
112%
$1,140
$1,011
n/a
n/a
n/a
n/a
n/a
78%
47%
13%
26.5
n/a
n/a
0%
Pacific Rubiales
PRE
GW
SP
$14.18
$22.00
4.7%
60%
$4,482
$8,516
3.6x
4.2x
2.4x
2.5x
n/a
86%
64%
17%
11.2
$57,508
$22.71
7%
Parex Resources
PXT
GW
SO
$9.57
$17.50
0.0%
83%
$1,285
$1,337
3.7x
2.7x
0.0x
-0.2x
n/a
76%
55%
22%
6.7
$59,441
$24.95
0%
ShaMaran Petroleum
SNM
GW
SP
$0.25
$0.40
0.0%
63%
$199
$213
n/a
n/a
n/a
n/a
n/a
51%
60%
37%
15.9
n/a
n/a
0%
TransGlobe Energy
TGL
GW
SP
$4.46
$10.00
2.2%
126%
$335
$176
1.0x
0.9x
-1.4x
-1.8x
n/a
52%
43%
19%
8.1
$10,925
$5.14
0%
WesternZagros Resources
WZR
GW
SP
$0.68
$1.65
0.0%
143%
$324
$310
n/a
n/a
n/a
n/a
n/a
22%
40%
9%
n/a
n/a
n/a
0%
0.5%
102%
$1,194
$1,521
2.9x
2.9x
0.8x
1.4x
n/a
62%
51%
17%
18.7
$60,930
$18.33
11%
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
1P
2P
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
Average
Junior E&P
Company
Arcan Resources
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
EV/DACF
2014E
2015E
P/NAV**
Risked(1)
ARN
CB
SU
$0.10
$0.15
0.0%
58%
$9
$334
6.0x
6.3x
8.7x
9.6x
25%
6%
21%
6%
30.5
$85,144
$20.36
3%
AET.UN
PB
SU
$1.43
$1.75
30.9%
39%
$91
$369
4.5x
6.6x
4.1x
6.6x
53%
26%
18%
11%
17.0
$55,180
$16.14
42%
BlackPearl Resources
PXX
WL
SP
$1.63
$2.50
0.0%
53%
$579
$690
4.7x
4.8x
1.2x
1.3x
141%
82%
27%
11%
76.2
$74,408
$12.00
2%
Cequence Energy
CQE
CB
SP
$1.60
$2.00
0.0%
25%
$373
$436
5.0x
4.9x
0.8x
1.7x
75%
50%
50%
50%
20.9
$39,345
$10.81
85%
68%
Argent Energy Trust
Delphi Energy
Eagle Energy Trust
LGX Oil + Gas
Painted Pony Petroleum
Parallel Energy Trust
DEE
CB
SP
$1.95
$2.65
0.0%
36%
$331
$507
6.3x
5.3x
2.6x
2.2x
160%
92%
48%
43%
14.0
$49,068
$13.45
EGL.UN
PB
SP
$4.50
$6.00
23.3%
57%
$153
$102
2.7x
3.5x
-1.5x
-0.9x
133%
81%
73%
65%
12.4
$36,543
$14.20
0%
OIL
WL
SP
$0.24
$0.40
0.0%
67%
$24
$49
4.9x
4.5x
2.9x
2.6x
43%
30%
22%
11%
15.9
$53,026
$18.40
25%
PPY
CB
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
R
PLT.UN
PB
SP
$2.49
$3.25
24.1%
55%
$136
$378
6.9x
7.6x
5.5x
6.0x
81%
60%
56%
51%
23.1
$53,077
$9.75
35%
88%
Perpetual Energy
PMT
PB
SP
$1.42
$1.75
0.0%
23%
$221
$536
4.1x
4.8x
3.3x
4.0x
141%
77%
59%
41%
9.2
$26,176
$12.32
Pinecrest Energy
PRY
CB
SU
$0.05
$0.05
0.0%
11%
$10
$121
4.2x
4.2x
4.9x
4.7x
16%
8%
16%
9%
14.8
$60,420
$20.04
3%
RMP Energy
RMP
CB
SO
$6.31
$9.50
0.0%
51%
$849
$949
4.9x
3.8x
0.6x
0.2x
374%
184%
77%
61%
5.7
$78,974
$36.01
49%
49%
Spyglass Resources
SGL
WL
SU
$0.96
$0.50
24.2%
-29%
$128
$423
4.9x
4.5x
4.5x
3.7x
36%
25%
20%
15%
14.2
$30,219
$9.55
Twin Butte Energy
TBE
WL
SP
$1.49
$2.25
12.8%
64%
$534
$884
3.8x
3.1x
1.7x
1.2x
210%
78%
53%
41%
9.4
$41,073
$17.95
8%
Zargon Oil & Gas
ZAR
PB
SP
$5.76
$7.50
12.5%
43%
$174
$301
5.2x
5.2x
2.5x
2.7x
77%
53%
50%
41%
10.4
$49,193
$15.27
19%
9.1%
39%
$258
$434
4.9x
4.9x
3.0x
3.3x
112%
61%
42%
33%
19.5
$52,275
$16.16
34%
Average
Notes:
* Figures reported in US$. **Estimated P/NAV
Legend: CB=Cameron Bean, JB=Jason Bouvier, PB=Patrick Bryden, WL=William Lee, GW=Gavin Wylie
(1) Risked NAV: NAV + Risked Upside or 2P+2C NAV.
(2) Unrisked NAV: NAV + UnRisked Upside.
(3) U.S. company data using 1P reserves, Canadian company data using 2P reserves, includes Future Development Costs.
(4) Scotiabank GBM Ratings: Focus Stock (FS); Sector Outperform (SO); Sector Perform (SP); Sector Underperform (SU); Tender (T); Under Review (UR); R=Restricted.
Risks include: lower realized crude oil and gas prices, general market conditions, and project timing and execution.
Source: Scotiabank GBM estimates; company reports; Bloomberg.
