global oil & gas weekly

Equity Research21 January 2014

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Investors should consider this report as only a single factor in making their investment decision.

This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA.

PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 49.

Global Oil & Gas Weekly

European seismic: down, but not out Over the past few weeks all of the European seismic companies under our coverage have announced an update, ranging from utilisation figures to a full corporate restructuring vision. What is clear to us from all of these is that the upwards progression of marine contract pricing has stalled and investors, we believe, are expecting a much flatter environment. It is also clear, however, that the industry has not lost control. Yes, more multi-client activity will enter the mix in low utilisation periods, but aggressive pre-funding levels have not materialised, and capacity is being removed where possible. Hence, while a flat outlook appears a sensible planning assumption in an insipid demand growth environment, what that will look like in a years time, in our view, is more likely to surprise on the upside than the downside. As a result, we believe the seismic industry is down, but not out. With the pure vessel plays PGS and Polarcus trading on 6-8x 2014F PE, we believe that the poor market is largely factored into valuations. It may take indications of a better late northern hemisphere summer season to catalyse share price performance, but with all companies showing strong earnings growth, despite a tepid current environment, we remain comfortable with recommending European seismic stocks. Our preferred play is PGS, whose unique vessels appear to us to offer an advantage and whose dividend yield could soon remind investors of its capital discipline. For Polarcus, we believe this is a company that has continued to do the right things and is undervalued. However, with a weak current market, we see covenants as tight again in 2014 and therefore downgrade the shares to Equal Weight. Our least preferred plays are CGG, which despite another restructuring programme is still expecting only to generate below average industry margins, and TGS, which after recent moves is fully factoring in its investment programme, in our opinion.

Market is not what it was: Post summer 2013 the indications coming out of the seismic market have become more tepid as some eagerly awaited large contracts got held up and winter demand, as has often happened in the past, began to wane. In addition, the oil industry is on what we view as a renewed health drive. Excess spending is being evaluated and, as has been the case in the past, the seismic industry is again in the firing line.

Longer-term thesis more in balance: Despite signs of waning demand in the short term, longer-term we see the shift of seismic into the production arena and the ever-increasing need for higher resolution as sustaining activity, and the need to unlock new basins to drive down unit development costs. To this point, we expect multiple new basins to open up over the coming years globally. This positive trend is currently, we believe, being swamped by small delays that can significantly impact quarterly numbers. These are very likely to be a continued feature for the industry, but we believe the general trend is in the right direction.

SECTOR UPDATE

European Integrated Oil Lydia Rainforth, CFA +44 (0)20 3134 6669 [email protected] Barclays, London

Joshua Stone +44 (0)20 3134 6694 [email protected] Barclays, London

Americas Integrated Oil Paul Y. Cheng, CFA 1.212.526.1884 [email protected] BCI, New York

North America Oil Services & Drilling James C. West 1.212.526.8796 [email protected] BCI, New York

European Oil Services & Drilling Mick Pickup +44 (0)20 3134 6695 [email protected] Barclays, London

European Oil & Gas: E&P Alessandro Pozzi +44 (0)20 7773 4745 [email protected] Barclays, London

CEEMEA Oil & Gas Matthew Thomas +44 (0)20 7773 3640 [email protected] Barclays, London

Asia ex-Japan Oil & Gas Somshankar Sinha +91 22 6719 6031 [email protected] BSIPL, Mumbai

Barclays | Global Oil & Gas Weekly

21 January 2014 2

Barclays Research Industries included in this report

Industry Industry view Author(s)

Americas Integrated Oil Positive Paul Cheng CFA

Asia ex-Japan Oil Positive Somshankar Sinha, Clement Chen

CEEMEA Oil Neutral Matt Thomas

European Integrated Oil Positive Lydia Rainforth CFA, Joshua Stone

European Exploration & Production Positive Alessandro Pozzi

European Oil Services & Drilling Positive Mick Pickup

European Refining & Marketing Negative Lydia Rainforth CFA, Joshua Stone

Russian Oil Services & Drilling Positive Mick Pickup

US Independent Refiners Positive Paul Cheng, CFA


21 January 2014 3

CONTENTS

CRUDE OIL AND NATURAL GAS PRICES .................................. 4

REFINING AND MARKETING MARGINS .................................... 5

TANKER AND EXCHANGE RATES............................................... 6

INVENTORIES ................................................................................... 7

CRACK SPREADS ............................................................................ 8

SHARE PRICE PERFORMANCE .................................................... 9 Valuations ........................................................................................................................... 11

REFINERS ........................................................................................ 17 Valuations ........................................................................................................................... 18 Share price performance ................................................................................................. 20

SERVICES ........................................................................................ 24 Valuations ........................................................................................................................... 25 Share price performance ................................................................................................. 27

E&PS ................................................................................................. 32 Valuations ........................................................................................................................... 33 Share price performance ................................................................................................. 35

GLOBAL EMERGING MARKET OILS ......................................... 41 Valuations ........................................................................................................................... 42 Share price performance ................................................................................................. 44

The data source for all charts and tables is Company data, Barclays Research, unless otherwise stated. Share prices are as of 17 January 2014 at market close, unless otherwise stated.

Source: Bloomberg, Barclays Research

Corporate Calendar

2014

January

21 Cairn Q4 2013 Trading UpdateBaker Hughes Q4 2013 Earnings ReleaseHalliburton Q4 2013 Earnings Release

27 Galp Energia Q4 2013 Trading Update

28 Chevron Q4 2013 Earnings Release

29 Repsol Exploration Day

30 Exxon Mobil Q4 2013 Earnings ReleaseHess Corp Q4 2013 Earnings ReleaseOMV Q4 2013 Trading UpdateRoyal Dutch Shell Q4 2013 Earnings Release

February

04 BG Group Q4 2013 Earnings ReleaseBP Q4 2013 Earnings ReleaseNeste Oil Q4 2013 Earnings ReleaseSuncor Energy Q4 2013 Earnings Release

05 Marathon Oil Corp Q4 2013 Earnings Release

06 SBM Offshore Q4 2013 Earnings ReleaseTGS Q4 2013 Earnings Release

07 Statoil Q4 2013 Earnings Release

10 Galp Energia Q4 2013 Earnings Release

12 Total SA Q4 2013 Earnings ReleaseTullow Oil PLC Q4 2013 Earnings Release


21 January 2014 4

Crude oil and natural gas prices

Henry Hub Rockies Russia UK-NBP Zee NE Asia LNG

Date Brent WTI ANS Kern River Dubai OPEC WTI-Maya Brent-Urals $/mBtu $/mBtu $/kcf p/therm p/therm $/mBtu

13-Jan-14 106.2 93.4 102.6 103.6 103.0 104.2 7.2 (0.3) 4.38 4.41 - 65.43 63.79 19.30

06-Jan-14 106.8 92.8 103.1 99.6 103.9 104.5 7.4 1.0 4.30 4.41 - 66.71 64.95 18.40

01-Jan-14 107.0 94.7 104.1 100.4 106.3 106.9 8.1 1.2 4.33 4.57 - 65.73 63.93 -

23-Dec-13 111.8 99.2 108.4 104.0 108.5 108.7 8.8 1.5 4.41 4.35 - 67.57 66.12 18.60

Jan-14 106.7 93.6 103.3 101.2 104.4 105.2 7.6 0.7 4.34 4.46 - 65.95 64.22 18.85

Dec-13 110.6 97.8 107.3 103.0 107.9 107.7 8.8 0.4 4.23 4.56 11.24 69.49 67.89 18.90

Nov-13 108.2 93.8 103.0 97.1 105.8 104.9 7.4 0.7 3.64 3.57 11.21 68.51 66.96 18.43

Oct-13 109.4 99.6 104.8 102.0 106.6 106.8 7.8 1.6 3.68 3.65 11.18 65.68 64.70 16.88

1Q 2014 106.7 93.6 103.3 101.2 104.4 105.2 7.6 0.7 4.34 4.46 - 65.95 64.22 18.85

4Q 2013 109.4 97.1 105.0 100.7 106.8 106.5 8.0 0.9 3.85 3.93 11.21 67.89 66.52 18.07

3Q 2013 110.0 105.6 111.0 109.8 106.0 106.7 6.5 (0.1) 3.81 3.40 11.22 65.06 64.96 15.65

2Q 2013 103.0 94.1 104.3 104.7 100.8 101.0 (3.8) 0.9 4.00 3.81 11.72 65.53 67.00 14.69

1Q 2013 112.8 94.3 110.4 113.9 108.0 109.4 (8.4) 2.1 3.50 3.50 12.30 74.27 71.44 17.95

4Q 2012 110.5 88.2 106.4 109.5 107.2 107.3 (5.0) 1.6 3.41 3.41 12.82 65.39 63.97 14.30

2014 106.7 93.6 103.3 101.2 104.4 105.2 7.6 0.7 4.34 4.46 - 65.95 64.22 18.85

2013 108.8 97.9 107.8 107.4 105.4 105.9 0.6 0.9 3.72 3.66 11.61 68.19 67.48 16.59

2012 112.1 94.3 110.9 111.9 109.1 109.6 (5.5) 1.7 2.75 2.68 12.87 59.56 59.32 15.14

2011 111.0 95.1 109.6 112.4 106.1 107.6 (3.6) 1.7 3.94 3.79 11.80 56.84 57.56 13.77

2010 79.7 79.5 78.9 82.8 78.1 77.5 9.2 1.4 4.37 3.94 9.77 42.52 43.06 11.13

2009 62.2 62.1 61.1 64.6 62.1 61.1 5.8 0.6 3.94 3.17 8.21 30.81 31.20 8.91

2008 97.2 99.1 97.9 91.5 93.2 93.5 15.5 3.3 8.82 6.30 10.98 58.11 58.99 11.42

2007 72.7 72.3 71.7 62.3 68.4 68.8 12.5 3.2 6.94 4.10 7.92 29.85 30.38 6.96

2006 65.8 66.2 63.6 55.1 61.6 61.0 15.1 4.9 6.75 5.27 7.19 40.20 43.33 6.46

2005 55.0 56.6 53.7 45.0 49.4 50.7 11.4 4.5 8.91 7.15 5.68 38.30 40.94 5.60

Source: Bloomberg, Datastream Source: Bloomberg, Natural Gas Week, European Gas Markets Source: WGI

Crude - $/blNatural gas


21 January 2014 5

Refining and marketing margins

Date NW Europe US Gulf US W. Coast Singapore Med Eur 6 France Germany Italy UK PADD1 PADD2 PADD3 PADD4 PADD5

13-Jan-14 (0.50) 10.99 3.80 6.09 (1.26) 19.48 14.83 15.51 26.98 13.97 14.86 9.11 5.54 24.02 13.10

