Académique Documents
Professionnel Documents
Culture Documents
19 January 2015
Rahul Bhat
AC
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Bloomberg JPMA BHAT <GO>
Daniel Butcher
(44-20) 7742-8701
daniel.butcher@jpmorgan.com
Fred Lucas
(44-20) 7134-5943
fred.lucas@jpmorgan.com
James Thompson
(44-20) 7134-5942
james.a.thompson1@jpmorgan.com
J.P. Morgan Securities plc
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
Global E&P capex likely to fall by >15% in 2015. Our proprietary global
upstream capex survey shows the planned aggregate reduction is 9%, with
the steepest cuts in the Independents (-22%), then IOCs (-8%) and NOCs (1%). If the oil price stays below $60/bbl as we forecast, during 2015 capex
cuts could exceed 15%, and 2016 could bring a second consecutive year of
capex cuts. This is concerning for high-beta stocks on page 9 we show
their exposure to a both a downturn and recovery.
We see a challenging year ahead for the oilfield services sector. We expect a
U-shaped rather than V-shaped oil price recovery with prices likely to
languish below $60/bbl for the next couple of years. Our updated E&P capex
survey now shows planned 2015 spending to decline by ~9% YoY (vs. -5%
just one month ago). We believe that capex cuts are trending to exceed the
15% cut witnessed in 2009 without a rebound in 2016. We think the seismic
and offshore drilling sectors are generally at the greatest risk from these capex
cuts, although each company is positioned differently. We upgrade GMS to
OW and downgrade Tecnicas to UW, CGG to UW and Cape to N.
Ticker
CIU LN
CGG FP
GMS LN
LAM LN
PGS NO
TRE SM
TGS NO
Mkt Cap
($ mn)
352.20
990.82
482.97
394.15
1,110.43
2,186.58
2,348.57
Price
CCY
GBp
EUR
GBp
GBp
NOK
EUR
NOK
Rating
Price
192
4.84
94
100
38.94
35.19
172.30
Cur
N
UW
OW
OW
UW
UW
N
Prev
OW
N
N
n/c
n/c
OW
n/c
Price Target
Cur
Prev
203
350
3.80
7.20
120
165
131
154
30.00
24.00
29.00
47.00
165.00
127.00
Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 16 Jan 15.
See page 50 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan 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.
www.jpmorganmarkets.com
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Table of Contents
E&P capex survey update........................................................3
Onshore/Offshore spending index............................................................................5
Overview of 2015 budgets.......................................................................................5
OFS sector revenue growth trend.............................................................................6
Appendices
Appendix I: Methodology of the E&P capex survey ............34
Appendix II: Detailed capex breakdown ...............................35
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Table 1: Aggregate organic exploration and production capital expenditure, sector revenue growth and global rig count data
Year
Initial Current/ Actual Prior year
YoY Sector 1 Onshore Offshore
Total
Avg.
Explor- Develop- Explorbudgets
final spending like-for-like change revenue avg. rig avg. rig avg. rig
Brent
ation
ment
ation
2
2
budgets
spending
growth
count
count
count
crude spending spending
share2
($m)
($m)
($m)
($m)
(%)
(%)
(%)
(%)
(%) ($/bbl)
($m)
($m)
(%)
2003
133,500
na
na
+24
-2
+19
28.4
19,603
83,719
19.0
2004 143,869 149,552 150,535
133,500
+12.8
+12
+1
+10
38.0
21,955
96,679
18.5
2005 171,647 184,682 193,663
149,712
+28.6
+16
+6
+15
55.2
29,502
129,832
18.5
2006 225,238 236,044 240,444
193,337
+24.2
+12
+0
+11
66.4
41,559
171,478
19.5
2007 298,877 297,551 319,306
239,986
+32.8
+22
+3
-1
+2
72.6
50,348
225,183
18.3
2008 340,852 348,482 389,328
314,754
+21.9
+14
+8
+0
+7
97.8
60,845
251,756
19.5
2009 340,825 327,465 332,229
388,689
-14.7
-8
-33
-12
-31
62.7
56,938
235,853
19.4
2010 354,033 358,395 370,453
330,836
+11.5
+3
+33
+6
+30
80.2
61,994
268,460
18.8
2011 420,764 432,848 436,782
369,439
+17.9
+16
+18
-0
+16
110.4
75,628
315,218
19.3
2012 479,243 485,190 519,764
436,767
+19.0
+9
+1
+4
+2
111.2
86,744
380,490
18.6
2013 545,161 542,924 571,911
519,764
+10.0
+4
-4
+7
-3
108.4
79,065
370,558
17.6
2014E 592,506 584,180
571,911
+2.1
-0
+5
+2
+5
99.4
41,444
231,516
15.2
2015E 482,982
530,012
-8.9
+4
50.4
13,435
83,966
13.8
Source: Company reports, Bloomberg; 1. USD based on Bloomberg consensus data for Amec, Cape, CGG Veritas, Hunting, Lamprell, Petrofac, PGS, Saipem, Seadrill, Subsea 7, Technip,
Tecnicas Reunidas, TGS Nopec and Wood Group; 2. exploration and development spending split not disclosed by all companies. 2015 spending change estimate is based on smaller sample of
companies which have disclosed 2015 capex on a like-for-like sample basis.
Figure 2: Y-o-Y change in organic upstream capex for NOCs, IOCs and independents
+50
+40
+30
+20
+10
+0
-10
-20
-30
-40
2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E
NOCs
IOCs
Independents
Total
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
2010
In 2015, we see both onshore and offshore capex falling (Figure 3). Onshore capex
showed relative strength in 2014, reflecting rising capital spending in US onshore
shale plays. Due to the recent softening of the oil price, however, capital spending in
US shale has been slowing down. Relatively high cost offshore capex is also
expected to continue its downward trend for the third successive year as offshorebiased IOCs look to moderate capex, rebalance cash flows and protect cash returns to
shareholders.
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
2008
2009
2010
2011
YoY change in capex (%)
2012
2013
2014E
Sector revenue growth (%)
2015E
Oil Services sector revenue growth outpacing E&P capex: Historically, the
European Oil Service sectors average revenue growth has closely tracked global
upstream capex growth (Figure 4). We note that the average consensus revenue
growth expected in 2014 has fallen from +11.7% in May to +4.7% in September to
+1.9% in December to -0.4% in January (below the capex growth expected in 2014).
However, for 2015, the average consensus revenue growth is still expected at +4%
(down from +5.8% in December). This may well be at risk given our preliminary
2015 capex data point to a -8.9% fall in capex. We expect service sectors that are
exposed to discretionary exploration spending (seismic and drilling services) to be hit
more than other sub-sectors.