8
D/CF
2014E
2015E
Commodity assumptions
WTI crude oil [US$/bbl]
WCS - WTI Differential
NYH 3-2-1 Crack [US$/bbl]
HH natural gas [US$/mmbtu]
US$/C$
2014E
$98.06
-21.1%
$20.50
$4.40
0.911
2015E
$92.00
-20.0%
$17.50
$4.00
0.900
2016E
$91.00
-20.0%
$17.50
$4.00
0.900
Weekly Energy Watch
November 17, 2014
Exhibit 8: Comparative Valuation Analysis (Continued)
Junior/Intermediate E&P
Company
Rating(4)
Price
14-Nov-14
Target
Price
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
EV/DACF
2014E
2015E
D/CF
2015E
2014E
1P
2P
P/NAV**
Risked(1)
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
Ticker
Analyst
Advantage Oil & Gas
AAV
WL
SO
$5.39
$7.00
0.0%
30%
$947
$1,213
6.7x
5.9x
1.6x
1.6x
130%
95%
78%
50%
42.7
$55,206
$10.71
98%
Bellatrix Exploration
BXE
CB
SO
$5.23
$8.00
0.0%
53%
$1,072
$1,561
4.9x
4.4x
1.7x
1.8x
91%
61%
46%
37%
12.3
$41,053
$13.45
70%
Birchcliff Energy
BIR
CB
SO
$11.13
$15.00
0.0%
35%
$1,850
$2,473
6.7x
6.6x
2.0x
2.2x
161%
97%
73%
64%
26.3
$72,840
$12.13
84%
Bonterra Energy
BNE
PB
SP
$48.77
$62.50
7.3%
36%
$1,562
$1,734
7.2x
7.6x
0.7x
1.0x
217%
176%
103%
84%
16.9
$132,597
$29.81
25%
Cardinal Energy
CJ
PB
SO
$16.29
$24.00
4.4%
52%
$937
$968
7.0x
5.7x
0.3x
-0.3x
141%
110%
82%
69%
26.9
$123,804
$47.56
8%
Crew Energy
CR
CB
SP
$7.41
$9.50
0.0%
28%
$968
$1,226
6.0x
6.0x
1.5x
2.1x
152%
102%
66%
47%
12.8
$49,917
$14.69
63%
Freehold Royalties Ltd.
FRU
PB
SP
$21.30
$26.00
7.9%
30%
$1,586
$1,708
11.4x
11.3x
0.9x
0.7x
283%
221%
n/a
n/a
6.9
$186,661
$74.59
36%
Kelt Exploration
KEL
CB
SO
$9.67
$14.00
0.0%
45%
$1,278
$1,381
10.4x
8.7x
0.8x
1.2x
214%
153%
70%
58%
15.2
$109,141
$25.24
61%
11%
Legacy Oil + Gas
LEG
WL
SO
$4.25
$9.00
0.0%
112%
$890
$1,677
3.9x
3.2x
2.2x
1.6x
89%
48%
39%
34%
15.4
$72,531
$20.72
Long Run Exploration
LRE
WL
SP
$2.86
$5.00
14.4%
90%
$579
$1,275
3.4x
3.3x
2.2x
2.1x
78%
46%
36%
29%
10.4
$40,605
$20.54
53%
Northern Blizzard
NBZ
PB
SO
$15.44
$23.50
2.5%
58%
$1,583
$1,985
6.3x
5.0x
1.7x
0.8x
101%
68%
59%
52%
22.1
$94,180
$21.81
15%
65%
NuVista Energy
NVA
WL
SO
$10.17
$16.00
0.0%
57%
$1,470
$1,676
13.6x
7.2x
1.9x
1.3x
206%
147%
80%
46%
21.4
$93,364
$19.42
Raging River Exploration
RRX
WL
SO
$7.69
$12.00
0.0%
56%
$1,505
$1,656
7.0x
6.0x
0.7x
0.7x
220%
164%
84%
70%
15.1
$155,852
$50.13
5%
Spartan Energy
SPE
CB
SO
$3.00
$5.25
0.0%
75%
$916
$1,000
8.7x
5.1x
1.0x
0.3x
156%
125%
64%
59%
8.8
$172,924
$39.22
5%
Surge Energy
SGY
CB
SO
$6.27
$7.75
9.6%
33%
$1,401
$1,900
6.4x
5.7x
1.9x
1.5x
169%
97%
79%
74%
14.8
$104,004
$22.82
14%
TORC Oil & Gas
TOG
WL
SO
$11.28
$16.00
4.8%
47%
$1,161
$1,386
6.4x
6.0x
1.1x
0.9x
152%
124%
93%
62%
12.7
$123,605
$35.99
15%
3.2%
52%
$1,232
$1,551
7.2x
6.1x
1.4x
1.2x
160%
115%
70%
56%
17.5
$101,768
$28.68
39%
2014E
Yield
Total
Return
Mkt. Cap
($M)
EV
($M)
1P
2P
Unrisked(2)
2P RLI
(years)
EV/Prod (2014E)
($/boe/d)
EV/Res.(3)
($/boe)
2015E
Gas Prod.
Average
Intermediate E&P
Company
Ticker
Analyst
Rating(4)
Price
14-Nov-14
Target
Price
EV/DACF
2014E
2015E
P/NAV**
Risked(1)
ARC Resources Ltd.
ARX
PB
SO
$27.98
$35.00
4.3%
29%
$8,928
$10,187
8.5x
8.4x
1.1x
1.0x
336%
228%
101%
83%
17.2
$90,592
$21.28
60%
Baytex Energy Corporation
BTE
PB
SO
$31.40
$52.50
8.9%
76%
$5,252
$7,503
7.0x
6.1x
2.5x
2.0x
209%
137%
66%
52%
14.9
$82,220
$30.71
16%
69%
Bonavista Energy Corporation
BNP
PB
SP
$10.83
$14.75
7.8%
44%
$2,477
$3,706
5.9x
6.5x
2.2x
2.6x
107%
75%
55%
48%
14.5
$48,194
$13.05
Crescent Point Energy
CPG
PB
SO
$36.14
$55.00
7.6%
60%
$16,193
$19,408
7.2x
7.3x
1.3x
1.3x
188%
126%
72%
65%
14.2
$138,273
$38.05
8%
Enerplus Corporation
ERF
PB
SO
$17.18
$24.00
6.3%
46%
$3,531
$4,650
5.0x
4.8x
1.3x
1.3x
149%
111%
96%
81%
11.7
$45,573
$16.58
55%
Lightstream Resources
LTS
WL
SP
$2.80
$3.50
17.1%
42%
$598
$2,175
3.0x
3.8x
2.6x
3.5x
93%
39%
29%
22%
12.0
$53,834
$19.56
23%
Paramount Resources
POU
WL
SO
$47.62
$70.00
0.0%
47%
$5,263
$6,664
23.5x
9.1x
8.2x
3.0x
420%
280%
58%
25%
18.1
$260,254
$65.54
55%
Pengrowth Energy Corporation
PGF
PB
SO
$4.27
$9.25
11.2%
128%
$2,269
$4,302
7.4x
5.4x
4.1x
3.0x
87%
62%
46%
31%
16.9
$59,156
$16.12
37%
Penn West Exploration
PWT
PB
SP
$4.75
$6.50
11.8%
49%
$2,355
$4,576
4.1x
5.2x
2.3x
3.2x
62%
45%
26%
19%
13.8
$43,942
$12.95
32%
PrairieSky Royalty
PSK
PB
SP
$35.67
$41.00
2.1%
19%
$4,726
$5,328
30.8x
18.7x
3.5x
1.6x
606%
516%
n/a
n/a
4.7
$318,209
$190.71
45%
Peyto Exploration & Dev.