06-Jan-14 (0.82) 11.34 4.79 5.56 (0.34) 18.89 14.33 16.44 26.16 11.87 15.75 7.52 5.88 22.56 10.73

01-Jan-14 1.02 8.87 6.10 5.72 1.43 - - - - - 11.69 6.48 2.96 18.44 0.41

23-Dec-13 (1.39) 8.75 6.78 4.26 (0.74) - - - - - 12.19 6.77 3.12 19.20 0.49

Jan-14 (0.10) 10.40 4.89 5.79 (0.06) 19.18 14.58 15.97 26.57 12.92 14.10 7.70 4.79 21.67 8.08

Dec-13 (1.33) 6.85 3.87 3.80 (1.69) 18.73 12.74 19.84 25.02 10.66 15.53 6.79 6.10 22.45 5.06

Nov-13 (1.71) 7.90 5.88 2.65 (1.68) 16.77 9.70 19.75 21.97 9.20 15.21 7.78 7.50 28.74 5.93

Oct-13 (1.30) 3.43 8.51 3.11 (0.22) 19.31 11.93 20.73 25.65 10.83 14.48 12.03 7.65 37.29 5.09

1Q 2014 (0.10) 10.40 4.89 5.79 (0.06) 19.18 14.58 15.97 26.57 12.92 14.10 7.70 4.79 21.67 8.08

4Q 2013 (1.45) 6.06 6.08 3.19 (1.20) 18.27 11.46 20.10 24.21 10.23 15.08 8.87 7.08 29.49 5.36

3Q 2013 0.13 3.75 9.37 4.84 -0.68 17.65 10.92 19.37 23.53 9.56 11.71 8.91 7.06 34.63 2.68

2Q 2013 1.28 11.27 13.63 7.35 1.60 18.52 14.14 20.76 22.46 11.98 12.41 20.09 9.87 37.73 4.29

1Q 2013 1.04 18.89 14.09 8.89 2.33 16.83 14.98 15.67 23.80 6.88 12.11 8.83 6.39 17.70 (2.76)

4Q 2012 1.57 19.37 12.34 7.24 2.18 18.55 12.21 20.36 25.68 13.65 18.51 13.37 10.54 37.63 9.46

2014 (0.10) 10.40 4.89 5.79 (0.06) 19.18 14.58 15.97 26.57 12.92 14.10 7.70 4.79 21.67 8.08

2013 0.28 9.95 10.86 6.10 0.52 17.80 12.80 18.99 23.48 9.64 12.83 11.57 7.60 29.82 2.29

2012 2.61 18.66 11.31 8.45 3.59 16.69 11.16 18.58 23.46 9.56 12.52 11.46 7.72 28.38 6.87

2011 0.22 15.02 6.91 8.49 1.33 17.74 14.18 14.27 27.47 9.01 11.65 11.46 8.57 17.26 7.08

2010 1.42 1.29 8.37 4.66 2.46 13.81 10.34 11.36 22.55 6.20 9.07 9.42 7.62 14.49 6.14

2009 1.53 1.68 10.34 3.15 2.95 8.03 7.68 9.22 11.91 3.32 8.26 7.55 6.85 9.02 1.41

2008 3.94 1.42 9.51 8.43 6.54 12.54 11.71 9.76 19.83 8.85 13.30 10.86 11.52 13.87 7.58

2007 2.63 5.72 17.56 6.65 6.08 9.32 7.87 8.10 14.90 6.39 10.56 11.35 8.99 13.02 2.39

2006 1.26 3.53 16.94 5.00 6.05 7.60 5.61 5.80 13.61 5.36 12.52 8.64 10.27 11.49 2.60

2005 2.90 4.62 14.16 6.39 6.40 6.55 4.32 3.01 10.87 4.17 9.08 7.16 8.16 8.73 2.64

Source: Bloomberg, Barclays Research Source: European Energy Commission, Barclays Research Source: Oil & Gas Journal, Bloomberg, Barclays Research

Refining margins - $/bl US gasoline marketing margins - $/blEuropean marketing margins - $/bl


21 January 2014 6

Tanker and exchange rates

Date Suezmax Aframax Clean Dirty EUR/USD GBP/USD GBP/EUR USD/NOK USD/CAD USD/AUS

13-Jan-14 81,960 73,170 35,756 11,083 1.36 1.64 1.20 6.14 1.09 1.12

06-Jan-14 73,201 44,471 28,325 11,517 1.36 1.64 1.21 6.18 1.08 1.12

01-Jan-14 56,081 46,048 23,718 11,038 1.37 1.65 1.20 6.10 1.06 1.12

23-Dec-13 56,362 50,033 21,008 12,614 1.37 1.64 1.20 6.14 1.06 1.12

Jan-14 70,414 54,563 29,266 11,213 1.36 1.64 1.21 6.15 1.08 1.12

Dec-13 50,323 34,560 13,400 12,860 1.37 1.64 1.20 6.14 1.06 1.11

Nov-13 15,335 10,789 6,828 9,939 1.35 1.61 1.19 6.10 1.05 1.07

Oct-13 7,783 12,778 9,189 9,375 1.36 1.61 1.18 5.95 1.04 1.05

1Q 2014 70,414 54,563 29,266 11,213 1.36 1.64 1.21 6.15 1.08 1.12

4Q 2013 23,777 18,715 9,576 10,664 1.36 1.62 1.19 6.06 1.05 1.08

3Q 2013 11,704 13,010 12,432 11,439 1.32 1.54 1.17 5.96 1.04 1.09

2Q 2013 12,134 11,765 11,833 12,983 1.31 1.53 1.18 5.84 1.02 1.01

1Q 2013 15,176 14,118 14,293 21,518 1.32 1.55 1.18 5.63 1.00 0.96

4Q 2012 11,577 13,954 15,610 15,348 1.30 1.61 1.24 5.68 0.99 0.96

2014 70,414 54,563 29,266 11,213 1.36 1.64 1.21 6.15 1.08 1.12

2013 15,698 14,402 12,033 14,151 1.33 1.56 1.18 5.87 1.03 1.03

2012 17,738 14,881 14,769 13,162 1.29 1.59 1.23 5.82 1.00 0.97

2011 19,239 13,528 10,535 12,644 1.39 1.60 1.15 5.61 0.99 0.97

2010 31,259 19,745 14,956 11,292 1.33 1.55 1.17 6.05 1.03 1.09

2009 28,205 15,969 12,738 8,869 1.39 1.57 1.12 6.29 1.14 1.28

2008 78,573 50,923 37,239 25,508 1.47 1.85 1.26 5.65 1.07 1.20

2007 44,781 35,865 30,533 26,018 1.37 2.00 1.46 5.86 1.07 1.19

2006 52,931 39,338 30,758 27,227 1.26 1.84 1.47 6.41 1.13 1.33

2005 53,579 41,650 37,639 31,145 1.24 1.82 1.46 6.44 1.21 1.31

Source: Clarksons Shipping Weekly Source: Datastream

Tanker rates - $/ship/day Exchange rates


21 January 2014 7

Inventories

US crude oil inventories, m bl US gasoline inventories, m bl US distillate inventories, m bl

240

280

320

360

400

440

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

7 Year Range 2013 2014Week

170

190

210

230

250

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


80

100

120

140

160

180

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


US total inventories, m bl US Refinery Utilisation, % Natural Gas Storage, bcf

800

900

1,000

1,100

1,200

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


65

75

85

95

105

Oct-01 Oct-03 Oct-05 Oct-07 Oct-09 Oct-11 Oct-13

Refinery utilisation Rolling 12 month average

1,000

2,000

3,000

4,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


Non-commercial Paper Positions, m bl Futures Curve - Brent, $/bl Baker Hughes US Rotary Rig Count

050

100150200250300350400

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

2013 2014Week

707580859095

100105110

Feb-14 Feb-15 Feb-16 Feb-17 Feb-18

Brent WTI

Source: Energy Information Administration (EIA), Commitments of Traders report - US CFTC, American Petroleum Institute (API), Bloomberg, Datastream, Barclays Research

0

400

800

1,200

1,600

2,000

Nov-05 Nov-07 Nov-09 Nov-11 Nov-13

Gas Rigs Oil Rigs


21 January 2014 8

Crack spreads

European Gasoline Brent Crack Spread, $/bl European Diesel Brent Crack Spread, $/bl European Naptha Brent Crack Spread, $/bl

-10

0

10

20

30

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 5210 Year Range 2013 2014Week

-10

0

10

20

30

40

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


-30

-20

-10

0

10

20

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


European Kerosene Brent Crack Spread, $/bl European LSFO Brent Crack Spread, $/bl European HSFO Brent Crack Spread, $/bl

-10

0

10

20

30

40

50

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


-50

-40

-30

-20

-10

0

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


-60

-50

-40

-30

-20

-10

0

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 5210 Year Range 2013 2014Week

Brent-Urals Crude Spread, $/bl Brent-WTI Spread, $/bl Brent Spot Price $/bl

-5

-3

-1

1

3

5

7

9

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

-10

0

10

20

30


30

60

90

120

150


Source: Energy Information Administration (EIA), Commitments of Traders report - US CFTC, American Petroleum Institute (API), Bloomberg, Datastream, Barclays Research


21 January 2014 9

Share price performance

European Integrateds vs European Market European Services vs European Market European Refiners vs European Market

80

85

90

95

100

105

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14

6065707580859095

100105


75

80

85

90

95

100

105


European E&P vs European Market European Integrateds vs European Services European Integrateds vs European Refiners

70

75

80

85

90

95

100

105


85

95

105

115

125

135

145


60

70

80

90

100

110

120


European Integrateds vs European E&P European Services vs European Refiners European Services vs European E&P

85

90

95

100

105

110

115


50

60

70

80

90

100

110


70

75

80

85

90

95

100

105


Source: Datastream, Barclays Research. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage. Source: Datastream, Barclays Research. Relative calculations use the FTSE 300 Integrated Sector (Euro) for the European companies and the S&P500 Integrated Sector (US) for the US companies.