60%
40%
15.0
20%
10.0
0%
-20%
5.0
-40%
-60%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
YTD
Sector average P/E
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
A key issue for investors currently is what valuation multiple the sector will trade
towards in the short term. The oil price crash of 2008/09 provides the nearest in time
analogy, and the most meaningful sample size. However, we think this oil price and
sector downturn will be more severe than that of 2008/09, and therefore the likely
floor valuation multiple in 2015 must be lower, too. Some factors we considered in
concluding this are discussed below.
1. Lower for longer oil price doldrums may last longer than in 2008/09
We think there is a good probability that the current oil price slump will take years to
rebalance. We believe that as a base case, OPEC may be broken, for now, and will
not make timely production cuts. Lower prices are already curbing the growth in
emerging suppliers such as US shale. This is likely to result in a delayed U-shaped
oil price recovery, in contrast to the previous crash in 2009 which was a quick Vshaped recovery. We think the most likely price is $49/bbl 2015, $57/bbl 2016,
$65/bbl 2017 and $75/bbl in 2018 (JPMe).
Figure 6: Historical Brent oil price ($/bbl) and JPM forecasts
150
100
50
-
Historical
JPMe
New
Prior
Q1
42.0
75.0
Q2
43.0
80.0
2015E
Q3
53.0
85.0
Q4
58.0
98.0
FY
49.0
82.0
Q1
50.0
85.0
Q2
52.0
88.0
2016E
Q3
60.0
90.0
Q4
65.0
88.0
FY
56.75
87.8
LT
90.0
90.0
The max-min fall in 2008/09 was very large ($146 to $36) compared to the present
situation ($115 to $46). However the oil price fall began in mid-2008 and recovered
substantially by mid-2009. Due to its quick recovery it was only below US$80/bbl
(which is the bottom of the range of long run marginal cost estimates) for around 13
months.
Furthermore, at the beginning of 2009, the consensus 2010 forecast was somewhat
robust at $74/bbl despite a spot price of low $40s. The market expected a healthy
rebound in prices (a V-shaped recovery) for most of 2009, only wavering for a few
months in the middle of 2009, when 2010 prices were expected to be in the $60s.
(Figure 7).
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
120
110
100
90
80
70
60
50
40
Aug 06
05
2006
07
2007
08
2008
09
2009
2010
10
2011
11
2012
12
2013
13
2014E
14
2015E
15
2016E
2. E&P capex may fall more than the 15% in 2009 and stay lower
Capex budgets in 2009 benefitted from both spot price and expectations for 2010
being >$70/bbl for over half of 2009. Yet capex for the full-year dropped by 15%.
Our proprietary upstream capex survey shows that capex intentions for 2015 are
down 9% already which is a decrease of -4% versus just one month ago. We think
the fall in 2015 will be greater than in 2014 if oil outlook is close to our house
forecasts. It should also take longer for capex levels to recover if our base case
2016/17 oil price scenario is correct. This forecast implies oil will not revert back to
a reasonable incentive price for new production for 2 or 3 years.
We think a 15-20% aggregate fall in oil & gas upstream capex is a reasonable
assumption for 2015. We also think that investment could fall a further 5-10% in
2016 as the prices and the volume of backlog to support it also falls.
3. Valuation multiples should reflect lower for longer customer spending
Currently the Euro OFS industry trades on a 8.4x P/E. The 2009 full-year average
was 10.5x, but it is still well above the 2009 intra-year trough average of ~6x.
The P/E applied to a potential 24-36 months of low activity and slow rebound should
be lower than the P/E average across a year which mostly reflected expectations of
temporary fall in activity with a strong rebound.
We think the market is still too optimistic about where valuations might go on a oneyear view. It seems to believe too much in OPECs willingness to act cohesively or
Saudis willingness to act unilaterally this year.
We therefore think that the average P/E multiple for 2015 should reflect further
potential downside to market expectations if our bearish "lower for longer" scenario
eventuates (see discussion above).
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
We believe a discount to the 2009 average of at least 25% is justified. This suggests a
sector average P/E of 8x until the flood of bad news reduces and recovery becomes
evident.
We would not apply our 8x sector average multiple to every stock. Rather we apply a
premium or discount based on previous sub-sector lows, and subsector/company oil
beta.
In the following section, we look at the theoretical oil betas to a sharp decline in oil
companies spending and a U- or V-shaped oil price recovery.
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
10
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Financial leverage
Financial leverage magnifies the impact of operating profit changes; it is a doubleedged sword. In a severe downturn, large debt obligations can lead to liquidity issues
and force asset sales at unfavorable prices, among other things. We use consensus
ND/EBITDA as a proxy for the financial leverage of a company. Among the
European OFS companies, Seadrill (SDRL) is amongst the highest-levered
companies. It has a 2015E ND/EBITDA of 4.6x based on Bloomberg consensus. On
the other end of the spectrum we have TRE, TGS, TEC (Technip) and LAM
(Lamprell) which are net cash companies.
Table 3: European OFS - Theoretical oil price beta
Overall, we believe the theoretical oil price beta of a company should be high if it
has (i) high exposure to capex-related activities; (ii) high upstream exposure; (iii) an
asset heavy business; (iv) high operational leverage; and (v) high financial leverage.
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Offshore drillers
OCTG
Land drillers
Upstream EPC
PGS
CGG
TGS
Seadrill
Vallourec
Tenaris
Hunting
Eurasia Drilling
Petrofac
Technip
Saipem
Subsea 7
Lamprell
Engineering
Amec
FosterWheeler
Wood Group
Downstream EPC
Tecnicas
Reunidas
Operations &
Maintenance
Cape
GMS
We expect the path to recovery will be different for each company and sub-sector in
the European OFS space. Our base case assumes a gradual oil price recovery to a
long-term oil price of $90/bbl by 2019. We believe that low oil prices for 2015 and
2016 could put severe pressure on the cash flows of oil companies (NOCs, IOCs and
Independents alike) and lead to consecutive years of capex declines. In such a
scenario, we believe that sub-sectors that have high exposure to discretionary
exploration spend could face severe structural challenges. The seismic and offshore
drilling sectors rank highest among those exposed to exploration spending. Low oil
prices for 2015 and 2016 could see asset utilization for companies in this sector fall
significantly and may also require capacity reduction.
The next in line with exposure to exploration-related spending are oil country tubular
goods (OCTG) companies and land drilling companies. Companies from this subsector may also face similar asset utilization and capacity issues. Oil companies to
some extent are also expected to delay marginally economical projects and postpone
investments. This could affect the bid pipeline of upstream EPC companies and
engineering-focused companies. Lowest on the scale of companies that would likely
suffer operationally as a result of a U-shaped recovery in the oil price are those that
are highly exposed to the operations & maintenance and/or downstream sectors.