PEY
PB
SO
$35.79
$47.50
3.2%
36%
$5,501
$6,515
9.3x
8.1x
1.5x
1.5x
409%
266%
124%
97%
n/a
$85,241
$19.37
90%
Tourmaline Oil
TOU
JB
SO
$43.38
$68.00
0.0%
57%
$9,405
$10,366
9.7x
7.5x
1.0x
1.1x
338%
211%
66%
47%
19.5
$90,132
$20.77
84%
Trilogy Energy
TET
WL
SP
$13.20
$25.00
3.2%
93%
$1,747
$2,496
6.2x
7.0x
2.1x
2.7x
207%
168%
33%
20%
8.6
$71,317
$24.18
58%
Vermilion Energy
VET
PB
SO
$61.59
$77.50
4.2%
30%
$6,709
$7,963
9.3x
7.9x
1.6x
1.2x
n/a
174%
134%
105%
13.3
$160,664
$47.89
37%
Whitecap Resources
WCP
WL
SO
$14.60
$21.00
4.9%
50%
$3,773
$4,555
8.1x
6.9x
1.6x
1.2x
213%
150%
102%
94%
13.7
$141,319
$40.73
24%
6.2%
54%
$5,248
$6,693
9.7x
7.5x
2.5x
2.0x
244%
172%
72%
56%
13.8
$112,595
$38.50
46%
Average
Notes:
* Figures reported in US$. **Estimated P/NAV
Legend: CB=Cameron Bean, JB=Jason Bouvier, PB=Patrick Bryden, WL=William Lee, GW=Gavin Wylie
(1) Risked NAV: NAV + Risked Upside or 2P+2C NAV.
(2) Unrisked NAV: NAV + UnRisked Upside.
(3) U.S. company data using 1P reserves, Canadian company data using 2P reserves, includes Future Development Costs.
(4) Scotiabank GBM Ratings: Focus Stock (FS); Sector Outperform (SO); Sector Perform (SP); Sector Underperform (SU); Tender (T); Under Review (UR); R=Restricted.
Risks include: lower realized crude oil and gas prices, general market conditions, and project timing and execution.
Source: Scotiabank GBM estimates; company reports; Bloomberg.
9
D/CF
2015E
2014E
Commodity assumptions
WTI crude oil [US$/bbl]
WCS - WTI Differential
NYH 3-2-1 Crack [US$/bbl]
HH natural gas [US$/mmbtu]
US$/C$
2014E
$98.06
-21.1%
$20.50
$4.40
0.911
2015E
$92.00
-20.0%
$17.50
$4.00
0.900
2016E
$91.00
-20.0%
$17.50
$4.00
0.900
Weekly Energy Watch
November 17, 2014
Pertinent Revisions
Exhibit 9: Unpublished Weekly Revisions
CFPS
NAV + Risked Upside (1,2)
2014E
Name
2015E
Analyst
New
Previous
Diff.
New
Previous
Diff.
New
Previous
Diff.
New
Previous
Diff.
New
Previous
Husky Energy
HSE
JB
$5.99
$5.71
4.91%
$6.19
$6.19
0.00%
$40.04
$40.04
0.00%
$40.00
$40.00
0%
SP
SP
Imperial Oil
IMO
JB
$5.51
$5.65
-2.51%
$6.08
$6.09
-0.19%
$61.92
$61.79
0.22%
$60.00
$60.00
0%
SP
SP
Suncor Energy
SU
JB
$6.36
$6.36
0.00%
$7.30
$7.30
0.00%
$55.30
$55.26
0.06%
$54.00
$54.00
0%
SO
SO
COS
JB
$2.62
$2.62
0.00%
$3.48
$3.48
0.00%
$19.34
$19.07
1.40%
$22.00
$22.00
0%
SU
SU
Source: Scotiabank GBM estimates; company reports; Bloomberg.
10
Rating (3)
Ticker
Canadian Oil Sands
#REF!
Target Price
Change
Weekly Energy Watch
November 17, 2014
U.S. Natural Gas: Storage Fundamentals
Exhibit 10: Total U.S. Working Natural Gas Storage
bcf
2014
2013
Exhibit 13: U.S. Heating Degree Days
2012
bcf
5-yr Avg
14/15
4000
4,000
300
3500
3,500
250
3000
3,000
2500
2,500
2000
2,000
5-yr Range Shaded
1500
Mar
Apr
May
Jun
Jul
Aug
Oct
Sep
Nov
5-y r Range Shaded
150
100
50
Warmer
0
Nov
500
Feb
Dec
Jan
Feb
Mar
Apr
Jun
Jul
Aug
Dec
Source: Bloomberg.
Source: U.S. Department of Energy.
Exhibit 11: U.S. Natural Gas Injection and Withdrawal Rates
Exhibit 14: U.S. Cooling Degree Days
200 bcf
bcf
100
2012
2014
Warm er
100
0
0
2013
5yr avg
120
100
5-yr Range Shaded
80
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
-100
-200
-100
60
-200
40
20
-300
-300
5-Year Average
2014
2013
Cooler
0
2012
Apr
Source: U.S. Department of Energy.
Source: Bloomberg.
Exhibit 12: U.S. Natural Gas Storage
BCF unless noted
Weekly Injection/Withdraw al
Working Gas in Storage
Heating Degree Days
Source: U.S. Department of Energy; Bloomberg; NOAA.
11
5yr avg
200
1,000
500
Jan
12/13
Cooler
1,500
1000
13/14
Current Week Ending - Nov 7
5 Yr. Last Week 2014
2013
2012
Avg
Oct 31
40
20
-18
8
91
3,611
3,834
3,911
3,847
3,571
108
118
109
114
83
May
Jun
Jul
Aug
Sep
Oct
Weekly Energy Watch
November 17, 2014
U.S. Natural Gas: Supply Fundamentals & Industrial Demand
Exhibit 15: U.S. Natural Gas Production
bcf/d
2014
Exhibit 18: Net U.S. Natural Gas Imports from Canada
2012
2013
2011
bcf/d
10.0
5 Year Average
75.0
2014
2013
2012
Avg (bcf/d):
2013: 5.1
2012: 5.3
2011: 5.8
2011
9.0
70.0
8.0
65.0
7.0
6.0
60.0
5.0
55.0
4.0
5 Year Range Shaded
Jan
50.0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Mar
May
Apr
Jun
Jul
Aug
Sep
Source: U.S. Department of Energy.
Source: U.S. Department of Energy.