21 January 2014 10

Integrateds


21 January 2014 11

Valuations IntegratedsChange in

Price Target Up/(Down) cons in

Company Rating 17-Jan Price side, % 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F EPS EPS last mnth

MajorsBP U/W 491 550 12 6.3 5.6 5.4 11.0 9.6 9.4 0.3 2.6 2.9 4.8 5.1 5.3 9.1 9.4 9.4 51.2 53.4 -1

Chevron* E/W 119 145 22 6.7 6.9 6.9 10.7 11.6 12.0 (2.4) (0.1) (0.3) 3.3 3.6 3.9 15.5 11.0 11.0 10.3 11.6 -4

ExxonMobil* E/W 99.2 102.0 3 9.4 9.1 9.6 13.4 13.3 14.7 2.9 4.0 3.3 2.5 2.8 3.0 18.6 14.1 14.1 7.5 7.9 -1

Royal Dutch Shell A O/W 2175 2660 22 6.4 6.0 5.9 11.4 9.4 9.4 3.7 4.6 4.7 5.2 5.5 5.7 10.1 10.9 10.9 3.8 3.8 -1

Royal Dutch Shell B O/W 2280 2660 17 6.6 6.3 6.1 12.0 9.9 9.8 3.5 4.4 4.4 5.0 5.3 5.5 10.1 10.9 10.9 3.8 3.8 -4

Total E/W 44.1 55.0 25 5.2 4.8 4.6 9.3 9.3 9.2 (0.8) 3.0 4.6 5.4 5.6 5.7 12.1 11.1 11.1 4.7 5.0 -3

Arithmetic average 17 6.8 6.5 6.4 11.3 10.5 10.8 1.2 3.1 3.3 4.4 4.6 4.9 12.6 11.2 11.2 -2

Integrated - EuropeBG Group E/W 1345 1500 12 10.1 10.2 8.2 16.8 16.5 12.6 (6.0) (5.7) 0.3 1.4 1.5 1.6 9.5 10.0 10.0 81.7 86.4 -2

Eni O/W 17.2 23.5 36 5.1 4.5 4.0 13.2 11.0 9.0 (0.1) 4.3 7.1 6.4 6.6 6.7 6.0 9.2 9.2 1.6 1.6 -5

Galp O/W 12.0 17.0 42 13.4 14.5 12.1 35.9 31.4 23.6 (4.7) (6.5) (4.2) 2.4 2.9 3.5 4.8 6.0 6.0 0.4 0.5 -2

MOL U/W 14300 15500 8 5.3 5.8 5.2 10.4 10.7 9.3 12.6 4.2 7.4 2.9 2.8 3.2 7.3 6.7 6.7 1334 1658 -15

OMV U/W 35.3 38.0 8 4.9 4.6 4.6 9.2 9.1 9.0 10.0 (2.4) (0.2) 3.5 3.7 3.8 9.8 8.0 8.0 3.9 4.2 -2

Repsol E/W 19.0 23.0 21 6.4 6.1 5.7 17.3 15.1 13.1 0.7 3.6 4.6 5.3 5.3 5.3 6.0 7.5 7.5 1.3 1.5 -3

Statoil O/W 152.7 175.0 15 4.4 4.2 4.2 10.1 11.1 11.1 0.2 0.4 0.2 4.6 4.7 4.9 13.2 10.0 10.0 13.8 15.3 0

Arithmetic average 20 7.1 7.1 6.3 16.1 15.0 12.5 1.8 (0.3) 2.2 3.8 3.9 4.2 8.1 8.2 8.2 -4

Integrated - US*ConocoPhillips O/W 67.5 83.0 23 6.5 6.7 6.6 11.9 12.3 11.6 (0.5) (1.8) (2.1) 4.0 4.1 4.2 11.1 10.1 10.1 5.5 6.1 -4

Hess O/W 77.1 90.0 17 6.2 7.0 6.3 13.7 20.0 17.0 (3.9) (0.9) 1.0 0.9 1.3 1.3 7.4 5.7 5.7 3.9 5.3 -8

Murphy E/W 62.8 69.0 10 5.5 5.1 4.9 13.8 12.9 12.7 (6) (5.5) (1.7) 2.0 2.0 2.0 8.5 7.5 7.5 4.9 6.1 -6

Arithmetic average 17 6.0 6.1 5.8 12.8 14.9 13.8 (2.5) (2.1) (0.5) 2.2 2.3 2.4 9.0 7.6 7.6 -5

The price targets for the European companies are based on a sum-of-the-parts based DCF methodology. For the US they are based on return on market capitalisation under mid-cycle assumptions.

P/E, x Dividend yield, % RoACE, %FCF yield, %Barclays

2013Cons 2014

Source: Company data, Datastream, Barclays Research. * Chevron, Exxon Mobil and the US Integrateds are covered by Barclays Integrated oil research team, headed by Paul Cheng, in New York. The forecasts for these companies are based on assumptions which are aligned but may sometimes differ from those used for the European companies.

EV:EBIDA, x


21 January 2014 12

Valuations Integrateds

EV:EBIDA, x P/E, x Dividend yield, %

0

5

10

15

20

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

EV/EBIDA 2014 Average

05

101520253035

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

P/E 2014 Average

01234567

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

Dividend Yield, % 2014 Average

Free cash flow yield, % RoACE, % Gearing - Net Debt to Equity, %

-5

0

5

10

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

FCF Yield, % 2014 Average

0

5

10

15

20

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

RoACE, % 2014 Average

0102030405060

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

2013 2014

Datastream consensus e relative to Barclays EPS, % Dollar EPS change y/y, % EV/b, $

-10

-8

-6

-4

-2

0

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

Cons vs BC EPS (%) 2014 Average

-0.40-0.30-0.20-0.100.000.100.200.30

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

EPS Growth 2014 Average

0

5

10

15

20

25

B

P

C

V

X

X

O

M

R

D

S

T

O

T

B

G

E

N

I

G

a

l

p

M

O

L

O

M

V

R

E

P

S

T

L

C

O

P

H

E

S

M

U

R

EV: 2P reserves 2014 Average

Source: Datastream, Barclays Research estimates


21 January 2014 13

Share price performance Integrateds

Change in USD share price over last week, % Change in USD share price over last month, % Change in USD share price over last three months, %

-3 -2 -1 0 1 2 3

MOLOMV

ENIBP

RDSACOP

GALPREPSTL

CVXXOMTOT

BG

-6 -4 -2 0 2 4 6 8 10

MOLCOPCVX

XOMGALP

TOTENI

OMVRDSA

REPBP

STLBG

-10 -5 0 5 10 15

COPGALPMOL

ENITOT

OMVCVXREPSTL

RDSABGBP

XOM

Change in USD share price over last year, % European Integrateds vs Brent European Integrateds vs US Integrateds

-30 -20 -10 0 10 20 30

MOLENISTL

GALPRDSA

CVXBP

XOMTOTCOPREP

OMVBG

80

85

90

95

100

105

110

115


85

90

95

100

105


BP vs European Integrateds Chevron vs US Integrateds ConocoPhillips vs US Integrateds

400

420

440

460

480

500

520

90

95

100

105

110


BP vs Sector BP, p

100

105

110

115

120

125

130

90

95

100

105

110

115


CVX vs Sector CVX, $

50

55

60

65

70

75

80

90

95

100

105

110

115

120

125


COP vs Sector COP, $

Source: Datastream, Barclays Research. Relative calculations use the FTSE 300 Integrated Sector (Euro) for the European companies and the S&P500 Integrated Sector (US) for the US companies.


21 January 2014 14


Exxon Mobil vs US Integrateds Royal Dutch Shell A vs Royal Dutch Shell B Royal Dutch Shell A vs European Integrateds

80

85

90

95

100

105

90

94

98

102

106

110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14XOM vs Sector XOM, $

96

97

98

99

100

101

102


2000

2250

2500

2750

3000

85

88

91

94

97

100

103

106

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14RDSA vs Sector RDSA, p

Total vs European Integrateds BG Group vs European Integrateds Eni vs European Integrateds

34

36

38

40

42

44

46

85

90

95

100

105

110

115

120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14TOT vs Sector TOT, E

900

1000

1100

1200

1300

1400

70

80

90

100

110

120

130

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14BG vs Sector BG, p

14

15

16

17

18

19

20

80

85

90

95

100

105

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14ENI vs Sector ENI, E

Galp vs European Integrateds Repsol vs European Integrateds Statoil vs European Integrateds

101111121213131414

80

85

90

95

100

105

110

115

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14GALP vs Sector GALP, E

121314151617181920

90

95

100

105

110

115

120

125

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14REP vs Sector REP, E

110

120

130

140

150

160

80

85

90

95

100

105

110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14STL vs Sector STL, NOK

Source: Datastream, Barclays Research. Relative calculations use the FTSE 300 Integrated Sector (Euro) for the European companies and the S&P500 Integrated Sector (US) for the US companies.


21 January 2014 15


BP vs Total BP vs Shell Total vs Eni

80

85

90

95

100

105

110


80

85

90

95

100

105

110

115


80

90

100

110

120

130


Total vs Shell BG vs Statoil Eni vs Repsol

70

80

90

100

110

120

130


60

70

80

90

100

110

120

130


60

70

80

90

100

110


OMV vs Repsol BG vs Eni Eni vs Statoil

60

70

80

90

100

110

120

130


50

70

90

110

130

150


70

80

90

100

110

120


Source: Datastream, Barclays Research


21 January 2014 16

Share price performance Integrateds Local Price

17-Jan -1d -5d -10d -30d MTD QTD YTD 4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 12

Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9Hang Seng 23133 0.6 1.3 1.4 -2.6 -0.8 -0.8 -0.8 2.0 9.9 -6.6 -1.7 8.8 4.1

Integrated - MajorsBP 491 0.9 -1.4 0.7 3.4 -0.1 -0.1 -0.1 15.4 0.6 -1.4 1.1 -2.5 42.2Chevron 119 0.4 -1.4 -4.1 -2.5 -4.5 -4.5 -4.5 3.0 2.0 -1.1 9.9 -7.8 72.7ExxonMobil 99.2 0.2 -1.4 -0.4 3.7 -2.0 -2.0 -2.0 17.7 -4.7 -0.5 4.1 -5.7 61.5Royal Dutch Shell A 26.4 -0.4 -0.8 0.7 5.8 0.1 0.1 0.1 9.0 3.1 -1.4 -5.5 -1.9 40.7Royal Dutch Shell B 2280 -0.5 -1.5 0.4 6.3 -0.7 -0.7 -0.7 10.1 3.9 -0.8 -6.2 -1.5 51.1Total 44.1 0.6 0.3 0.1 1.8 -2.6 -2.6 -2.6 5.1 18.8 1.6 -6.7 1.5 11.1Arithmetic Average 0.2 -1.0 -0.4 3.1 -1.6 -1.6 -1.6 10.0 3.9 -0.6 -0.6 -3.0 46.6

Integrated - EuropeBG Group 1345 0.1 1.7 3.7 10.4 2.9 2.9 2.9 12.8 11.1 -1.4 4.2 -20.3 33.3Eni 17.2 -0.4 -1.8 -1.8 0.3 -3.1 -3.1 -3.1 3.1 10.2 -8.9 -6.9 8.1 19.5Galp 12.0 1.2 -0.4 0.7 2.2 -0.9 -0.9 -0.9 -3.0 9.9 -5.8 1.2 -6.4 6.9OMV 35.3 -2.5 -1.0 1.7 1.3 -0.2 -0.2 -0.2 -2.6 4.4 5.8 18.1 1.6 16.9Repsol 19.0 -0.5 -0.4 4.6 6.4 2.1 2.1 2.1 3.1 18.1 3.5 0.7 7.9 -1.5Statoil 153 -1.0 0.4 3.8 9.2 2.3 2.3 2.3 7.5 8.7 -15.5 -3.1 -3.9 37.4Arithmetic Average -0.5 -0.3 2.1 5.0 0.5 0.5 0.5 3.5 10.4 -3.7 2.4 -2.2 18.8