Overall, we believe that companies that have a lower oil price beta (as outlined in
the section above) would be in a relatively better position to recover from a weak
market.
Figure 9: Sub-sector preference for a U-shaped oil price recovery
Land
drillers
Offshore
drillers OCTG
Marine
seismic
Operations &
Maintenance
Engineering
Upstream Downstream
EPC
EPC
12
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
scenario, companies with a high oil price beta (as defined in the section above)
could recover quicker.
Figure 10: Sub-sector preference for a V-shaped oil price recovery
Operations &
Maintenance
Engineering
Land
drillers
OCTG
Downstream Upstream
EPC
EPC
Offshore
drillers
Marine
seismic
51%
55%
55%
8% fall in margin
50%
47%
45%
40%
43%
35%
39%
30%
25%
35%
2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E
2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E
Average Off. Drilling*
Average Seismic*
Source: J.P. Morgan estimates, Bloomberg. * PGS, CGG, TGS and Fugro considered.
Source: J.P. Morgan estimates, Bloomberg. *Seadrill, Diamond Offshore, Noble Corp,
Transocean and Ensco considered.
The seismic and offshore drilling sectors live at the sharp end of the capex cycle.
From Figure 11 and Figure 12 we can see that the peak-to-trough falls in the average
margins for the seismic and offshore drilling sectors during the last oil price collapse
were 8% and 29%, respectively. We anticipate the recovery in the oil price to be
slower this time around, which could lead to greater margin decline and a much
slower recovery in margins than is currently anticipated.
However, as we see from the figures above, consensus is still forecasting margin
expansion for the seismic companies over 2014-16 and a gradual reduction in
margins for the offshore drilling companies over the same period. We expect this to
correct (i.e. fall by a greater extent) as market weakness becomes more apparent.
13
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
28%
10%
26%
9%
8%
24%
7%
22%
6%
2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E
2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E
Average OTCG*
Average EPC*
Source: J.P. Morgan estimates, Bloomberg. *Amec FosterWheeler, Petrofac, Wood Group,
Saipem, Tecnicas Reunidas and Technip considered.
The OCTG and EPC sectors are other sectors where we could see further margin
compression. In the OCTG sector, the 2008-09 oil price collapse led to a c.4% fall in
margins. Consensus forecasts currently expect only a 1% margin compression. We
believe this could be higher given the slower expected recovery of the oil price and
of capex compared to the 2008-09 period. The 2008-09 oil price collapse left EPC
margins largely unscathed. We believe that the continued investment over 2008-09
by Middle Eastern NOCs helped these companies achieve stable margins. Over the
2014-16 period, however, we expect investments by Middle Eastern NOCs to slow
down (unlike the 2008-09 period) due to the expected prolonged low price
environment. Thus the margin expansion being forecast for these EPC companies
may not materialize and in our view could even lead to a decline in margins.
14
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
We test our analysis against a recent deal. For one of the deals proposed recently,
Technips approach to CGG, the metrics line up. Technip shows the third-strongest
ND/EBITDA and ND/EV ratio in the sector, and the largest absolute debt capacity
by a factor of 2x. Its proposed target CGG has the third-weakest ND/EBITDA and
equal weakest ND/EV, and the second-weakest absolute debt capacity.
Figure 15: Euro OFS sector Net debt / EBITDA
4.6
5.0
4.0
2.9
3.0
2.0
2.8
2.2
1.8
1.4
1.2
0.6
1.0
1.2
0.6
0.4
0.7
0.2
Average
TGS
Tecnicas
Technip
Subsea 7
Saipem
PGS
Petrofac
Lamprell
Hunting
GMS
CGG
Cape
AmecFW
Aker
Source: Bloomberg
Seadrill
(0.4)
(0.8)
(2.0)
Wood
(1.0)
71%
50% 25%
35%
30%
24%
16%
12%
71%
60%
47%
11%
9%
8%
(14%)
(16%)
(50%)
Source: Bloomberg
Average
Seadrill
Wood
TGS
Tecnicas
Technip
Subsea 7
Saipem
PGS
Petrofac
Lamprell
Hunting
GMS
CGG
Cape
Aker
AmecFW
(50%)
(100%)
Figure 17: Euro OFS sector net debt capacity at 2.5x ND/EBITDA
5,162
2,403
1,447
41
1,387
Seadrill
Wood
TGS
Tecnicas
Technip
PGS
Petrofac
Lamprell
Hunting
(523)
GMS
CGG
Cape
AmecFW
1,836
393
Subsea 7
121
496 586
(360)
Source: Bloomberg
16
1,420
1,361
Saipem
442
Aker
6,000
5,000
4,000
3,000
2,000
1,000
(1,000)
(2,000)
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
TGS
TRE
(20%)
WG/
AMFW
(30%)
SBMO
(40%)
PFC
(50%)
SPM
SDRL
(60%)
HTG
PGS AKSO
SUBC
TEC GMS
CIU
LAM
CGG
(70%)
(80%)
0
10
12
14
16
18
20
17
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Cape
Neutral
Company Data
Price (p)
Date Of Price
Price Target (p)
Price Target End Date
52-week Range (p)
Market Cap ( bn)
Fiscal Year End
Shares O/S (mn)
192
16 Jan 15
203
31-Dec-15
335-177
0.23
Dec
121
2013A
2014E
2015E
2015E
2016E
2016E
23.58
23.40
697
58
8.3%
5.0
19.4%
8.1
26.48
26.90
660
64
9.7%
5.6
23.9%
7.3
30.25
696
72
10.4%
6.7
24.7%
6.3
27.10
30.80
663
68
10.3%
5.1
22.4%
7.1
34.53
732
77
10.5%
5.7
25.0%
5.6
28.64
34.20
668
70
10.5%
4.7
21.7%
6.7
(Prev)
(Curr)
(Prev)
(Curr)
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
to Neutral, reduce our 2015E target PER from 11.5x to 7.5x and reduce our end2015 price target to 203p (6% upside).