Exhibit 16: Net U.S. Natural Gas Imports (Excluding LNG)
Exhibit 19: U.S. Natural Gas Supply/Demand Disposition (Bcf/d)
bcf/d
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
Jan
2014
Feb
Mar
Apr
2013
May
Jun
2012
Jul
Aug
Avg (bcf/d):
2013: 3.3
2012: 3.7
2011: 4.5
2011
Sep
Oct
Nov
Dec
Exhibit 17: Net U.S. LNG Imports
bcf/d
1.5
1.3
1.0
0.8
0.5
0.3
0.0
-0.3 Jan
Oct
Nov
Dec
2014
Supply
Dry Gas Production
Net Imports
Net Inventory Withdrawals
Other
Total Supply
Demand
Residential
Commercial
Industrial
Electric Power Generation
Other
Total Demand
Excess Supply (Demand)
2015
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2014
2015
67.82
3.90
22.86
0.17
94.75
69.33
2.77
(12.68)
0.16
59.59
70.35
3.09
(12.64)
0.14
60.94
70.68
3.33
1.28
0.18
75.47
71.09
3.50
16.55
0.19
91.34
71.04
2.39
(10.95)
0.16
62.65
70.89
2.57
(9.67)
0.17
63.95
71.14
2.12
2.99
0.19
76.45
69.54
3.28
(0.30)
0.16
72.69
71.04
2.64
(0.27)
0.18
73.60
28.83
16.43
23.00
19.70
7.64
95.60
(0.85)
7.38
6.14
20.03
21.04
6.62
61.22
(1.63)
3.60
4.54
19.79
26.92
6.63
61.48
(0.54)
15.55
10.16
22.25
20.11
6.78
74.85
0.63
24.99
14.51
23.76
19.96
7.27
90.50
0.84
7.23
5.98
20.95
21.83
6.55
62.54
0.11
3.50
4.60
20.64
28.22
6.52
63.48
0.47
15.74
10.32
23.03
20.56
6.80
76.45
(0.01)
13.84
9.32
21.27
21.94
6.92
73.29
(0.60)
12.87
8.85
22.10
22.64
6.79
73.24
0.35
Source: U.S. Department of Energy.
Source: U.S. Department of Energy.
Exhibit 20: U.S. Natural Gas Industrial Demand
2014
2013
2012
Avg (bcf/d):
2013: 0.3
2012: 0.4
2011: 0.7
2011
bcf/d
24.0
22.0
20.0
18.0
16.0
Feb
Mar
Source: U.S. Department of Energy.
12
Feb
Dec
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
14.0
2004
2005
2006
Source: U.S. Department of Energy.
2007
2008
2009
2010
2011
2012
2013
2014
Weekly Energy Watch
November 17, 2014
U.S. Natural Gas: Benchmark Prices
Exhibit 21: Natural Gas 12-Month Strip
US$/mmBtu
Exhibit 24: National Balancing Point vs. Henry Hub Spot Natural Gas Prices
Current Strip
6 Month Prior Strip
US$/mmBtu
$16
$14
$12
$10
$8
$6
$4
$2
$0
Aug-09 Feb-10
1 Year Prior Strip
$5.00
$4.50
$4.00
$3.50
Strip Price:
Current Strip: $3.81
May 13-14: $4.35
Nov 13-13: $3.66
$3.00
$2.50
$2.00
NG1
NG2
NG3
NG4
NG5
NG6
NG7
NG8
NG9
NG10
NG11
NG12
Futures Contract
Henry Hub spot
Aug-10
Feb-11
Aug-11
National Balancing Point spot
Feb-12
Aug-12
Feb-13
Source: Bloomberg.
Source: Bloomberg.
Exhibit 22: U.S. Gulf Coast Alternative Fuel Price Comparison
Exhibit 25: U.S. Dry Gas Production Sources and Imports
Natural Gas HH
US$/mmBtu
"Heating Oil GC No. 2"
bcf/d
Residual Fuel GC 3%
Aug-13
Feb-14
Aug-14
Forecasts
40
$30
35
Net imports
$25
30
$20
Shale Gas
25
$15
Non-associated conventional
$10
15
$5
10
$0
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14
Source: Bloomberg.
Source: EIA.
Exhibit 23: AECO – Henry Hub Spot Natural Gas Price (Spread)
US$/mmbtu
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
-$0.50
-$1.00
-$1.50
-$2.00
Oct-08
% of Henry Hub
Historically, AECO price trades at 88% of Henry Hub
120%
100%
80%
60%
40%
AECO-Henry Hub Price Differential
20%
AECO as a % of Henry Hub
0%
Apr-09
Source: Bloomberg.
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Tight gas
Coalbed methane
Alaska
5
0
13
Non-associated offshore
20
Associated with oil
Weekly Energy Watch
November 17, 2014
Canadian Natural Gas: Supply Fundamentals and Benchmark Prices
Exhibit 26: Canadian Working Gas in Storage
bcf
2014
2013
Exhibit 28: AECO “C” Natural Gas Prices
2012
2012
C$/mcf
$10
5-yr average
800
700
600
500
400
300
200
100
2013
2014
$8
$6
$4
5-Yr Range Shaded
$2
$0
Mar
Jan
May
Jul
Jan
Nov
Sep
Feb
Mar
Apr
May
Jun
Jul
Source: Bloomberg.
Source: Bloomberg.
Exhibit 27: Canadian Natural Gas Injection and Withdrawal Rates
Exhibit 29: Nova/Alliance Pipeline Field Receipts
bcf
25
25
14,000
10
10
13,250
-5Jan
-5
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Sep
Oct
mmcf/d
14,750
bcf
Feb
Aug
2014
2013
Nov
Dec
Avg Receipt Grow th:
2010 YTD = -4.7%
2009 YTD = -5.1%
YOY 4-w k = 0.5%
2012
12,500
11,750
-20
-20
-35
-35
10,250
-50
9,500
-50
5-Year Average
Source: Bloomberg.
14
2012
2013
2014
11,000
Jan
Feb
Mar
Apr
May
Source: TransCanada Pipelines; Alliance Pipelines.