Integrated - USConocoPhillips 67.5 -0.5 -2.0 -3.5 -4.6 -4.4 -4.4 -4.4 0.9 13.5 0.0 3.6 1.0 53.5Cenovus Energy 29.5 -0.3 -1.7 -4.4 -7.9 -5.8 -5.8 -5.8 -4.1 4.7 -8.8 -7.4 -5.2 35.4Hess 77.1 -0.8 -4.7 -3.9 -4.6 -7.1 -7.1 -7.1 5.5 15.9 -9.6 35.2 -1.8 7.5Husky Energy 33.3 -0.2 -0.8 -2.9 6.2 -4.2 -4.2 -4.2 10.5 8.0 -7.2 -2.8 8.1 13.2Imperial Oil 46.0 -0.1 -0.7 -4.0 -4.4 -5.1 -5.1 -5.1 1.4 15.1 -6.6 -4.8 -7.7 26.2Murphy 62.8 0.4 -0.3 -0.8 -1.8 -3.3 -3.3 -3.3 6.6 14.2 -3.8 7.0 8.3 9.7Suncor 37.4 -0.7 -1.8 -0.9 1.6 -2.6 -2.6 -2.6 -2.6 21.4 -3.1 -8.8 -1.3 11.6Arithmetic Average -0.3 -1.7 -2.9 -2.2 -4.6 -4.6 -4.6 2.6 13.3 -5.6 3.2 0.2 22.4

Source: Datastream, Barclays Research. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for

companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted

average for our coverage.


21 January 2014 17

Refiners


21 January 2014 18

Valuations RefinersChange in



Refiners - EuropeEssar Energy E/W 69 70 2 25.6 15.3 8.4 29.4 4.5 3.1 (59) (16.9) 17.9 0.0 2.2 3.2 4.2 6.6 6.6 15.29 18.96 -

Hellenic E/W 7.53 9.00 20 8.2 7.1 6.5 13.5 9.2 8.4 8.6 12.7 13.7 6.0 6.0 6.0 5.9 7.8 7.8 0.82 0.40 -44

Grupa Lotos E/W 35.5 34.0 (4) 9.3 8.4 8.6 14.5 10.5 11.7 3.8 6.0 5.0 0.0 0.0 0.0 3.3 3.6 3.6 3.38 4.40 4

Motor Oil O/W 8.92 9.50 7 8.7 6.9 6.7 13.3 8.8 9.4 12.6 16.4 15.7 5.6 5.6 5.6 7.9 10.7 10.7 1.02 1.00 -5

Neste Oil U/W 14.17 15.5 9 6.2 6.4 5.8 8.8 11.3 11.0 13.1 9.8 10.7 2.9 3.2 3.2 10.0 7.4 7.4 1.25 1.29 -8

PKN Orlen U/W 42.1 40.0 (5) 6.0 5.2 4.2 14.8 11.8 9.2 7.7 10.1 13.3 0.0 0.0 0.0 5.3 6.8 6.8 3.57 3.47 -13

Saras U/W 0.87 1.00 16 5.1 3.8 3.3 (86) 35 36.0 8.2 14.6 14.5 0.0 0.0 0.0 9.6 2.9 2.9 0.03 0.02 -95

Tupras U/W 42.5 42.8 1 8.2 7.8 7.3 7.4 7.1 8.5 (26) 3.1 7.7 8.8 9.5 9.9 18.9 16.9 14.0 6.01 4.83 3

Arithmetic average 6 9.7 7.6 6.4 2.0 12.2 12.1 (3.9) 7.0 12.3 2.9 3.3 3.5 8.1 7.8 7.5 -27

Refiners - US*Alon USA Energy U/W 15.9 14.0 (12) 13.4 6.9 9.7 45.4 12.7 26.5 1.8 8.9 5.5 2.4 1.9 2.9 3.9 5.2 5.2 1.25 0.94 371

Delek US Holdings O/W 32.1 35.0 9 7.9 7.5 8.2 14.6 14.0 15.7 (6.2) 2.8 0.2 2.3 2.3 3.0 16.3 11.7 11.7 2.30 2.55 28

Tesoro O/W 52.6 110 109 8.0 5.4 5.0 17.2 9.1 7.6 4 4.8 3.5 1.7 2.5 3.2 10.5 17.2 17.2 5.80 6.08 9

Valero O/W 51.4 64.0 24 8.1 5.5 5.6 13.9 8.1 9.0 4.4 8.3 7.1 1.7 1.9 2.3 9.5 12.7 12.7 6.35 5.60 24

Arithmetic average 33 9.4 6.3 7.1 22.8 11.0 14.7 0.9 6.2 4.1 2.0 2.2 2.9 10.1 11.7 11.7 108

The price targets for the European companies are based on a sum-of-the-parts based DCF methodology. For the US they are based on an assumed discount to the estimated greenfield replacement value.

Source: Company data, Datastream, Barclays Research. *The US Refiners are covered by Barclays Integrated oil research team, headed by Paul Cheng, in New York.

Dividend yield, %EV:EBIDA, x P/E, x FCF yield, %Barclays

2014Cons 2014

RoACE, %


21 January 2014 19

Valuations Refiners


0

5

10

15

20

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O


0

5

10

15

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O

P/E 2014 Average

0

2

4

6

8

10

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O



-20

-10

0

10

20

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O


0

5

10

15

20

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O


-500

50100150200250300350

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O

2013 2014

Datastream consensus e relative to Barclays EPS, % Dollar EPS change y/y, % EV: Capital employed, x

-200

20406080

100120

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O


-100%

-50%

0%

50%

100%

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O


0.0

0.5

1.0

1.5

2.0

E

S

S

R

H

E

P

L

O

T

M

O

H

N

E

S

T

O

R

L

P

K

N

S

R

S

T

U

P

A

L

J

D

K

T

S

O

V

L

O

EV/Capital Employed 2014 Average

Source: Datastream, Barclays estimates


21 January 2014 20

Share price performance Refiners


-4 -3 -2 -1 0 1

NES1VORL

ELPEPKN

SectorESSR

TUPRSLTSSRS

MOHBrent

-10 -5 0 5

TUPRSELPEESSRORL

BrentSector

LTSPKN

NES1VMOH

SRS

-50 -40 -30 -20 -10 0 10 20

ESSRELPE

TUPRSNES1V

SRSSector

PKNLTS

BrentMOHORL

Change in USD share price over last year, % European Refiners vs Brent European Refiners vs US Refiners

-60 -40 -20 0 20 40

ESSRTUPRS

ORLPKNSRSLTS

SectorELPEBrentMOH

NES1V

707580859095

100105110115


60

70

80

90

100

110

120

130


Essar vs European Refiners Hellenic Petroleum vs European Refiners Lotos Group vs European Refiners

50

70

90

110

130

150

170

405060708090

100110120130

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14ESSAR vs Sector ESSR, p

2345678910

5060708090

100110120130

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14ELPE vs Sector ELPE, E

20

25

30

35

40

45

50

80

85

90

95

100

105

110

115

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14LTS vs Sector LTS, PLN

Source: Datastream, Barclays Research. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage.


21 January 2014 21


Motor Oil vs European Refiners Neste Oil vs European Refiners ORL vs European Refiners

2

4

6

8

10

50

70

90

110

130

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14MOH vs Sector MOH, E

4

8

12

16

20

60708090

100110120130140150160170

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14NES1V vs Sector NES1V, E

80

100

120

140

160

180

200

40

50

60

70

80

90

100

110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14ORL vs Sector ORL, ILS

PKN Orlen vs European Refiners Saras vs European Refiners Tupras vs European Refiners

25

35

45

55

65

60

70

80

90

100

110

120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14PKN vs Sector PKN, PLN

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

60

70

80

90

100

110

120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SRS vs Sector SRS, E

202530354045505560

60

70

80

90

100

110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14Tupras vs Sector TUPRS, TRY

Source: Datastream, Barclays Research. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage.


21 January 2014 22


PKN Orlen vs Lotos Group Saras vs Motor Oil Saras vs Neste

60

70

80

90

100

110

120


40

60

80

100

120

140


50

60

70

80

90

100

110

120


Neste vs Tupras Tupras vs Saras Hellenic vs Motor Oil

60

80

100

120

140

160

180

200

220


60

70

80

90

100

110

120

130


70

80

90

100

110

120

130

140

150


Essar vs Neste

10

30

50

70

90

110

130


Source: Datastream, Barclays.


21 January 2014 23

Share price performance RefinersLocal Price


Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9Refiners - EuropeEssar Energy 69 2.3 -1.5 -4.8 -7.3 -6.2 -6.2 -6.2 -42.4 6.3 -6.9 7.9 1.2 -73.5Hellenic 7.53 0.1 -6.4 -3.9 -10.1 -2.3 -2.3 -2.3 0.6 14.1 -5.0 -1.4 18.1 13.8Grupa Lotos 35.5 -0.3 2.0 -1.9 -5.4 -1.6 -1.6 -1.6 -1.1 6.6 -14.3 -5.5 32.0 15.7MOL 14300 -1.8 -1.6 -2.2 3.1 -4.0 -4.0 -4.0 -8.1 -2.7 5.9 -12.4 -4.6 -1.5Motor Oil 8.92 0.1 1.6 6.5 1.0 6.8 6.8 6.8 9.2 10.2 -2.4 -11.1 36.7 -12.5Neste Oil 14.17 -2.6 -4.5 -4.3 3.8 -3.0 -3.0 -3.0 -10.4 48.7 3.4 9.7 -3.9 -9.3ORL 1.08 -0.5 -3.1 -0.3 -7.8 -4.2 -4.2 -4.2 -8.1 -14.1 -15.6 -2.0 32.0 -4.7PKN Orlen 42.1 -1.3 -1.1 -1.2 -7.7 0.9 0.9 0.9 -5.8 -1.5 -11.5 -1.2 11.9 33.6Saras 0.87 0.1 -1.5 -1.9 -0.1 2.4 2.4 2.4 -7.7 -1.7 6.4 -6.8 -3.1 -38.8Tupras 42.5 -1.7 0.0 0.6 -14.2 -4.1 -4.1 -4.1 -7.2 -12.7 -19.8 5.3 25.7 23.6Arithmetic Average -0.6 -1.6 -1.4 -4.5 -1.5 -1.5 -1.5 -8.1 5.3 -6.0 -1.8 14.6 -5.4

Refiners - USAlon 15.9 0.3 -4.4 -3.2 14.1 -3.9 -3.9 -3.9 62.3 -27.4 -23.0 5.3 28.8 127.2Delek 32.1 -0.4 -3.9 -3.2 7.1 -6.6 -6.6 -6.6 61.9 -24.8 -27.1 55.8 -2.5 247.7HollyFrontier 48.0 1.1 -3.6 -2.8 2.3 -3.4 -3.4 -3.4 18.8 3.4 -16.7 10.5 12.2 220.9Marathon Petroleum 85.3 -0.5 -6.3 -3.4 -2.2 -7.0 -7.0 -7.0 42.7 -8.6 -20.9 42.2 13.8 NASunCoke Energy 21.4 0.0 -0.7 -4.3 -2.7 -6.1 -6.1 -6.1 32.9 21.1 -12.0 4.7 -6.5 NATesoro 52.6 -0.3 -8.6 -8.0 -8.9 -10.1 -10.1 -10.1 35.7 -15.3 -8.0 32.9 2.4 278.8Valero 51.4 1.1 -3.4 4.2 10.4 2.0 2.0 2.0 48.9 -0.3 -15.4 33.3 6.2 83.5Arithmetic Average 0.2 -4.4 -3.0 2.9 -5.0 -5.0 -5.0 43.3 -7.4 -17.6 26.4 7.8 191.7

Source: Datastream, Barclays Research. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies

under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage.