Table 5: Cape - Interim estimates
Year end Dec
Revenue
YoY revenue growth (%)
1H12
360
+7
2H12
386
-0
2012
746
+3
1H13
371
+3
2H13
326
-16
15
4
12
3
28
4
25
7
16
5
41
6
23
7
26
8
49
7
0
0
0
15
0
-1
-159
-148
0
-1
-159
-133
0
0
-16
9
0
-15
0
1
0
-15
-16
10
-1
0
-1
21
0
0
0
25
-1
0
-1
46
Finance income
Finance costs
Net finance income
1
-6
-5
1
-6
-5
2
-12
-10
1
-6
-5
1
-6
-5
2
-12
-10
1
-5
-4
1
-5
-5
1
-10
-9
10
-2
21%
8
-153
-17
-11%
-170
-143
-19
-13%
-162
4
0
-7%
4
-4
0
-3
-3
-75% ####
-7
-3
17
-3
20%
14
21
-5
22%
16
38
-8
21%
30
-1
7
-1
6
8
6.9
-42
-212
-1
-212
7
5.8
-43
-205
-2
-207
15
12.7
-3
2
-1
1
16
13.5
-1
13
-1
13
16
12.9
0
16
-1
15
17
13.5
-1
29
-1
28
32
26.5
-2
-9
1
-8
12
10.1
-5
-7
0
-7
29
23.6
19
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
CGG
Underweight
Company Data
Price ()
Date Of Price
Price Target ()
Price Target End Date
52-week Range ()
Market Cap ( bn)
Shares O/S (mn)
2013A
2014E
2014E
2015E
2015E
2016E
2016E
(3.95)
(3.15)
(2.99)
0.50
2.48
3,768
2,990
3,022
(11.1%) (5.8%) (4.6%)
2.7
4.2
3.8
0.26
0.31
0.30
(16.9%) (15.9%) (15.0%)
NM
NM
NM
0.18
3,110
7.8%
3.5
0.30
1.0%
30.8
(0.37)
2.64
2,776
3.3%
4.0
0.31
(2.0%)
NM
0.49
3,198
9.2%
3.3
0.29
2.6%
11.5
0.05
0.21
2,738
6.5%
3.8
0.31
0.3%
110.0
(Prev)
(Curr)
(Prev)
(Curr)
(Prev)
(Curr)
Impairment ($m)
0
7
533
131
0
36
818
296
20
More impairments to come. The weak seismic market may require CGG to
write down some of its goodwill, MC library and/or vessels. We note that CGGs
goodwill/MC library is 76%/31% of its expected end-2014 equity. While
goodwill is a mere (lagging) accounting entry, it confirms the company sees
rough times ahead and in the worst case can signal internal expectations are
lower than the market.
Q4 2014 preview. CGG is scheduled to report its Q4 2014 results on 26
February. CGG pre-reported record MC sales of $290m in Q4 along with its
vessel availability and production rates. Adjusting our numbers for these, we now
forecast 4Q14 revenues of $832m (Bloomberg consensus: $716m), EBIT of
$27m (consensus $45m), recurring EBIT of $11m, net income of $(45)m
(consensus $(9)m) and EPS of $(0.25) (consensus of $(0.04)).
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
1Q13
871
1
871
+11
2Q13
1,032
1
1,032
+24
3Q13
908
0
908
+6
4Q13
955
1
956
+2
2013
3,766
2
3,768
+10
1Q14
806
0
807
-7
2Q14
689
1
690
-33
3Q14E
694
0
694
-24
4Q14E
831
0
831
-13
2014E
3,021
1
3,022
-20
Operating costs
EBITDA
EBITDA margin (%)
EBITDA growth (%)
-591
281
32.2
+28
-682
351
34.0
+50
-600
309
34.0
+7
-702
255
26.6
-14
-2,574
1,194
31.7
+15
-588
219
27.1
-22
-554
136
19.7
-61
-462
232
33.4
-25
-510
322
38.7
+26
-2,114
908
30.0
-24
-72
-112
-183
-102
-116
-218
-96
-112
-208
-129
-873
-1,002
-399
-1,213
-1,612
-80
-104
-184
-114
-207
-322
-89
-156
-245
-202
-92
-294
-486
-560
-1,045
97
11
132
13
100
11
-747
-78
-417
-11
34
4
-186
-27
-14
-2
27
3
-138
-5
0
0
55
152
0
0
-11
122
0
0
-21
79
0
0
0
-747
0
0
23
-395
0
0
0
34
0
0
0
-186
0
0
0
-14
0
0
0
27
0
0
0
-138
-47
1
-46
-47
0
-47
-52
0
-51
-48
0
-48
-193
2
-192
-48
1
-48
-63
0
-62
-45
0
-45
-45
0
-45
-201
2
-200
0
-5
101
0
0
75
0
-8
20
0
-10
-805
0
-22
-609
0
3
-11
0
-47
-295
0
-5
-63
0
0
-18
0
-49
-387
Income tax es
Net income from consolidated companies
Equity in income (losses) of investees
Net income (loss)
Net income margin (%)
-32
69
11
79
9
-35
40
-5
36
3
-11
10
-6
4
0
-6
-810
0
-810
-85
-83
-692
1
-691
-18
-12
-23
-17
-39
-5
-16
-311
-13
-325
-47
-43
-106
-10
-116
-17
-9
-26
-17
-43
-5
-79
-466
-56
-522
-17
Minority interests
Net income
-2
77
-1
35
-2
2
-3
-813
-8
-699
-1
-40
-2
-327
-2
-118
-2
-45
-7
-530
202
0.43
0.43
-9
178
0.20
0.20
-55
178
0.01
0.01
-98
177
-4.59
-4.59
-815
177
-3.95
-3.95
-14
177
-0.23
-0.23
-94
177
-1.85
-1.85
+708
177
-0.67
-0.67
-68
177
-0.25
-0.25
-91
177
-2.99
-2.99
+1084
Valuation
We update our SOTP valuation away from an acquisition-based scenario (where we
used normalized earnings and multiple) to one that better reflects the current weak
outlook for the seismic market. We reduce the multiple used for CGG's vessels from
1.0x to 0.9x of book value to reflect the weak expected demand for vessels in this
downturn. For the GGR segment, we use the average 2015-16 EBITDA and apply
TGS's average 2009 (bottom cycle) EV/EBITDA. For its Equipment segment we
apply a 4.5x multiple (slight premium to the average of its peers in Table 9). We thus
value it at 3.8/share, which implies a 2015E EV/EBITDA multiple of 3.8x. We
downgrade CGG to Underweight and our Dec-15 price target of 3.80 offers 22%
downside from current levels.
21
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
While this might screen cheap on an EV/EBITDA basis, we caution that the seismic
industry may be at the brink of structural change. The low oil price in 2015 and 2016
is expected to force oil companies to moderate their upstream capex. We believe this
could lead to a three-year down-cycle for the seismic industry the longest in recent
memory and could result in severe asset under-utilization and write-downs.
Table 8: CGG - Sum of the parts value
Vessels
GGR
Equipment
Other land and building
Net debt YE 2015E
Total
Shares in issue (diluted)
Value ($/Share)
Value (/Share)
Implied 2015E EV/EBITDA (x)
Tangible net
book value
2014E ($m)
425
Avg. EBITDA
(2015-16E, $m)
Multiple (x)
Value ($m)
0.9
2.5
4.0
1.0
383
1,819
768
200
-2,383
786
177
4.4
3.8
3.8
728
192
200
Source: Bloomberg.