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Crude Oil: U.S. Inventories, Forward Cover, Imports, and Refinery Utilization
Exhibit 30: U.S. Petroleum Balance Sheet
Millions of barrels
Exhibit 33: U.S. Crude Oil and Motor Gasoline PADD Inventories
Inventory Levels
Total Crude Oil & Products
Crude Oil (excluding SPR)
Crude Oil in SPR
Crude Oil, Cushing, Oklahoma
Major Products
Motor Gasoline
Distillate Fuel Oil
Jet Fuel
Residual Fuel Oil
Petroleum Supply (mmbbl/d)
Crude Oil Imports
Net Product Imports
Crude Oil Input to Refineries
7-Nov-14
1,127.0
378.5
691.0
22.5
480.2
203.6
116.9
36.2
37.6
31-Oct-14
1,132.2
380.2
691.0
20.8
482.8
201.8
119.7
37.1
36.4
6.9
(1.8)
15.8
90.1
Refinery Utilization (%)
W/W
Change
Millions of barrels
% Change
(5.2)
(1.7)
(0.0)
1.7
(2.7)
1.8
(2.8)
(0.9)
1.1
7-Nov-13
1,111.0
388.1
696.0
38.2
486.3
209.2
117.3
38.3
34.7
5 year Avg
1,090.3
360.7
707.7
34.5*
426.3
207.5
138.8
42.8
37.1
Week
-0.5%
-0.5%
0.0%
8.2%
-0.5%
0.9%
-2.3%
-2.4%
3.1%
Year
1.4%
-2.5%
-0.7%
-41.0%
-1.3%
-2.7%
-0.4%
-5.5%
8.4%
5 year
3.4%
4.9%
-2.4%
-34.8%
12.6%
-1.9%
-15.8%
-15.5%
1.1%
6.7
(1.7)
15.5
0.2
(0.2)
0.3
7.8
(1.4)
15.4
8.2
(0.4)
14.5
3.0%
9.6%
1.7%
-12.3%
34.5%
2.2%
-16.2%
351.5%
8.5%
88.4
1.7
88.7
84.4
Inventory Levels
Crude Oil Stocks
PADD I - Atlantic Coas t
PADD II - Midwes t
PADD III - Gulf Coas t
PADD IV - Rocky Mountain
PADD V - Wes t Coas t
7-Nov-14
378.5
12.7
99.0
192.6
21.2
53.0
Motor Gasoline Stocks
PADD I - Atlantic Coas t
PADD II - Midwes t
PADD III - Gulf Coas t
PADD IV - Rocky Mountain
PADD V - Wes t Coas t
203.6
50.3
43.6
75.8
6.9
26.8
W/W
31-Oct-14 Change
380.2
(1.7)
12.0
0.7
98.1
1.0
195.5
(2.8)
20.6
0.5
54.1
(1.1)
201.8
51.1
43.8
73.3
6.8
26.7
% Change
7-Nov-13 5 year Avg
388.1
360.7
11.2
11.2
108.2
95.0
196.1
181.2
20.4
17.6
52.2
55.7
1.8
(0.8)
(0.2)
2.5
0.1
0.2
209.2
52.8
48.5
72.7
7.1
28.1
207.5
51.3
47.9
72.9
6.5
28.9
Week
-0.5%
5.9%
1.0%
-1.5%
2.6%
#-2.1%
/0
Year
-2.5%
13.0%
-8.5%
-1.8%
3.8%
# 1.5%
/0
5 year
4.9%
13.6%
4.2%
6.3%
20.0%
#-5.0%
/0
0.9%
-1.5%
-0.4%
3.4%
1.6%
1%
-2.7%
-4.7%
-10.0%
4.3%
-2.5%
-4%
-1.9%
-1.8%
-8.9%
4.0%
7.0%
-7%
*Since April, 2004
Source: U.S. Department of Energy.
Source: U.S. Department of Energy.
Exhibit 31: U.S. Crude Oil Inventory Levels
Exhibit 34: U.S. Crude Oil One-Month Forward Cover
mmbbl
2014
2013
2012
Days
5-Yr Average
440
2013
5-Yr Average
28
400
26
380
24
360
22
340
20
320
5-Y r Range Shaded
18
300
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Exhibit 32: U.S. Crude Oil Imports
mbbl/d
2014
2013
2012
2014
100%
10,000
95%
9,000
90%
8,000
85%
7,000
80%
6,000
75%
Feb
Mar
Source: U.S. Department of Energy.
Jul
May
Sep
Nov
Exhibit 35: U.S. Refinery Utilization Rates
11,000
Jan
Mar
Jan
Source: U.S. Department of Energy.
Source: U.S. Department of Energy.
15
2012
30
5-Y r Range Shaded
420
2014
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2013
2012
5-Yr Avg
5-Yr Range
Shaded
Jan
Feb
Mar
Source: U.S. Department of Energy.
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Crude Oil: U.S. Refined Product Inventories and One-Month Forward Cover
Exhibit 36: U.S. Major Product Inventory Levels
2014
mmbbl
2012
Exhibit 39: U.S. Major Product One-Month Forward Cover
2013
5-Yr Average
2014
Days
34
450
430
32
410
30
390
28
370
2013
5-Yr Average
2012
26
350
5-Yr Range Shaded
330
24
5-Y r Range Shaded
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
22
Mar
Jan
May
Jul
Sep
Source: U.S. Department of Energy. Major Refined Products include motor gasoline, jet fuel, and distillate fuel.
Source: U.S. Department of Energy.
Exhibit 37: U.S. Distillate Fuel Inventory Levels
Exhibit 40: U.S. Distillate Fuel One-Month Forward Cover
2014
mmbbl
190
2013
2012
5-Yr Avg
2014
Days
50
2012
2013
Nov
5-Yr Average
46
170
42
150
38
130
34
30
110
26
5-Yr Range Shaded
90
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
5-Yr Range Shaded
22
Dec
Jan
Mar
May
Jul
Sep
Source: U.S. Department of Energy. Distillate fuel includes diesel fuel and heating fuel.
Source: U.S. Department of Energy.
Exhibit 38: U.S. Motor Gasoline Inventory Levels
Exhibit 41: U.S. Motor Gasoline One-Month Forward Cover
mmbbl
2014
2013
5-Year Avg
2012
5-Yr Range Shaded
235
2014
Days
30
2013
2012
5-Year Avg
28
220
5-Year Range Shaded
26
205
24
190
22
20
175
Jan
Feb
Mar
Apr
Source: U.S. Department of Energy.
16
Nov
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Source: U.S. Department of Energy.
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Crude Oil: U.S. Refined Product Consumption and Imports
Exhibit 42: U.S. Major Refined Product Consumption
2014
mbbl/d
16,000
2013
Exhibit 45: U.S. Residual Fuel Consumption
2012
mbbl/d
1,200
2014
2013
2012
1,000
15,000
800
14,000
600
400
13,000
200
12,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
0
Jan
Mar
Apr
May
Jun
Source: U.S. Department of Energy. Major Refined Products include motor gasoline, jet fuel, and distillate fuel.
Source: U.S. Department of Energy.
Exhibit 43: U.S. Motor Gasoline Consumption
Exhibit 46: U.S. Jet Fuel Consumption
mbbl/d
2014
2013
mbbl/d
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
Jan
2012
9,900
9,600
9,300
9,000
8,700
8,400
8,100
7,800
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
2014
Feb
Mar
Apr
May
Aug
Sep
2013
Jun
Jul
Oct
Nov
Dec
2012
Aug
Sep
Nov
Oct
Dec
Source: U.S. Department of Energy.
Exhibit 44: U.S. Distillate Fuel Consumption
mbbl/d
5,000
4,700
4,400
4,100
3,800
3,500
3,200
2,900
Jan
Jul
Dec
Source: U.S. Department of Energy.
Exhibit 47: U.S. Net Refined Product Imports
2014
2013
mbbl/d
3,000
2012
2014
2013
2012
2,000
1,000
0
-1,000
-2,000
-3,000
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Source: U.S. Department of Energy. Distillate Fuel includes diesel fuel and heating fuel.
17
Feb
Oct
Nov
Dec
Jan
Feb
Mar
Source: U.S. Department of Energy.