21 January 2014 24

Services


21 January 2014 25

Valuations ServicesChange in



Services - EuropeAker Solutions U/W 103 106 3 9.8 8.1 7.8 21.7 12.3 9.9 (6.5) 8.5 9.7 3.9 4.1 4.5 7.9 11.1 13.7 8.36 8.51 -6

CGG Veritas U/W 12.3 15.0 22 20.6 16.2 12.5 20.7 12.9 9.5 (31) (18.3) (12.5) 0.0 0.0 0.0 3.9 4.7 5.6 0.95 0.98 -20

Hunting O/W 755 1100 46 10.0 8.3 7.1 12.6 10.4 9.2 3.3 7.1 10.0 2.6 3.2 3.6 8.8 10.4 11.7 72.25 65.43 -2

Maire Tecnimont O/W 1.82 2.00 10 13.6 9.9 6.1 21.1 9.5 6.2 (54.1) 4.2 19.2 0.0 3.2 4.8 8.0 12.2 12.2 0.19 0.11 0

Petrofac U/W 1263 1655 31 9.5 7.7 7.0 10.2 8.8 8.0 (2.7) (0.0) 2.4 3.5 4.2 4.6 29.1 26.0 23.0 2.34 1.99 -10PGS O/W 73.0 93 27 7.9 6.6 5.7 10.9 8.1 6.4 (6.8) (0.2) 0.7 4.2 4.6 5.5 8.7 10.2 11.3 1.47 1.43 -8

Polarcus E/W 4.51 6.2 37 5.4 5.1 4.4 10.5 6.1 3.9 1.1 3.2 6.5 0.0 0.0 0.0 0.5 0.5 0.4 0.12 0.12 -15

Saipem O/W 17.3 20.0 15 17.5 9.6 6.3 (23) 20.4 9.3 (3.9) 9.8 16.1 0.0 1.6 3.6 0.2 4.9 9.1 0.85 1.02 -15

SBM Offshore O/W 15.5 19.3 24 12.4 7.2 5.8 12.7 7.5 5.4 (21) (5.1) (3.1) 0.0 4.0 5.6 9.8 12.6 14.8 2.06 1.88 -1

Subsea 7 O/W 119 190 59 9.5 5.9 4.8 21.3 9.7 8.1 1.3 8.5 10.0 1.5 3.3 4.0 4.8 9.8 11.4 1.58 1.96 0

Technip O/W 66.9 100 49 7.3 5.7 4.8 12.2 9.7 8.6 7.2 8.9 10.9 2.8 3.4 3.7 11.2 13.6 14.8 6.93 5.11 -14Tecnicas Reunidas E/W 40.8 49 20 13.4 10.6 7.0 15.3 12.9 11.7 7.2 9.5 9.8 3.6 4.3 4.7 27.1 28.5 27.1 3.16 2.75 0

TGS U/W 170 180 6 4.3 4.0 3.7 10.9 10.7 9.9 4.6 6.6 6.9 5.3 5.4 5.1 21.4 19.6 19.4 2.58 2.55 -1

Wood Group O/W 660 1025 55 9.9 8.4 6.9 10.2 9.4 8.3 6.0 9.4 10.3 1.8 2.1 2.3 14.3 14.9 16.0 0.71 0.64 -3

Arithmetic average 29 10.8 8.2 6.5 12.0 10.6 8.2 (5.9) 4.1 7.2 2.2 3.2 3.8 11.7 13.3 14.1 -6Source: Company data, Datastream, Barclays Research - Price targets are based on a sum-of-the-parts based DCF methodology.

EV:EBIDA, x P/E, x FCF yield, % Dividend yield, % RoACE, %Barclays

2014Cons 2014


21 January 2014 26

Valuations Services


-10-505

1015

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P/E 2014 Average

0123456

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2013 2014

Datastream consensus e relative to Barclays EPS, % Dollar EPS change y/y, % EV:Capital Employed, x

-20

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EV/Capital Employed 2014 Average

Source: Datastream, Barclays Research estimates


21 January 2014 27

Share price performance Services


-6 -4 -2 0 2 4 6

AMCTEC

CGGAKSO

HTGPGSSUB

SectorSBMOBrent

TREPFCWG

SPMMT

-5 0 5 10 15 20

BrentWG

AMCAKSO

HTGCGGTEC

SectorTRE

SBMOSUBMT

PGSSPMPFC

-30 -20 -10 0 10 20 30

TECCGGWGSUBPFC

SectorHTGAMC

SBMOBrent

PGSTRE

SPMMT

AKSO

Change in USD share price over last year, % European Services vs US Services Amec vs European Services

-60 -40 -20 0 20 40 60

SPMCGGPGS

AKSOSector

PFCSUBTECWG

HTGBrentAMCTREMT

SBMO

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110


700

900

1100

1300

708090

100110120130140150

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14AMEC vs Sector AMEC, p

Aker Solutions vs European Services CGG Veritas vs European Services Maire Tecnimont vs European Services

405060708090100110120130

707580859095

100105110115

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14AKSO vs Sector AKSO, NOK

8

12

16

20

24

28

32

65

75

85

95

105

115

125

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14CGG vs Sector CGG, E

0.0

0.5

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10

60

110

160

210

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14MT vs Sector MT, E

Source: Datastream, Barclays Research. Relative calculations use the Barclays Oil Services Index calculated as a market capitalisation weighted average for companies under coverage


21 January 2014 28


Petrofac vs European Services PGS vs European Services Saipem vs European Services

100011001200130014001500160017001800

60

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110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14PFC vs Sector PFC, p

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100

110

60

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100

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120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14PGS vs Sector PGS, NOK

10

15

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25

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35

10

30

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70

90

110

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SPM vs Sector SPM, E

SBM Offshore vs European Services Subsea 7 vs European Services Technip vs European Services

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406080

100120140160180200220

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SBMO vs Sector SBMO, E

80

100

120

140

160

80859095

100105110115120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SUB vs Sector SUB, NOK

60

65

70

75

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85

90

95

80

90

100

110

120

130

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Jan-13 Apr-13 Jul-13 Oct-13 Jan-14TEC vs Sector TEC, E

Tecnicas Reunidas vs European Services Wood Group vs European Services

30

32

34

36

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8090

100110120130140150160

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14TRE vs Sector TRE, E

600

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700

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800

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900

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80

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100

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140

150

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14WG vs Sector WG, p

Source: Datastream, Barclays Research. Relative calculations use the Barclays Oil Services Index calculated as a market capitalisation weighted average for companies under coverage.


21 January 2014 29


Amec vs Wood Group Saipem vs Technip Petrofac vs Wood Group

70

80

90

100

110

120

130


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90

100

110


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90

100

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Maire Tecnimont vs Tecnicas Reunidas PGS vs CGG Veritas Petrofac vs Maire Tecnimont

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30

50

70

90

110

130

150

170


70

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90

100

110

120

130

140


30

50

70

90

110

130

150

170


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50

60

70

80

90

100

110


70

120

170

220

270


70

75

80

85

90

95

100

105

110


Source: Datastream, Barclays Research.


21 January 2014 30

Share price performance Services Local Price

17-Jan -1d -5d -10d -30d MTD QTD YTD 4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 12Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9

Oil Services - EuropeAker 103 -1.0 -1.9 -3.1 -0.9 -6.5 -6.5 -6.5 27.1 2.7 -27.5 -8.2 5.3 101.9AMEC 1045 2.4 -3.4 -3.0 -4.3 -4.6 -4.6 -4.6 3.6 12.7 -5.2 -1.7 -12.6 52.0CGG Veritas 12.3 -2.2 -1.2 -1.0 -16.3 -4.1 -4.1 -4.1 -25.0 3.7 -2.2 -24.2 -7.1 85.7Hunting 755 -0.8 -2.3 -2.7 -4.6 -4.0 -4.0 -4.0 -0.4 6.3 -18.0 5.0 -6.5 101.0Maire Tec 1.82 1.6 4.4 4.0 16.7 9.9 9.9 9.9 8.5 41.5 -18.2 -10.7 -38.0 -72.9Petrofac 1263 1.6 1.4 3.5 6.4 2.5 2.5 2.5 -11.6 23.4 -16.8 -17.5 1.3 49.3PGS 73.0 -0.3 0.1 5.2 9.4 0.6 0.6 0.6 -5.1 0.4 -21.7 -9.9 -0.5 104.6Polarcus 4.51 -1.0 -1.8 1.3 2.3 -5.3 -5.3 -5.3 19.7 -21.3 -26.2 -8.2 5.1 68.2Saipem 17.3 3.2 10.1 9.1 8.5 9.6 9.6 9.6 -3.2 23.5 -47.3 -20.3 -21.0 56.8SBM 15.51 0.8 0.7 4.4 10.2 3.1 3.1 3.1 1.5 15.3 3.2 19.6 -4.9 0.3Subsea 7 119 0.5 0.1 3.5 3.5 1.2 1.2 1.2 -8.9 19.3 -25.7 -1.4 0.1 66.0Technip 66.9 -0.6 -3.4 -3.1 -9.3 -5.7 -5.7 -5.7 -18.6 13.5 -1.3 -10.3 0.0 96.6Tecnicas 40.8 -0.7 1.7 4.3 6.4 1.7 1.7 1.7 17.0 -1.9 -2.3 1.5 -1.8 1.2TGS 170 -0.5 -4.5 12.4 14.3 4.3 4.3 4.3 -10.6 1.1 -23.6 15.7 -2.6 187.9Wood Group 660 1.0 1.5 -2.6 -17.0 -4.5 -4.5 -4.5 -12.1 3.5 -7.0 11.4 -10.8 172.3Arithmetic Average 0.3 0.1 2.0 1.6 -0.2 -0.2 -0.2 -1.2 9.1 -15.3 -3.9 -3.2 65.4

Source: Datastream, Barclays. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage.