22
Market value
LCU
$m
2013
EV ($m)
2014
2015
EBITDA ($m)
2013A
2014E
2015E
ND / EBITDA
2013A 2014E
2015E
2013A
EV/EBITDA
2014E
0.0
0.0
4.4
1.5
3.3
1.7
9.2
1.7
USD
USD
0.6
1.9
-0.5
-0.7
Average
Average ex Geospace
STD
4.0
4.1
5.4
5.9
4.2
4.2
1.5
4.6
5.0
5.6
5.2
4.2
4.4
1.5
4.5
5.1
5.5
5.0
5.2
4.3
2.4
USD
EUR
USD
USD
24.2
5.5
13
12
318
66
318
66
-2
-11
-53
0
0
0
316
55
265
66
318
66
72
37
81
38
34
39
0.0
-0.3
-0.7
0.0
436.5
19.5
11.5
58.0
148
131
1,181
431
648
2,546
13,553
24,960
983
3,000
15,972
24,960
206
2,249
-911
-286
193
1,944
-1,014
-1,203
146
1,861
-1,339
-3,177
1,188
5,249
15,061
24,674
1,176
4,944
14,958
23,757
1,128
4,862
14,632
21,784
297
1,271
2,795
4,178
258
981
2,684
4,564
252
956
2,665
4,383
0.7
1.8
-0.3
-0.1
0.7
2.0
-0.4
-0.3
Reporting
2015E Currency
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Overweight
Company Data
Price (p)
Date Of Price
Price Target (p)
Price Target End Date
52-week Range (p)
Market Cap ( bn)
Shares O/S (mn)
94
16 Jan 15
120
31-Dec-15
167-92
0.32
339
2013A
0.25
0.21
184
121
65.8%
6.7
40.1%
5.8
2014E
0.24
0.23
196
125
63.7%
6.2
30.3%
5.9
2015E
0.30
0.30
244
157
64.2%
5.4
26.2%
4.7
2016E
0.40
0.38
306
200
65.3%
3.8
27.0%
3.6
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
EV/EBITDA of 8.4x and 4.6x, using consensus data. GMS thus trades at a 15% PER
and 6% EV/EBITDA multiple discount to its peer group and at a -44% PER and
+16% EV/EBITDA multiple difference to the European OFS sector average. We
believe GMS's advantaged business model, high revenue visibility, high EBITDA
margin along with a low tax rate should allow it to trade at a premium to its peers.
We value GMS based on a target 2015E PER of 6.0x (c.10% premium to its peer
group and at a c.30% discount to average European OFS sector). This implies an
end-2015 target price of 120p (28% upside from current levels) based on the spot
/$ FX.
Key catalysts in 2015. (i) Long-term contract for large SESV Enterprise: The
Enterprise is expected to finish its current contract in early Q1 2015 and
management had earlier indicated that it was bidding on a couple of long-term
contracts in the MENA region a long-term contract could increase its revenue
visibility to over 100% of our 2015 forecast; (ii) option exercise for small SESV
Kudeta: GMS Kudetas current contract is expected to finish late Q1 2015 and its
customer has the option to extend the contract for another six months; and (iii)
full year 2014 results in February-March which will be accompanied by updated
guidance.
Figure 19: GMS vessel contract snapshot
MENA
NA
Feb-15 Jan-18
Apr-20
Kudeta (K5)
Small
MENA
Maintenance
Kinoa (K7)
Small
MENA
Kikuy u (K3)
Small
MENA
Kaw aw a (K4)
Small
MENA
Naashi (K1)
Small
MENA
Jan-13
Keloa (K6)
Small
MENA
Maintenance
MENA
Jul-13
EOR
Aug-12 Aug-15
24
Jan-18
Jul-18
Oct
eSmall
Jul
Jul-20
Pepper
Apr
Jul-17
Jan
Jul-15
2018
Oct
Jan-15
Jul
Sep-14 Dec-14
MENA
Apr
Maintenance
Mid
Jan
MENA
Shamal (M1)
2017
Oct
Jul
Apr-19
Apr
Apr-17
Maintenance
Jan
Apr-15
UK
2016
Oct
Maintenance
2015
Jul
2014
Apr
Option
Jan
To
Oct
From
Jul
Type of work
Apr
Type Location
Jan
Rig
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Company
Europe
Farstad Shipping
Gulf Marine Services
Prosafe
Siem Offshore
Solstad Offshore
USA
Gulfmark Offshore
Hornbeck Offshore
Seacor Holdings
Tidewater
Rest of World
Ezion Holdings
Mermaid Marine Australia
Share price
LCU
Shares in
issue (m)
Market value
LCU
$m
2015E
2013
EV ($m)
2014
2015
39.4
94.0
21.4
3.0
67.0
39
350
236
389
39
1,537
329
5,050
1,153
2,592
203
498
666
152
342
1,294
326
666
902
1,323
1,288
280
996
1,192
1,364
1,332
354
1,179
1,128
1,253
1,496
824
1,332
1,054
1,664
1,491
778
1,662
1,344
1,705
1,534
851
1,845
1,280
1,595
258
121
307
123
253
225
125
309
188
227
236
157
370
214
222
5.0
2.7
2.2
7.4
5.2
5.7
2.2
3.2
6.3
6.0
5.6
2.3
3.2
5.3
5.6
5.8
6.8
4.3
8.6
6.6
6.6
6.2
5.4
7.1
7.5
6.5
5.4
5.0
6.0
7.2
NOK
USD
USD
USD
NOK
21.1
21.8
71.6
31.0
26
36
18
50
555
793
1,263
1,542
555
793
1,263
1,542
440
625
328
1,455
489
870
362
1,331
464
813
279
1,481
995
1,418
1,591
2,996
1,044
1,663
1,625
2,872
1,018
1,606
1,542
3,022
164
257
235
369
172
290
244
437
160
330
278
459
2.7
2.4
1.4
3.9
2.9