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Crude Oil: Crude Prices, Gasoline Prices, and Refining Margins
Exhibit 51: WTI Crude Oil vs. U.S. Trade-Weighted Dollar
Exhibit 48: WTI Crude Oil Prices
US$/bbl
2012
2013
US$/bbl
2014
$120
Index
WTI Crude Oil Price (US$/bbl)
$160
120
$120
105
$80
90
$40
75
$100
$80
$0
2001
$60
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
60
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Bloomberg. WTI Crude–Light Sweet (38.7º API Gravity, 0.45% sulphur).
Source: Bloomberg. Trade-weighted average foreign exchange rate includes Australia, Canada, Japan, Sweden, Switzerland,
United Kingdom, and EURO (11 countries). Base Year – Mar 1973.
Exhibit 49: U.S. Gulf Coast 3-2-1 Crack Spreads
Exhibit 52: Brent Crude Oil Prices
US$/bbl
2012
2013
US$/bbl
2014
2012
$140
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
2013
$120
$100
Jan
Mar
May
Jul
Sep
$80
Nov
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Source: Bloomberg. 3-2-1 Crack Spread is WTI, Heating Oil (#2), and Motor Gasoline.
Source: Bloomberg. Brent Crude - Light Sweet (38.1º API Gravity, 0.388% sulphur).
Exhibit 50: Crude Oil Long-Dated Strip
Exhibit 53: U.S. (Regular) Average Retail Gasoline Prices
US$/bbl
Current
Last Week
US$/gal
3 Months
Avg Strip Prices:
$105
$100
$95
$90
$85
$80
$75
$70
Dec-14
Source: Bloomberg.
18
2014
Nov 13-14: $76.78
Nov 06-14: $79.65
Aug 13-14: $91.02
2012
$4.50
2013
Sep
Oct
Nov
Dec
2014
$4.00
$3.50
$3.00
$2.50
Jan
Apr-15
Aug-15
Dec-15
Source: Bloomberg.
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Crude Oil: Prices and Spreads
Exhibit 54: WTI – Brent Crude Oil Price (Spread)
US$/bbl
$10
Exhibit 57: WTI – Western Canadian Select Posting Differential %
2013
2012
2012
2014
2013
2014
0%
Jan
2
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
-10%
$0
-20%
-30%
-$10
-40%
-$20
-50%
-$30
-60%
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Bloomberg. Brent Crude - Light Sweet (38.1º API Gravity, 0.388% sulphur).
Source: Bloomberg.
Exhibit 55: WTI – Western Canadian Select Posting Differential
Exhibit 58: Bitumen Prices and Natural Gas Prices
US$/bbl
2012
2013
2009
$100
2
2014
$0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
-$10
2010
2011
2012
2013
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
$80
C$/bbl
-$20
-$30
$60
$40
-$40
$20
-$50
$0
Source: Bloomberg.
Source: Bloomberg.
Exhibit 56: Mexican Maya and Western Canadian Select Differentials
Maya
Western Canadian Select
$20
$10
2
$0
-$10
-$20
-$30
-$40
-$50
2009
Source: Bloomberg.
19
2010
2011
2012
2013
2014
2014
DilBit (C$/bbl)
SynBit (C$/bbl)
$/mcf
Jan
Weekly Energy Watch
November 17, 2014
OPEC: Production, Spare Capacity, and Basket Prices
Exhibit 61: OPEC Reference Basket Prices
Exhibit 59: OPEC-10 Spare Capacity vs. WTI
7.0
$160
Spare Capacity
WTI
2013
2014
$135
$120
5.0
$115
$100
4.0
$80
3.0
US$/bbl
mmbbl/d
2012
US$/bbl
$140
6.0
$95
$60
2.0
$75
$40
1.0
Jan
$20
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: International Energy Agency; Bloomberg.
Note: OPEC basket price includes Saharan Blend (Algeria), Minas (Indonesia), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export
(Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE), and BCF 17
(Venezuela).
Source: Bloomberg.
Exhibit 60: OPEC Production and Spare Capacity
Exhibit 62: WTI – OPEC Basket Price (Spread)
0.0
$0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
mmbbl/d
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Algeria
1.1
1.1
1.2
1.1
1.1
Angola
1.7
1.6
1.6
1.7
Ecuador
0.5
0.5
0.5
0.5
Iran
2.7
2.7
2.8
Kuwait (a)
2.8
2.8
Libya
0.5
0.2
Mar-14
Apr-14
May-14
1.1
Jun-14
Jul-14
1.1
1.2
1.6
1.7
0.6
0.6
2.8
Aug-14
1.0
1.1
1.6
1.5
1.6
0.6
0.6
0.6
2.8
2.9
2.8
2.8
2.8
2.8
2.8
2.8
2.8
2.8
2.8
2.9
2.8
2.9
0.2
0.5
0.4
0.2
0.2
0.2
0.5
0.4
0.5
Spare
Sep-14 Capacity Capacity
1.2
1.1
1.2
0.0
1.7
1.7
1.7
1.8
0.1
0.6
0.6
0.6
0.6
0.0
2.8
2.8
2.8
2.9
0.2
2.9
2.9
(0.0)
0.8
0.9
0.1
Nigeria
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.8
1.9
2.0
0.2
Qatar
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.0
Saudi Arabia (a)
9.8
9.8
9.8
9.8
9.9
9.6
9.7
9.7
9.7
10.0
9.7
9.7
12.4
2.7
UAE
2.8
2.7
2.8
2.7
2.7
2.8
2.7
2.8
2.9
2.8
2.8
2.8
2.9
0.1
Venezuela
2.5
2.5
2.4
2.5
2.4
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.6
0.1
OPEC-11
26.9
26.5
26.8
26.9
26.9
26.3
26.6
26.7
27.2
27.3
27.2
27.4
30.8
3.4
Iraq
OPEC
( )
20
3.0
3.1
3.1
3.1
3.6
3.2
3.3
3.4
3.1
3.2
3.1
3.3
3.4
0.1
30.0
29.6
29.9
30.0
30.5
29.5
29.9
30.1
30.3
30.5
30.3
30.7
34.2
3.5
(a) Includes 50% share of Neutral Zone output.
Source: International Energy Agency.
2012
US$/bbl
2013
2014
$10
$0
Jan
Feb
Mar
-$10
-$20
-$30
YTD Avg:
2014 YTD: US($3.88)
2013 YTD: US($7.49)
-$40
Source: Bloomberg.