21 January 2014 31

Share price performance Services Local Price

17-Jan -1d -5d -10d -30d MTD QTD YTD 4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 12Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9Oil Services - U.S.Baker Hughes 54.1 0.8 2.0 1.0 0.6 -2.0 -2.0 -2.0 11.3 5.2 0.9 13.6 -9.3 8.4Basic Energy Systems 17.25 2.6 13.1 9.3 20.5 9.3 9.3 9.3 22.0 1.7 -3.7 19.8 5.7 50.4Bristow Group 73.3 -2.4 -3.1 -1.8 -7.1 -2.4 -2.4 -2.4 0.8 10.7 0.4 22.9 6.9 72.2Cameron Int 58.7 -0.1 -1.3 0.6 4.8 -1.4 -1.4 -1.4 0.6 -4.4 -4.0 15.5 1.0 73.0CARBO 112.2 2.5 -1.1 -2.3 -8.6 -3.7 -3.7 -3.7 17.3 51.0 -23.4 16.2 22.8 -13.9Chart industries 90.6 -0.3 -0.5 -3.9 -1.6 -5.3 -5.3 -5.3 -25.1 27.9 19.7 20.0 -10.0 378.6Core Laboratories 191.0 0.9 1.4 2.3 1.6 0.0 0.0 0.0 11.4 11.8 13.1 26.2 -9.4 64.7Diamond Off 54.1 -0.4 -3.2 -4.2 -8.1 -5.0 -5.0 -5.0 -8.8 -9.4 -0.6 2.4 2.3 3.1Dresser-Rand 58.8 -0.4 1.0 -0.3 0.8 -1.5 -1.5 -1.5 -4.8 0.5 -1.3 9.8 2.9 75.6Dril-Quip 106.5 0.2 -1.6 -0.7 -2.5 -3.1 -3.1 -3.1 -5.4 24.8 5.5 19.3 2.4 63.3ENSCO 54.6 -0.4 -4.1 -3.5 -7.5 -4.5 -4.5 -4.5 5.5 -7.3 -0.9 1.2 8.2 35.8Exterran Holdings 35.2 0.7 2.7 3.7 9.5 2.9 2.9 2.9 21.8 -2.9 9.0 23.2 8.0 -21.7FMC Tech 51.0 -0.2 -2.5 -1.7 0.6 -2.3 -2.3 -2.3 -7.1 -0.7 3.3 27.0 -8.7 73.3Global Geophysical 1.58 9.0 11.3 -7.1 6.8 -1.9 -1.9 -1.9 -40.4 -42.0 101.7 -36.4 -30.9 -19.7Gulfmark Offshore 44.2 0.6 -1.4 -5.2 -10.6 -6.3 -6.3 -6.3 -7.9 10.4 21.5 13.1 2.5 22.5Halliburton 50.7 -0.5 0.3 1.1 0.2 -0.2 -0.2 -0.2 4.4 13.4 4.5 16.5 3.0 34.9Helmerich & Payne 85.7 0.9 0.1 3.1 7.3 1.9 1.9 1.9 18.6 8.1 4.4 8.4 19.4 30.5Hercules Offshore 5.64 -2.8 -7.1 -13.4 -8.1 -13.5 -13.5 -13.5 -13.2 4.6 -2.6 20.3 26.4 99.0Hornbeck Offshore 46.0 0.7 2.5 -5.1 -9.3 -6.5 -6.5 -6.5 -14.8 5.0 17.6 35.3 -7.1 139.5ION Geophysical 3.03 -0.3 0.0 -10.1 -4.7 -8.2 -8.2 -8.2 -38.1 -13.9 -9.9 4.6 -5.8 92.8Key Energy Ser 7.88 1.5 5.8 0.3 3.3 -0.3 -0.3 -0.3 5.5 18.0 -21.0 16.3 -0.3 -23.6Nabors 17.3 0.5 1.2 2.8 9.7 1.7 1.7 1.7 2.9 1.5 -2.0 12.2 2.8 -20.4National Oilwell 77.0 -0.2 -1.4 -2.3 -5.7 -3.2 -3.2 -3.2 0.9 12.1 -1.2 3.5 -15.1 141.0Noble Corp. 35.4 0.4 -3.1 -3.6 -6.5 -5.6 -5.6 -5.6 -2.2 -0.5 -0.7 9.6 -2.2 9.9Oceaneering 74.7 0.5 -3.1 -4.3 -6.2 -5.3 -5.3 -5.3 -3.2 9.1 8.9 23.5 -1.9 150.4Parker Drilling 8.06 0.6 1.4 -0.4 2.2 -0.9 -0.9 -0.9 38.7 13.1 16.4 -7.0 7.2 16.9Patterson-UTI 25.0 0.2 -1.3 -1.0 5.1 -1.1 -1.1 -1.1 15.1 6.0 -15.6 28.0 18.4 21.3Rowan Comp 32.8 -0.3 -3.2 -5.0 -4.2 -7.4 -7.4 -7.4 -4.9 6.7 -1.8 13.1 -6.7 55.7Schlumberger 90.2 1.8 2.3 2.1 2.3 0.1 0.1 0.1 1.2 21.4 -3.2 8.1 -4.5 30.9Seacor 87.2 -1.4 -2.1 -3.0 -5.7 -4.3 -4.3 -4.3 -0.4 7.3 14.6 13.3 -3.2 19.4Seadrill 247 0.1 -0.3 -0.8 -4.4 -1.8 -1.8 -1.8 -10.5 9.1 10.4 -0.6 -9.1 119.0Superior Energy 26.1 0.9 4.6 1.6 2.4 -1.9 -1.9 -1.9 4.0 -4.2 4.3 25.3 2.3 9.8Tenaris 16.4 1.0 2.3 3.1 1.4 1.7 1.7 1.7 -7.3 14.9 -1.6 -0.9 -1.6 16.7Tetra 11.33 -0.2 1.3 -7.3 -4.4 -8.3 -8.3 -8.3 -3.4 19.0 6.0 35.2 22.8 -30.6Thermon 28.2 -1.1 2.7 4.3 1.6 3.1 3.1 3.1 18.4 11.3 -7.4 -1.4 -11.8 NATidewater 56.4 -1.1 -5.2 -5.6 -3.0 -4.8 -4.8 -4.8 0.6 3.9 13.4 13.0 -6.9 26.6Transocean 46.7 -1.1 -3.8 -4.1 -6.2 -5.5 -5.5 -5.5 9.9 -7.8 -6.1 16.3 -3.4 -8.2Weatherford 14.7 0.1 1.3 -2.6 -3.4 -5.2 -5.2 -5.2 -3.1 10.8 12.8 8.5 -10.5 -4.1Arithmetic Average 0.3 0.2 -1.7 -1.0 -2.7 -2.7 -2.7 0.3 6.5 4.8 13.0 0.2 48.5

Source: Datastream, Barclays. The European Market is the Eurostoxx, the European Integrateds, is the corresponding FTSE 300 index. The Barclays European Refining Index is calculated using arithmetic averages for companies under coverage. The Barclays European Services Index is calculated using market capitalisation weighted averaged for companies under coverage. The Barclays E&Ps Index is calculated using a free float weighted average for our coverage.


21 January 2014 32

E&Ps


21 January 2014 33

Valuations E&P - EuropeChange in


Company Rating 17-Jan Price side, % 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F NAV NAV last mnth

E&Ps - EuropeAfren O/W 163 225 38 3.4 5.1 4.7 8.4 11.0 8.7 0.4 (1.5) (0.7) 30.5 31.7 29.3 225 207 7

Africa Oil E/W 56.5 78 38 nm nm nm nm nm nm (10.1) (12.7) (13.5) (54) (15.7) 28.0 78 83 1

Bowleven O/W 44 135 209 nm nm nm nm nm nm (7) (4) (1) (10) (2) (0) 135 142 -37

Enquest U/W 137.0 155.0 13 4.3 3.4 1.6 9.4 6.7 7.1 (29.5) 27.0 28.2 0 0.0 (0.2) 155 163 5

Oryx Petroleum O/W 14.1 20.0 42 nm nm nm nm nm nm (0.3) (0.3) (0.3) (0) 0.2 0.7 20 19 0

Premier Oil O/W 287.8 535.0 86 5.5 4.2 3.4 10.7 6.6 6.1 (14.1) (16.1) (3.6) 69 76.4 70.9 535 457 -3

Rockhopper Exploration O/W 158.5 235.0 48 nm nm nm nm nm nm (3.3) (7.3) (3.0) (90) (75.4) (70.3) 235 280 -1

Salamander Energy E/W 109.0 160.0 47 3.6 3.5 3.4 nm nm nm (30.5) 9.6 14.5 72 62.0 48.2 160 187 -2

Soco International U/W 411.6 405.0 (2) 6.6 6.4 5.4 10.4 11.1 9.9 9.7 8.9 9.6 (30) (38.0) (44.5) 405 428 3

Tullow Oil O/W 906.5 1490.0 64 10.2 10.8 12.4 22.1 24.0 27.8 (1.9) (1.8) (6.3) 25 29.3 42.9 1490 1236 -3

Arithmetic average 57 5.6 5.6 5.1 12.2 11.9 11.5 (9.9) (2.1) 0.6 (1.5) 5.5 10.5 19.4 -3Source: Company data, Datastream, Barclays Research - Price targets are based on a sum-of-the-parts based DCF methodology.