3.0
1.5
3.0
2.9
2.5
1.0
3.2
6.1
5.5
6.8
8.1
6.1
5.7
6.7
6.6
6.4
4.9
5.6
6.6
USD
USD
USD
USD
1.2
1.0
1,579
369
1,823
358
1,374
294
920
251
1,033
270
1,007
208
2,294
545
2,408
564
2,381
502
159
58
297
124
415
150
5.8
4.3
3.5
2.2
2.4
1.4
Average
STD
14.4
9.4
7.5
2.7
8.1
4.6
6.4
1.0
5.7
3.3
5.7
1.0
USD
AUD
Share price
LCU
2010
2011
2013
2014E
2015E
EPS growth
2010-12 2013-15
2013A
PER
2014E
2015E
2013
DPS ($)
2014E
2015E
39.4
94.0
21.4
3.0
67.0
2.36
NA
0.81
0.03
0.10
2.60
0.07
0.71
-0.02
-0.98
1.41
0.16
0.80
-0.01
1.88
1.16
0.25
0.85
0.05
2.01
1.23
0.24
0.83
0.09
2.63
1.51
0.30
0.97
0.14
2.44
-23%
NM
-1%
NM
342%
14%
11%
7%
60%
10%
4.5
5.8
3.3
7.3
4.4
4.2
5.9
3.4
4.4
3.4
3.5
4.7
2.9
2.8
3.6
0.51
0.00
0.60
0.00
0.85
0.41
0.98
0.49
0.03
0.67
0.49
1.35
0.23
0.03
0.65
9.8%
0.0%
21.2%
0.0%
9.6%
7.8%
0.7%
17.1%
6.6%
7.6%
9.5%
0.9%
8.0%
7.7%
7.3%
21.1
21.8
71.6
31.0
1.86
1.29
9.94
4.89
1.90
-0.13
0.89
2.06
0.78
1.13
1.91
2.09
2.54
2.17
1.39
3.03
2.40
2.80
2.82
3.62
1.70
2.98
3.73
3.80
-35%
-6%
-56%
-35%
-18%
17%
64%
12%
8.3
10.1
51.5
10.2
8.8
7.8
25.4
8.6
12.4
7.3
19.2
8.1
1.00
0.00
1.00
1.00
0.00
1.00
1.00
0.00
1.00
4.7%
0.0%
NM
3.2%
4.7%
0.0%
NM
3.2%
4.7%
0.0%
NM
3.2%
1.2
1.0
0.04
0.17
0.06
0.20
0.07
0.23
0.12
0.27
0.12
0.20
0.17
0.18
Average
Average ex-Seacor
STD
33%
16%
26%
20%
-19%
16%
7.3
3.0
10.5
6.4
13.8
7.1
4.0
7.5
5.8
6.3
5.0
4.6
6.7
5.5
5.0
0.00
0.11
0.41
0.00
0.10
0.47
0.00
0.10
0.48
0.1%
14.4%
6.3%
0.1%
13.0%
6.1%
0.1%
12.5%
5.4%
EPS (US$)
2012
EBITDA ($m)
2013A
2014E
2015E
ND / EBITDA
2013A
2014E
2015E
EV/EBITDA
2013A
2014E
Reporting
2015E Currency
Dividend Yield
2013A
2014E
2015E
25
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Lamprell PLC
Overweight
Company Data
Price (p)
Date Of Price
Price Target (p)
Price Target End Date
52-week Range (p)
Market Cap ( bn)
Shares O/S (mn)
100
16 Jan 15
131
31-Dec-15
178-94
0.26
260
2013A
0.12
0.08
1,092
77
7.0%
4.3
7.2%
12.8
2014E
0.27
0.25
1,046
119
11.4%
2.0
15.6%
5.6
2015E
0.17
0.19
941
94
10.0%
2.8
8.7%
8.7
2016E
0.23
0.22
1,035
111
10.7%
2.0
10.9%
6.5
High revenue visibility, strong B/S protects downside; NDC options offer upside
High revenue visibility: On our estimates, Lamprell has 67% of its 2015 and
51% of its 2016 sales covered by its current backlog. Including walk-in work
(short duration rig refurbishment work) that Lamprell regularly wins during the
year, its coverage is a healthy 83% for 2015 and 65% for 2016.
Option exercise to secure 2016 revenue visibility: Lamprell has two Ensco
options and three NDC options that are due to expire in Q1 2015. Exercise of
these options could add another $938m to its backlog, which stood at $1.2bn at
the mid-year 2014 point. We see Lamprells exposure to the Middle East region,
where large NOCs benefit from lower cost of operations, as a positive. We see a
very high probability of NDC exercising these outstanding options, albeit a small
delay will not be a surprise.
Well-funded balance sheet, cash generation: Lamprells net cash at YE 2014 is
expected to be around $275m, down slightly from $280m at the mid-year point.
The cash position is expected to weaken marginally through 2015, but overall the
refinancing and rights issue appear fortuitously timed for a market downturn.
Reduce Dec-15 PT to 131p: Lamprell trades at a 2015 PE of 8.7x and an
EV/EBITDA of 2.8x vs. an European OFS average of PE of 8.4x and
EV/EBITDA of 4.6x. Lamprells YE14 cash balance of $275m (ex-prepayments)
is c.53% of its current market capitalization of $518m. We believe that
Lamprell's 39% EV/EBITDA discount to the European OFS average is
unjustified. We reduce our target 2016E PER from 10.0x to 8.5x which results in
a December 2015 price target of 131p (31% upside from current levels).
ENSCO options a key event in Q1. Lamprell was the second-best-performing
company in the European OFS space in 2014 (TSR -2%). However, YTD
performance has been in line with the sector. In our view, this is partly due to
concerns that the two options outstanding with ENSCO, due to expire during Q1
15, may lapse. If they are awarded, it could add a further $390m to its backlog, so
they are an important element of the near-term outlook.