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Weekly Energy Watch
November 17, 2014
Commodity Prices
Exhibit 63: Commodity Price Summary
Crude Oil
WTI
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Jan 2012
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 2013
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan 2014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
2014 YTD Avg
2013 YTD Avg
Yr-to-Yr Chg
Crack
FX
W.C. Select
Heavy Oil
Heavy Oil
3-2-1 Gulf Coast
Nymex
Henry Hub
AECO C
AECO C
Nymex/AECO
FX
FX
@ Cushing (1)
Brent (1)
40º API (2)
20.5º API (2)
Differential
as a
Crack Spread (1)
Near Month (2)
Spot Gas
Spot Gas (2)
Spot Gas (2)
Differential
Rate (3)
Rate (3)
(US$/bbl)
26.07
30.99
41.47
56.71
66.25
72.36
99.67
61.83
79.51
95.11
94.19
97.97
100.18
102.31
106.21
103.34
94.55
82.41
87.92
94.16
94.65
89.57
86.76
88.26
94.73
95.35
93.16
92.07
94.77
95.80
104.55
106.54
106.30
100.55
93.85
97.95
94.99
100.66
100.51
102.14
101.91
105.15
102.46
96.08
93.17
84.34
78.14
96.32
97.97
-1.65
(US$/bbl)
24.97
28.87
38.32
54.51
65.42
72.71
97.64
61.82
79.63
111.08
111.96
108.84
110.99
119.70
124.93
120.59
110.52
95.59
103.14
113.34
113.38
111.97
109.71
109.64
112.93
116.46
109.24
102.88
103.03
103.11
107.72
110.96
111.62
109.48
108.08
110.63
107.57
108.81
107.41
107.88
109.68
111.87
106.98
101.92
97.34
87.27
82.65
102.67
108.68
-6.01
(C$/bbl)
40.20
43.39
52.85
69.17
73.25
76.99
102.66
66.36
77.58
95.37
86.43
93.44
97.53
94.99
87.88
84.30
87.31
81.18
76.43
83.13
91.27
92.45
86.46
74.21
88.00
88.25
89.93
91.56
95.60
92.26
105.88
105.43
103.48
94.70
82.04
84.10
90.11
106.17
104.24
103.70
107.27
109.20
100.66
96.83
97.29
86.22
78.05
98.16
94.29
3.87
(C$/bbl)
31.88*
32.38*
37.25*
43.83*
50.97
52.78
82.87
58.53
65.75
79.28
71.86
71.39
78.56
72.60
76.17
84.93
77.17
56.77
66.41
79.40
85.81
71.92
57.46
55.09
59.77
68.73
71.65
75.66
73.10
78.67
83.62
80.20
75.92
66.36
55.85
67.21
69.70
70.27
71.37
75.64
76.59
78.56
74.24
71.07
71.68
61.72
54.26
70.46
71.77
-1.31
(C$/bbl)
8.32
11.01
15.59
25.34
22.27
24.22
18.93
7.83
11.83
16.09
14.57
22.04
18.97
22.40
11.71
-0.63
10.14
24.40
10.02
3.72
5.46
20.53
29.01
19.13
28.23
19.51
18.29
15.90
22.50
13.60
22.26
25.23
27.57
28.34
26.19
16.89
20.42
35.90
32.88
28.06
30.68
30.63
26.42
25.76
25.61
24.50
23.79
27.70
22.51
5.18
% of Light
21%
25%
30%
37%
30%
31%
18%
12%
15%
17%
17%
24%
19%
24%
13%
-1%
12%
30%
13%
4%
6%
22%
34%
26%
32%
22%
20%
17%
24%
15%
21%
24%
27%
30%
32%
20%
23%
34%
32%
27%
29%
28%
26%
27%
26%
28%
30%
0.28
0.24
4%
(US$/bbl)
3.27
4.58
6.42
10.63
10.31
12.89
NA
6.69
7.36
22.44
26.32
17.78
18.66
25.78
26.51
27.81
23.47
24.33
24.88
30.87
33.97
31.86
25.40
22.24
21.88
30.68
28.63
21.62
19.06
17.65
14.56
14.34
7.92
9.27
14.07
13.72
16.76
13.31
14.74
16.13
14.93
14.39
11.35
15.20
16.04
10.07
11.03
14.00
18.15
-4.16
(US$/mmBtu)
3.36
5.49
6.18
9.01
6.98
7.12
8.89
4.16
4.40
4.03
2.83
3.73
2.72
2.53
2.30
2.05
2.50
2.50
2.96
2.81
2.91
3.50
3.70
3.44
3.36
3.31
3.78
4.16
4.08
3.81
3.64
3.41
3.62
3.65
3.65
4.28
4.53
5.17
4.49
4.61
4.53
4.59
4.04
3.90
3.93
3.80
4.19
4.34
3.68
0.66
(US$/mmBtu)
3.36
5.49
5.90
8.89
6.73
6.97
8.89
3.94
4.39
4.00
2.76
3.70
2.69
2.51
2.16
1.95
2.44
2.46
2.95
2.84
2.85
3.32
3.54
3.35
3.34
3.33
3.82
4.17
4.05
3.83
3.61
3.38
3.59
3.63
3.62
4.06
4.66
6.20
4.78
4.46
4.57
4.57
4.07
3.85
3.88
3.81
3.75
4.42
3.67
0.75
(C$/mcf)
4.10
6.68
6.59
8.81
6.53
6.46
8.20
3.99
4.01
3.63
2.39
3.18
2.51
2.13
1.80
1.66
2.07
1.98
2.35
2.21
2.33
3.08
3.37
3.15
3.04
3.08
3.47
3.68
3.62
3.32
2.85
2.41
2.07
3.28
3.42
3.89
4.34
7.25
5.15
4.77
4.60
4.73
4.13
3.99
4.01
3.70
3.57
4.57
3.11
1.45
(US$/mmBtu)
2.61
4.75
5.07
7.33
5.76
6.01
7.70
3.50
3.89
3.67
2.39
3.09
2.48
2.14
1.81
1.67
2.05
1.92
2.32
2.23
2.38
3.12
3.38
3.19
3.07
3.05
3.39
3.62
3.55
3.22
2.74
2.31
2.00
3.16
3.26
3.66
3.97
6.56
4.64
4.34
4.22
4.37
3.84
3.65
3.64
3.30
3.14
4.15
3.03
1.12
(US$/mmBtu)
0.75
0.72
1.08
1.74
1.22
1.10
1.19
0.66
0.51
0.36
0.43
0.64
0.24
0.39
0.48
0.38
0.45
0.58
0.64
0.58
0.53
0.37
0.32
0.25
0.29
0.26
0.40
0.55
0.53
0.59
0.91
1.10
1.62
0.49
0.39
0.63
0.56
-1.40
-0.15
0.28
0.31
0.23
0.20
0.25
0.29
0.50
1.06
0.19
0.65
-0.45
(US$/C$)
0.64
0.71
0.77
0.83
0.88
0.93
0.94
0.88
0.97
1.01
1.00
0.97
0.99
1.00
1.01
1.01
0.99
0.97
0.99
1.01
1.02
1.01
1.00
1.01
1.01
0.99
0.98
0.98
0.98
0.97
0.96
0.96
0.97
0.96
0.95
0.94
0.91
0.90
0.90
0.91
0.92
0.92
0.93
0.92
0.91
0.89
0.88
0.91
0.97
-0.07
(C$/US$)
1.57
1.40
1.30
1.21
1.13
1.07
1.06
1.14
1.03
0.99
1.00
1.03
1.01
1.00
0.99
0.99
1.01
1.03
1.01
0.99
0.98
0.99
1.00
0.99
0.99
1.01
1.02
1.02
1.02
1.03
1.04
1.04
1.04
1.04
1.05
1.06
1.09
1.11
1.11
1.10
1.09
1.08
1.07
1.09
1.10
1.12
1.14
1.10
1.03
0.07
Source: (1) U.S. Department of Energy; (2) Sproule; Bloomberg; (3) Bank of Canada; Scotiabank GBM.