19.7 8.7

14.3 13.5

41.4 16.5

97.1

EV/2P+2Cx

9.0

-

14.4

6.0

- 3.5

15.9

12.4 5.9

7.8

1.1

17.7

-

Barclays 2014

Cons 2014

EV:EBIDA, x P/E, x FCF yield, % Net Debt/Equity, %EV/2P

x


21 January 2014 34

Valuations E&P - Europe

EV:EBIDA, x P/E, x Free cash flow yield, %

-10

-5

0

5

10

15

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


-10

-5

0

5

10

15

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A

P/E 2014 Average

-10

-5

0

5

10

15

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


Gearing - Net Debt to Equity, % Dollar EPS Growth, y/y % EV:2P, x

-100%

-60%

-20%

20%

60%

100%

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A

2013 2014

-150%

-100%

-50%

0%

50%

100%

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


0

5

10

15

20

25

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


EV/2P+2C, x Datastream consensus relative to Barclays NAV, % ROACE, %

0

5

10

15

20

25

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


-20

-10

0

10

20

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


-15-10

-505

1015

A

F

R

A

O

I

L

B

L

V

N

C

N

E

E

N

Q

O

X

C

P

M

O

R

K

H

S

M

R

S

I

A


Source: Datastream


21 January 2014 35

Share price performance E&P - Europe


-10 -5 0 5 10

PMOAFRCNE

SMDRAOIL

SectorBrentOXCRKHSIA

ENQTLW

BLVN

-5 0 5 10 15 20 25 30

PMOBrent

AFRENQCNE

SectorSIA

SMDRRKHTLWOXCAOILBLVN

-30 -20 -10 0 10

BLVNPMOCNETLW

BrentAOIL

SectorOXC

SIAENQRKH

SMDR

Change in USD share price over last year, % European E&P vs Brent European E&P vs European market

-60 -40 -20 0 20 40

SMDRBLVNTLWPMORKHCNE

SectorBrentENQAFRSIA

AOIL

80

85

90

95

100

105

110


70

75

80

85

90

95

100

105


Afren vs European E&P Bowleven vs European E&P Cairn Energy vs European E&P

100110120130140150160170180

80

90

100

110

120

130

140

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14AFR vs Sector AFR, p

2030405060708090100110

1030507090

110130150170

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14BLVN vs Sector BLVN, p

220230240250260270280290300

80

85

90

95

100

105

110

115

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14CNE vs Sector CNE, p

Source: Datastream, Barclays Research. Relative calculations use the Barclays European E&P Index for the European companies. The index is calculated using free float weighted averages for the E&P companies under coverage.


21 January 2014 36

Share price performance E&P - Europe

Enquest vs European E&P Premier Oil vs European E&P Rockhopper Exploration vs European E&P

90

100

110

120

130

140

150

80859095

100105110115120125

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14ENQ vs Sector ENQ, p

280

300

320

340

360

380

400

420

80859095

100105110115120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14PMO vs Sector PMO, p

80

100

120

140

160

180

6065707580859095

100105

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14RKH vs Sector RKH, p

Salamander Energy vs European E&P Soco International vs European E&P Tullow Oil vs European E&P

80100120140160180200220240

40

60

80

100

120

140

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SMDR vs Sector SMDR, p

280300320340360380400420440

9095

100105110115120125130135

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14SIA vs Sector SIA, p

600

700

800

900

1000

1100

1200

1300

60

70

80

90

100

110

120

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14TLW vs Sector TLW, p

Source: Datastream, Barclays Research. Relative calculations use the Barclays European E&P Index for the European companies. The index is calculated using free float weighted averages for the E&P companies under coverage


21 January 2014 37

Share price performance E&P-Europe

Tullow Oil vs Cairn Energy Bowleven vs Salamander Energy Cairn Energy vs Premier Oil

50

60

70

80

90

100

110

120


60

80

100

120

140

160

180

200


80

90

100

110

120

130


Tullow Oil vs Soco International Soco International vs Premier Oil Premier Oil vs Tullow Oil

30

50

70

90

110

130


80

90

100

110

120

130

140

150

160


70

80

90

100

110

120

130


Afren vs Cairn Energy Afren vs Premier Oil Afren vs Soco International

70

80

90

100

110

120

130

140


80

90

100

110

120

130

140

150

160


60

70

80

90

100

110

120


Source: Datastream, Barclays.


21 January 2014 38

Share price performance E&P - Europe & Israel Local Price

17-Jan -1d -5d -10d -30d MTD QTD YTD 4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 12Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9

E&P - EuropeAfren 163 -0.7 -3.7 -3.9 1.6 -4.5 -4.5 -4.5 26.4 11.6 -9.1 1.0 -7.1 89.1Africa Oil 10 -1.6 -2.0 -0.4 -6.6 0.0 0.0 0.0 3.5 18.6 -3.3 0.7 -27.7 811.0BowLeven 43.8 4.2 15.6 19.9 8.6 14.3 14.3 14.3 -31.3 1.9 -38.4 36.6 -16.3 -34.8Cairn Energy 267 1.5 -1.8 -2.2 -0.1 -1.7 -1.7 -1.7 5.1 8.9 -7.9 -3.5 -4.5 -35.3Enquest 137 1.3 1.1 1.1 -0.7 1.1 1.1 1.1 6.8 16.9 -18.0 11.8 4.5 27.8Premier Oil 288 0.6 -9.0 -9.0 -3.8 -8.9 -8.9 -8.9 -2.2 2.1 -14.7 7.9 -7.1 25.1Rockhopper Exploration 159 4.2 1.0 3.8 8.1 2.0 2.0 2.0 21.3 9.8 -18.6 -8.7 -10.1 -34.1Salamander Energy 109 1.6 -0.9 -2.4 10.7 -3.2 -3.2 -3.2 2.7 -15.2 -31.0 2.2 -5.7 16.2Soco International 412 1.5 1.9 3.2 3.7 3.4 3.4 3.4 1.5 32.2 -7.4 -2.0 7.4 -8.2Tullow Oil 907 0.5 -0.6 6.0 1.4 5.3 5.3 5.3 -15.2 3.8 -19.0 -8.8 -9.2 47.6Arithmetic Average 1.2 -1.3 -0.3 -1.4 -2.0 -2.0 -2.0 0.3 8.3 -14.4 3.2 -6.6 106.6E&P - IsraelAvner 3.28 -0.9 -1.3 0.6 -0.3 2.4 2.4 2.4 10.0 15.8 -3.6 4.5 20.7 31.1Delek Drilling 18.5 -1.3 -2.3 -0.1 -2.4 0.8 0.8 0.8 4.9 19.7 -4.6 4.9 23.8 30.3Delek Energy Systems 2419 0.0 0.3 -0.2 -1.8 0.3 0.3 0.3 3.7 37.0 3.6 5.3 6.3 58.3Isramco Negev 0.70 0.2 -0.1 0.0 -3.6 -0.2 -0.2 -0.2 9.4 7.2 -6.4 9.1 31.0 5.3Ratio Oil 0.48 -1.4 -2.1 3.2 5.7 7.1 7.1 7.1 6.6 30.4 -1.8 0.3 29.7 27.5Arithmetic Average -0.7 -1.1 0.7 -0.5 2.1 2.1 2.1 6.9 22.0 -2.6 4.8 22.3 30.5

Source: Datastream, Barclays Research. The European E&P Sector is the corresponding Euro Stoxx indices and the US E&P Sector is the corresponding S&P 500 indices.


21 January 2014 39

Share price performance E&P Canada Local Price


Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9E&P - (Canada)ARC Resources 28.2 -0.7 -1.6 -6.3 -5.7 -7.6 -7.6 -7.6 9.4 -2.5 -0.7 7.6 -0.7 31.0Athabasca 7.0 1.5 -0.3 -0.3 6.0 4.7 4.7 4.7 -18.5 23.2 -28.4 -14.8 -21.2 29.4Baytex Energy 41.3 -0.5 0.1 -2.4 -3.7 -3.7 -3.7 -3.7 -4.8 14.6 -14.3 -2.7 -9.8 58.8BlackPearl Resources 2.5 1.8 -2.6 8.7 0.7 7.3 7.3 7.3 16.1 20.8 -34.2 -24.6 -17.4 38.8Bonavista Energy 14.7 -0.4 0.4 4.1 4.7 2.3 2.3 2.3 4.9 -3.2 -11.4 -1.2 -17.1 -17.3Canadian Natural Res 35.7 -0.7 -1.6 -1.1 1.4 -3.6 -3.6 -3.6 6.4 11.6 -11.7 11.5 -8.9 -7.2Canadian Oil Sands 20.3 0.3 1.3 0.1 -1.7 -1.5 -1.5 -1.5 -2.2 4.7 -10.6 1.8 -3.8 -15.7Crescent Point 39.4 -0.2 -1.7 -5.1 -5.3 -7.3 -7.3 -7.3 2.1 11.7 -10.5 -0.1 -15.6 26.7Enerplus 20.0 1.2 4.2 3.6 -0.2 0.7 0.7 0.7 8.4 12.1 2.0 12.8 -23.4 -23.0Legacy Oil & Gas 6.0 0.4 0.6 -3.6 -5.0 -5.0 -5.0 -5.0 -10.6 36.6 -12.8 -22.1 0.7 -36.7Lightstream 6.0 -0.1 -2.7 -1.7 3.7 -1.8 -1.8 -1.8 -25.3 -3.4 -12.5 -15.6 -27.3 -28.8Oryx Petroleum 14.1 0.3 -2.5 -2.4 3.3 -2.4 -2.4 -2.4 -5.1 4.9 NA NA NA NAParamount Resources 42.2 -0.9 4.1 6.0 11.5 5.2 5.2 5.2 3.1 3.1 -6.1 14.9 -1.5 74.5Pengrowth Energy 7.2 6.1 8.0 6.7 4.5 5.9 5.9 5.9 3.7 19.8 -3.2 2.6 -26.9 -26.3Penn West Petroleum 9.2 0.2 -0.9 -2.3 -2.8 0.2 0.2 0.2 -26.9 5.2 -0.8 -0.9 -23.5 -25.5Petrobank Energy 0.3 -1.7 -3.2 -9.8 -2.9 -8.5 -8.5 -8.5 -17.0 -11.7 -32.0 -36.1 -10.4 -27.9Peyto E&P 34.1 -2.0 1.6 0.9 2.6 1.6 1.6 1.6 3.8 2.3 9.2 14.9 -7.0 79.7Trilogy Energy 26.6 -0.8 -2.9 -3.8 -5.2 -6.6 -6.6 -6.6 -5.6 -4.6 2.6 -1.4 9.4 198.7Vermilion Energy 63.3 0.9 2.6 -1.1 2.1 -1.4 -1.4 -1.4 5.3 12.5 -5.7 -0.8 11.1 48.4Whitecap Resources 12.3 0.8 -0.2 -3.8 -5.5 -5.9 -5.9 -5.9 1.4 13.2 8.1 9.6 13.7 59.8



21 January 2014 40

Share price performance E&P US

Local Price17-Jan -1d -5d -10d -30d MTD QTD YTD 4Q 13 3Q 13 2Q 13 1Q 13 4Q 12 3Q 12