26
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Petroleum Geo-Services
Underweight
Company Data
Price (Nkr)
Date Of Price
Price Target (Nkr)
Price Target End Date
52-week Range (Nkr)
Market Cap (Nkr bn)
Shares O/S (mn)
38.94
16 Jan 15
30.00
31-Dec-15
75.15-31.50
8.39
215
2014E
2015E
2016E
2016E
0.16
0.44
1,437
12.9%
2.8
0.54
1.7%
32.2
0.23
0.31
1,265
9.1%
3.4
0.53
2.3%
22.7
0.28
1,298
9.7%
4.2
0.52
2.8%
18.5
0.24
0.41
1,265
9.1%
3.7
0.52
2.5%
21.3
1.10
1.19
1,502
25.4%
2.2
0.54
12.0%
4.7
(Prev)
(Curr)
27
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Total revenues
382
366
360
1502
293
337
394
413
1437
+8
-6
-6
-0
-1
-26
-12
+8
+15
-4
Operating costs
-193
-172
-150
-159
-673
-154
-166
-213
-200
-733
EBITDA
202
210
216
201
829
139
171
182
213
704
51
55
59
56
55
47
51
46
52
49
-59
-56
-66
-62
-244
-63
-72
-71
-69
-274
22
18
39
34
113
33
28
20
18
99
Amortization of MC library
-68
-60
-81
-93
-302
-64
-72
-54
-120
-309
-106
-99
-108
-120
-433
-94
-116
-105
-171
-485
97
111
108
81
397
45
55
77
42
220
-15
-15
-9
-25
-34
97
111
108
66
382
45
46
52
42
186
24.5
29.0
29.6
18.5
25.4
15.5
13.7
13.3
10.2
12.9
+170
+28
-2
+10
+30
-53
-58
-52
-36
-51
Operating profit
-2
-1
-3
-8
-13
-16
-2
-9
-1
-28
Net financials
-7
-12
-8
-14
-41
-17
-9
-17
-21
-64
Pre-tax profit
88
97
98
45
328
13
35
27
20
94
Tax es paid
-25
-26
-24
-15
-90
-8
-5
-19
-28
-60
62
72
74
30
238
30
-8
35
72
74
30
238
30
-8
35
72
74
30
238
30
-8
35
15.8
18.7
20.3
8.4
15.9
1.6
8.8
2.1
-1.9
2.4
0.29
0.33
0.34
0.14
1.10
0.02
0.14
0.04
-0.04
0.16
+395
+57
-14
-24
+29
-93
-58
-89
-126
-85
0
62
62
Net profit
28
395
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Tecnicas Reunidas
Underweight
Company Data
Price ()
Date Of Price
Price Target ()
Price Target End Date
52-week Range ()
Market Cap ( bn)
Shares O/S (mn)
35.19
16 Jan 15
29.00
31-Dec-15
46.62-33.35
1.89
54
2014E
2015E
2015E
2016E
2016E
Adj. EPS FY ()
Bloomberg EPS FY ()
Revenue FY ( mn)
EBITDA FY ( mn)
EBITDA Margin FY
EV/EBITDA FY
Adj P/E FY
ROE FY
2.51
2.48
3,131
170
5.4%
7.3
14.0
29.2%
2.94
3,527
196
5.6%
7.1
12.0
30.3%
2.66
2.76
3,362
180
5.4%
6.5
13.2
27.7%
3.26
3,777
217
5.8%
6.0
10.8
29.7%
2.88
2.92
3,602
196
5.4%
5.5
12.2
26.9%
(Prev)
2.38
2.46
2,854
157
5.5%
8.4
14.8
29.5%
2.53
3,146
172
5.5%
8.7
13.9
29.5%
(Curr)
(Prev)
(Curr)
(Prev)
(Curr)
29
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Q4 2014 preview. Tecnicas is yet to announce the date of its Q4 2014 results.
We forecast revenues of 830m, up 11% YoY and 1% sequentially, operating
profit of 42m, also up 11% YoY and 1% sequentially, margin of 5.0%, net profit
of 35m, up 31% YoY and 7% sequentially, and EPS of 0.66.
Downgrade to Underweight. The deteriorating investment outlook in the Middle
East has resulted in the shrinking of Tecnicas' probability weighted bid pipeline
by 29%. We believe there is high risk of Tecnicas backlog contracting over the
coming year. We downgrade Tecnicas to Underweight and reduce our cash
neutral target 2015E PER multiple from 13.4x to 8.0x (in line with the target
2015 European OFS sector average). We reduce our end-2015 price target from
47 to 29 (downside of 17% from current levels).
Figure 21: TR - share price vs. backlog (RHA)
60
9000
8000
7000
6000
5000
4000
3000
2000
50
40
30
20
TR price (in )
Source: J.P. Morgan estimates, Bloomberg.
30
Dec '14
Jun '14
Dec '13
Jun '13
Dec '12
Jun '12
Dec '11
Jun '11
Dec '10
Jun '10
Dec '09
Jun '09
Dec '08
Jun '08
Dec '07
Jun '07
Dec '06
Jun '06
10
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
1Q13
622
24
45
691
3
694
+11
2Q13
655
16
33
704
2
706
+8
3Q13
665
22
24
711
-3
708
+5
Operating costs
EBITDA
EBITDA margin (%)
EBITDA growth (%)
-654
40
5.8
+7
-668
38
5.3
-3
-2
0
38
5.5
2013
2,614
79
153
2,846
8
2,854
+7
1Q14
695
14
20
728
1
729
+5
2Q14
710
16
25
750
1
751
+6
-668
40
5.6
-1
-707 -2,697
40
157
5.4
5.5
-2
+0
-689
40
5.5
+0
-710
41
5.5
+9
-776
44
5.4
+12
-785 -2,961
45
170
5.4
5.4
+12
+8
-2
0
35
5.0
-3
0
37
5.2
-2
0
38
5.1
-9
0
148
5.2
-3
0
37
5.1
-3
0
38
5.1
-3
0
41
5.0
-3
0
42
5.0
-12
0
158
5.1
2
1
3
3
0
2
2
-1
2
-1
0
-1
5
0
5
1
0
1
3
0
3
1
0
1
1
0
1
7
0
7
40
5.8
0
41
5.8
37
5.3
0
38
5.3
39
5.5
1
39
5.6
37
4.9
-4
33
4.4
153
5.4
-3
151
5.3
39
5.3
0
38
5.3
41
5.5
0
41
5.4
42
5.1
0
42
5.1
43
5.2
0
43
5.2
165
5.3
-1
164
5.3
0
41
0
38
0
39
0
33
0
151
0
38
0
41
0
42
0
43
0
164
-6
13.8
35
-5
13.3
33
-5
13.0
34
-6
19.0
27
-22
14.6
129
-6
15.9
32
-7
16.4
34
-9
21.5
33
-8
18.5
35
-30
18.1
135
Minority interests
Net profit
Net profit margin
Net profit growth (%)
0
35
5.0
+8
0
33
4.6
-4
0
34
4.8
-2
0
27
3.6
-24
0
129
4.5
-6
0
32
4.4
-7
0
34
4.5
+5
0
33
4.0
-4
0
35
4.2
+31
0
135
4.3
+5
# shares (m)
EPS ()
Net profit growth (%)
53.7
0.65
+8
53.7
0.60
-4
53.7
0.64
-2
53.7
0.50
-24
53.7
2.39
-6
53.7
0.60
-7
53.7
0.64
+5
53.7
0.61
-4
53.7
0.66
+31
53.7
2.51
+5
4Q13
672
18
51
741
6
746
+5
31
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
TGS Nopec
Neutral
Company Data
Price (Nkr)
Date Of Price
Price Target (Nkr)
Price Target End Date
52-week Range (Nkr)
Market Cap (Nkr bn)
Shares O/S (mn)
172.30
16 Jan 15
165.00
31-Dec-15
210.70143.20
17.74
103
2014E
2015E
2015E
2016E
2016E
2.54
2.49
915
38.9%
2.7
1.66
19.3%
9.0
2.23
871
37.0%
3.1
1.64
16.3%
10.2
1.87
1.83
744
36.0%
3.2
1.57
13.2%
12.2
2.36
898
38.2%
3.0
1.54
16.4%
9.7
1.97
1.95
767
37.0%
3.2
1.48
13.2%
11.6
(Prev)
2.60
2.53
883
43.8%
2.8
1.82
21.9%
8.8
2.51
878
40.3%
3.0
1.71
19.4%
9.1
(Curr)
(Prev)
(Curr)
(Prev)
(Curr)