21
Natural Gas
Cdn. Lt Sweet
Appendix A: Important Disclosures
Company
Africa Oil Corp.
ARC Resources Ltd.
Arcan Resources Ltd.
Argent Energy Trust
Baytex Energy Corporation
Bellatrix Exploration Ltd.
Birchcliff Energy Ltd.
BlackPearl Resources Inc.
Bonavista Energy Corporation
Bonterra Energy Corp.
Calvalley Petroleum Inc.
Canacol Energy Ltd.
Canadian Natural Resources Limited
Cardinal Energy Ltd.
Cenovus Energy Inc.
Crescent Point Energy Corp.
Crew Energy Inc.
Eagle Energy Trust
Encana Corporation
Freehold Royalties Ltd.
GeoPark Limited
Gran Tierra Energy Inc.
Husky Energy Inc.
Imperial Oil Limited
Kelt Exploration Ltd.
LGX Oil + Gas Inc.
Long Run Exploration Ltd.
MEG Energy Corp.
Niko Resources Ltd.
Northern Blizzard Resources Inc.
NuVista Energy Ltd.
Oryx Petroleum Corporation Limited
Pacific Rubiales Energy Corp.
Paramount Resources Ltd.
Parex Resources Inc.
Pengrowth Energy Corporation
Perpetual Energy Inc.
Peyto Exploration & Development Corp.
PrairieSky Royalty Ltd.
RMP Energy Inc.
ShaMaran Petroleum Corp.
Ticker
AOI
ARX
ARN
AET.UN
BTE
BXE
BIR
PXX
BNP
BNE
CVI.A
CNE
CNQ
CJ
CVE
CPG
CR
EGL.UN
ECA
FRU
GPRK
GTE
HSE
IMO
KEL
OIL
LRE
MEG
NKO
NBZ
NVA
OXC
PRE
POU
PXT
PGF
PMT
PEY
PSK
RMP
SNM
Disclosures (see legend below)*
VS99
T
I, U
I, VS27
G, I, N1, P, T, U
G, I, U, VS176
I
G, I, U
G, I, U
I
J
J
G, I, N1, U
G, I, U
I, S
G, I, U
I
T
S, U
G, I, U
G, I, U
T
G, I, N1, S, U
I, U, V48
G, I, U
S
G, I, U, V65, V71
G
P, T
G, I, U
G, I, U
G, I, U
J, P, T
G, U
T
VS28
G, U
G, I, U
G, I, U
G, I, U
T
Spartan Energy Corp.
Sunshine Oilsands Ltd.
Surge Energy Inc.
Talisman Energy Inc.
TORC Oil & Gas Ltd.
Tourmaline Oil Corp.
TransGlobe Energy Corporation
Trilogy Energy Corp.
Twin Butte Energy Ltd.
Vermilion Energy Inc.
WesternZagros Resources Ltd.
Whitecap Resources Inc.
SPE
SUO
SGY
TLM
TOG
TOU
TGL
TET
TBE
VET
WZR
WCP
G, I, U
G, I, N1, U
G, I, U, V61
I
I
G, I, U
I, P, U
I
G, I, U
P
P, T
G, I, U
The following analysts certify that (1) the views expressed in this report in connection with securities or issuers they analyze accurately reflect their personal views and (2) no part of their
compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by them in this report: William Lee, Gavin Wylie, Patrick Bryden, Cameron
Bean, and Jason Bouvier
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*
Legend
G
Scotia Capital (USA) Inc. or its affiliates has managed or co-managed a public offering in the past 12 months.
I
Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12 months.
J
Scotia Capital (USA) Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services in the next 3 months.
N1
Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months.
P
This issuer paid a portion of the travel-related expenses incurred by the Fundamental Research Analyst/Associate to visit material operations of this issuer.
S
Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and outstanding equity securities of this issuer.
T
The Fundamental Research Analyst/Associate has visited material operations of this issuer.
U
Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or debt securities of, or have provided advice
for a fee with respect to, this issuer.
V48
Scotia Waterous has been retained as exclusive financial advisor by Imperial Oil Resources Limited in the divestiture of various assets.
V61
Scotia Capital Inc. acted as financial advisor to Surge Energy Inc. with respect to an asset acquisition from Renegade Petroleum Ltd.
V65
Scotiabank has been retained as strategic advisor by Long Run Exploration Ltd. in its acquisition of assets from Crew Energy Ltd.
V71
Scotiabank acted as strategic advisor to Long Run Exploration Ltd on its acquisition of Crocotta Energy Inc.
VS176
Our Research Analyst visited Ferrier, a drilling site and compression station, on September 16, 2014. Full payment was received from the issuer for the travel-related
expenses incurred by the Research Analyst to visit this site.
VS27
Our Research Analyst visited Eagle Ford and Austin Chalk, exploration, development & production properties, on April 8-9, 2013. No payment was received from the issuer for
the travel-related expenses incurred by the Research Analyst to visit this site.
VS28
Our Research Analyst visited the Lindbergh, Alberta, SAGD Oil Sands Project, on July 30, 2013. Full payment was received from the issuer for the travel-related expenses
incurred by the Research Analyst to visit this site.
VS99
Our Research Analyst visited Block 10BB in Kenya, an exploration well, on October 2-4, 2012. Partial payment was received from the issuer for the travel-related expenses
incurred by the Research Analyst to visit this site.
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Risk Rankings
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The stock represents an analyst’s best idea(s); stocks in this category are expected to significantly outperform the average
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Sector Outperform (SO)
The stock is expected to outperform the average 12-month total return of the analyst’s coverage universe or an index
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Moderate financial and operational risk, moderate predictability of financial
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High financial and/or operational risk, low predictability of financial results,
high stock volatility.
Speculative
Exceptionally high financial and/or operational risk, exceptionally low predictability
of financial results, exceptionally high stock volatility. For risk-tolerant investors
only.
Scotiabank, Global Banking and Markets Equity Research Ratings Distribution*
Distribution by Ratings and Equity and Equity-Related Financings*
Percentage of companies covered by Scotiabank, Global Banking and Markets Equity Research
within each rating category.
Percentage of companies within each rating category for which Scotiabank, Global Banking and
Markets has undertaken an underwriting liability or has provided advice for a fee within the last 12
months.
Source: Scotiabank GBM.
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