Indices & marketsFTSE All 3656 0.8 0.9 1.4 5.1 0.6 0.6 0.6 7.1 9.7 -3.1 2.1 2.5 28.9StoxxEuro 321 -0.1 0.9 2.5 5.5 0.6 0.6 0.6 7.9 14.6 0.0 -0.6 7.3 4.6S&P 500 1839 -0.4 -0.2 0.4 1.9 -0.5 -0.5 -0.5 9.1 4.1 2.8 10.0 -1.3 40.2MSCI EMG 1920 0.2 0.5 1.1 3.9 0.2 0.2 0.2 4.9 9.8 -1.7 4.4 5.2 12.9E&P - USAnadarko 80.1 -1.5 0.3 2.2 -7.6 0.9 0.9 0.9 -15.1 7.1 -0.5 17.7 5.2 88.1Apache 84.3 -1.9 -2.2 -1.4 -5.3 -1.9 -1.9 -1.9 -0.6 2.2 9.3 -1.7 -9.2 3.3Bill Barrett 27.3 0.4 2.1 7.1 4.0 1.9 1.9 1.9 3.6 22.5 0.6 13.9 -28.1 -18.6Cabot Oil & Gas 37.5 -1.8 -0.1 -1.2 6.5 -3.3 -3.3 -3.3 4.5 5.7 6.4 35.9 8.8 187.1Chesapeake 25.5 -1.9 -1.0 -3.7 -3.9 -6.2 -6.2 -6.2 3.4 24.6 0.1 22.8 -13.8 -9.4Cimarex 101.4 -0.5 6.6 0.1 5.7 -3.4 -3.4 -3.4 6.0 45.2 -11.7 30.7 -1.1 -16.5Comstock 16.9 -1.3 1.0 -2.3 1.7 -7.7 -7.7 -7.7 13.7 -0.6 -0.3 7.5 -21.5 -32.8Concho Resources 99.6 -1.2 0.7 -2.9 0.0 -7.8 -7.8 -7.8 -5.0 29.6 -14.0 20.9 -17.4 75.4Crimson Exploration NA NA NA NA NA NA NA NA NA NA NA NA NA NADenbury Resources 16.3 -1.2 -1.6 -1.8 -0.1 -1.0 -1.0 -1.0 -12.7 5.7 -4.8 15.1 -1.3 11.4Devon 59.0 -0.6 -2.5 -3.3 -2.4 -4.6 -4.6 -4.6 5.6 10.5 -6.6 8.4 -14.4 -0.3Encana 17.7 0.1 1.1 0.7 -7.3 -2.0 -2.0 -2.0 4.0 2.5 -11.9 -1.5 -13.2 -28.1EOG Resources 169.0 -0.7 1.3 2.7 5.6 0.7 0.7 0.7 -2.5 25.1 2.5 6.0 5.8 13.1Exco Resources 4.9 3.0 -1.6 -5.1 0.2 -8.1 -8.1 -8.1 -21.9 -9.2 10.1 5.3 -18.8 -46.2Forest Oil 3.3 -3.2 -7.1 -11.1 -13.5 -9.1 -9.1 -9.1 -43.5 47.7 -18.0 -21.4 -21.8 -56.1Gulfport Energy Corp. 54.8 -0.4 1.5 -7.6 -5.8 -13.1 -13.1 -13.1 -4.0 34.3 3.7 19.9 24.1 160.9Jones Energy 15.0 0.2 -1.1 2.0 7.5 3.8 3.8 3.8 -13.3 NA NA NA NA NAKosmos 10.2 -0.9 -8.5 -7.4 -9.5 -8.4 -8.4 -8.4 7.3 -1.2 -9.8 -8.5 7.4 NAMarathon Oil 34.0 -0.6 -2.0 -1.6 -7.1 -3.8 -3.8 -3.8 0.7 0.1 2.9 10.0 2.7 57.9Newfield Exploration 25.1 -0.6 -2.3 2.9 -5.1 1.9 1.9 1.9 -11.7 13.3 8.9 -16.3 -14.7 -34.5Noble Energy 63.9 -1.2 -1.3 -3.4 -8.1 -6.2 -6.2 -6.2 0.2 11.9 3.5 13.7 10.3 51.5Occidental 90.6 -1.3 -3.5 -3.2 -2.2 -4.8 -4.8 -4.8 0.8 3.9 13.0 2.3 -11.3 12.1Penn Virginia 26.7 0.0 2.8 0.5 7.2 -0.6 -0.6 -0.6 16.6 -16.8 13.6 -7.2 3.6 22.3Pioneer Natural 174.7 -0.5 2.9 -0.8 -1.4 -5.1 -5.1 -5.1 -5.3 26.9 17.8 16.6 2.6 77.2QEP Resources 30.0 -0.5 1.5 -0.9 -4.6 -2.2 -2.2 -2.2 8.5 -1.6 -11.4 5.2 -5.6 8.0Quicksilver 3.0 0.0 2.7 -9.9 0.7 -1.6 -1.6 -1.6 41.5 18.0 -35.4 -21.3 -31.7 -63.5Range Resources 82.6 -1.6 1.1 2.6 4.5 -2.0 -2.0 -2.0 11.0 -1.6 -3.8 29.0 -10.8 73.8Resolute 8.4 -3.1 -3.3 -2.4 -3.1 -7.2 -7.2 -7.2 6.5 3.9 -29.5 41.6 -8.7 -28.8Sandridge 6.0 -0.5 -1.2 0.8 9.7 -1.3 -1.3 -1.3 -1.6 21.3 -8.5 -17.0 -9.7 17.8SM Energy 84.2 -1.0 1.6 2.7 -0.8 1.3 1.3 1.3 6.3 27.4 1.7 13.4 -3.8 34.8Southwestern Energy 39.3 -0.7 2.1 1.5 1.7 0.0 0.0 0.0 8.4 -0.9 -1.2 11.5 -5.5 -10.4Stone Energy 32.0 -2.6 -2.1 -1.2 0.4 -7.5 -7.5 -7.5 3.2 43.4 3.0 6.0 -17.0 122.7Swift Energy 12.6 -1.9 -4.9 -6.9 0.4 -6.5 -6.5 -6.5 11.9 -5.4 -16.4 -3.8 -27.0 -21.4Talisman 12.6 1.4 0.9 -1.4 -2.8 -1.3 -1.3 -1.3 -3.2 0.6 -7.3 8.2 -16.8 -11.8Ultra Petroleum 21.2 -0.4 4.5 -0.7 -0.7 -2.1 -2.1 -2.1 4.0 3.7 0.3 10.9 -21.0 -50.6W&T Offshore 14.3 -1.4 -3.1 -5.0 -8.7 -10.6 -10.6 -10.6 -11.5 21.7 5.0 -11.4 -15.9 104.4Whiting PTL 59.6 -0.7 0.8 0.9 1.4 -3.7 -3.7 -3.7 0.2 27.3 -8.4 17.2 -7.9 22.4WPX Energy 18.7 -2.7 -1.7 -4.7 2.0 -8.5 -8.5 -8.5 4.8 1.7 19.7 7.7 -13.2 NA



21 January 2014 41

Global Emerging Market Oils


21 January 2014 42

Valuations GEM Change in



Integrated - RussiaBashneft E/W 65.7 71.0 8 5.9 5.0 4.5 8.6 6.8 6.1 12.0 7.7 10.5 9.5 5.7 7.8 21.6 21.1 21.1 9.61 9.30 1

Gazprom O/W 8.2 9.5 16 2.6 2.7 2.7 2.6 2.7 2.8 4.0 7.0 9.0 5.0 5.3 8.6 12.2 9.0 9.0 1.49 1.33 -2

Gazprom Neft O/W 22.0 25.0 14 3.3 3.4 3.5 3.9 3.6 3.8 4.5 (6.4) (0.0) 6.3 6.9 6.5 18.0 13.6 13.6 1.22 1.16 0

Lukoil E/W 58.7 70.0 19 3.0 2.4 1.8 4.2 4.3 4.1 4.7 5.2 13.6 5.4 6.1 7.1 12.8 11.1 11.1 13.72 13.92 -4

Novatek O/W 128.8 140.0 9 11.9 9.2 8.1 12.9 10.1 9.2 2.7 4.1 5.1 2.3 3.0 2.7 24.0 24.7 24.7 1.28 1.05 0

Rosneft U/W 7.3 7.3 (1) 6.0 5.3 5.5 6.7 5.6 6.1 (4.9) 2.6 1.3 4.9 4.5 4.1 11.1 7.4 7.4 1.31 1.24 0

Surgutneftegas U/W 8.2 9.6 18 (0.5) (0.6) (0.8) 5.7 5.7 5.7 16.2 8.9 12.3 2.4 2.4 2.4 16.2 15.2 15.2 0.14 0.15 5

Tatneft E/W 35.3 40.0 13 4.1 3.5 3.2 5.5 4.8 4.8 13.0 13.6 14.2 4.6 5.2 5.2 16.1 15.8 15.8 1.22 1.05 -2

Arithmetic average 12 4.5 3.9 3.6 6.3 5.5 5.3 6.5 5.3 8.2 5.1 4.9 5.6 16.5 14.7 14.7 0

Integrated - OtherPetrobras E/W 12 20 60 7.5 7.3 5.9 7.1 6.9 4.6 (23.6) (13.9) (3.9) 4.7 4.6 5.8 5.7 7.0 7.0 1.80 1.95 -3

Sasol E/W 537 480 (11) 9.4 8.8 7.8 11.5 11.1 9.8 3.6 4.1 5.6 2.9 3.2 3.4 24.0 23.2 23.2 48.58 49.18 0

Arithmetic average 25 8.5 8.1 6.8 9.3 9.0 7.2 (10.0) (4.9) 0.9 3.8 3.9 4.6 14.8 15.1 15.1 -1

ServicesC.A.T. Oil E/W 20.4 8.0 (61) 12.1 11.0 9.4 3.7 2.8 2.1 0.2 0.2 0.6 0.0 0.0 0.0 8.6 12.3 12.3 0.95 1.05 12

COSL O/W 23.7 22.8 (4) 2.9 2.7 2.7 17.6 17.2 16.8 6.9 7.5 7.5 1.1 1.2 1.2 8.4 7.4 7.4 1.38 1.94 2

Eurasia Drilling O/W 42.8 42.0 (2) 6.8 5.6 4.0 nm nm nm 8.3 10.1 13.0 0.0 0.0 0.0 20.7 18.0 18.0 4.08 3.43 1

Integra O/W 15.9 4.5 (72) 16.4 13.0 11.0 0.4 0.3 0.2 2.9 4.3 5.4 0.0 0.0 0.0 15.5 21.8 21.8 0.59 1.89 nm

Arithmetic average (34) 9.6 8.1 6.8 7.3 6.8 6.4 4.6 5.5 6.6 0.3 0.3 0.3 13.3 14.9 14.9 5

Source: Company data, Datastream, Barclays Research - Price targets are based on a sum-of-the-parts based DCF methodology.

FCF yield, %Barclays

2014Cons 2014

RoACE, %EV:EBIDA, x P/E, x Dividend yield, %


21 January 2014 43

Valuations GEM


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