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
1Q13
2Q13
3Q13
4Q13
2013
1Q14
2Q14
211
210
191
271
883
222
205
190
298
915
+10
-2
-22
-4
-5
+5
-2
-0
+10
+4
-153
Total revenues
Revenue growth (%)
Operating costs
-48
-31
-33
-39
-150
-38
-33
-33
-49
EBITDA
163
179
158
233
733
185
171
157
249
762
77.1
85.4
82.9
85.7
83.0
83.0
83.7
82.7
83.6
83.3
-3
-3
-4
-5
-16
-3
-4
-4
-4
-16
Amortization of MC library
-70
-78
-75
-107
-330
-87
-85
-81
-136
-390
-74
-82
-79
-112
-346
-91
-89
-86
-140
-406
Operating income
89
98
80
120
387
94
82
72
109
356
42.3
46.5
41.8
44.3
43.8
42.2
40.1
37.6
36.5
38.9
+0
+4
-21
+2
-4
+5
-16
-10
-18
-11
Net financials
-3
-3
-3
-6
Pre-tax profit
87
95
82
118
381
97
84
72
110
363
Tax es paid
-26
-27
-26
-34
-112
-29
-23
-17
-33
-102
60
68
56
84
269
68
61
55
77
261
60
68
56
84
269
68
61
55
77
261
-2
-2
-3
-6
-3
-12
-11
Net profit
58
66
58
81
263
65
66
42
77
250
27.5
31.6
30.3
29.9
29.8
29.1
32.3
22.3
25.9
27.4
0.58
0.66
0.54
0.81
2.60
0.66
0.59
0.53
0.75
2.54
-5
+5
-23
+0
-5
+13
-10
-35
+14
+328
33
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Midstream
(pipelines/transport)
Upstream (E&P)
Exploration
(expensed & cap)
Downstream
Development
Refining
SG&A
Exploration
drilling
Development
drilling
Marketing
Capitalised
interest payments
Seismic
(contract/MC)
Production
facilities
Chemicals
Asset retirement
costs
Acquisitions
(corporate/land)
Field
acquisitions
LNG
Costs included
Costs excluded
Our proprietary model of global organic upstream capital expenditure includes data for
99 of the worlds pre-eminent oil and gas exploration and production companies,
including 18 NOCs, 16 IOCs and 65 independent oil companies. In Figure 23 and
Figure 24, we show the capex split for these three groups.
Figure 23: Historical upstream capex split ($m)
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2003A
2005A
2007A
NOCs
IOCs
2009A
2011A
2013A
2003A
2005A
2007A
NOCs
Independents
IOCs
2009A
2011A
2013A
Independents
We record actual costs incurred (expensed and capitalized exploration costs and total
investment in the development and production of oil and gas assets) and exclude
acquisitions (land and corporate), capitalized SG&A and capitalized interest payments,
and any other non upstream components of capex which will not directly apply to the
provision of oil services and equipment, or materials used in the fabrication of
production-related infrastructure. The purpose of this analysis is to try and gauge the
change in global demand for oil services and equipment through revenue expectations
34
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
which are primarily defined by global upstream capital investment. The primary
components of this capex are (i) seismic, (ii) drilling and completion, (iii) subsea
umbilicals, risers and flow lines (SURF), and (iv) other production infrastructure
particularly large offshore production platforms.
Methodology for onshore versus offshore analysis
For the purpose of our simple index, we assign every company either an onshore or
an offshore status depending on the skew of their capex in either region. For
example, BP is assigned an offshore status since its E&P capex is heavily skewed
towards the offshore. All the companies that have been assigned an 'offshore' status
are marked with a '*' against their names in the Tables 13-17 of this report. The total
capex of the companies assigned an offshore status is then used to calculate the
trend in offshore capex. We adopt the same approach to derive our onshore capex
barometer. We caveat that this is by no means a perfect methodology, not least
because many of those companies tagged 'offshore' have onshore activities and vice
versa. However, it is the best that we can do because companies do not break down
their capital spending between onshore and offshore.
Country
CNOOC*
Ecopetrol
Gazprom
Gazprom Neft
MOL
ONGC
PDO
PDVSA
Pemex *
Petrobras*
Petrochina*
Petronas*
PGNiG
PTTEP*
Rosneft
Sinopec
Statoil*
YPF
Total NOC
YoY change (%)
China
Colombia
Russia
Russia
Hungary
India
Oman
Venezuela
Mex ico
Brazil
China
Malay sia
Poland
Thailand
Russia
China
Norw ay
Argentina
Acquired by
804
969 1,609
126
129
161
2,950 4,130 4,170
1,140 1,238 1,505
1,912 2,749 3,888
8,416 8,876 9,246
5,248 7,495 9,021
7,844 11,949 14,238
2,821 3,043 3,472
68
125
238 1,049
888
619 1,770 2,988
2,803 3,110 4,366
4,006 4,903 8,284
902 1,265 1,600
42,174 55,668 69,190
+22
+32
+24
2007A
($m)
4,074
1,281
4,460
2,679
230
4,186
2,382
6,912
10,610
11,464
17,784
6,022
702
1,198
4,786
7,164
9,547
1,626
97,108
+40
2008A
($m )
5,159
1,908
7,540
3,882
323
7,336
3,089
12,836
11,546
17,153
23,951
10,141
603
1,502
6,653
9,834
10,901
2,117
136,474
+41
2009A
($m)
6,254
2,771
7,695
2,870
535
7,209
2,806
8,124
13,510
18,936
19,685
7,496
616
2,023
6,154
9,489
11,727
1,172
129,071
-5
2010A
($m)
5,071
3,913
7,795
3,264
529
8,665
2,736
6,897
14,234
21,354
25,114
6,937
727
1,643
6,650
9,404
11,630
1,742
138,305
+7
2011A
($m )
6,424
5,646
8,678
3,224
489
8,940
2,657
9,549
13,179
21,425
26,096
6,847
855
4,215
9,282
11,155
15,856
2,329
156,845
+13
2012A
($m )
9,193
6,049
7,622
3,883
536
6,413
3,800
13,793
14,574
24,518
34,759
10,050
515
2,834
9,623
14,868
19,020
2,430
184,480
+18
2013A
($m)
14,912
6,537
9,957
5,660
684
8,584
4,300
12,750
17,090
28,261
38,980
12,216
516
2,945
11,580
14,444
20,444
5,084
214,944
+17
2014E
($m )
19,723
6,598
8,500
6,200
910
7,881
4,300
15,000
22,813
27,136
36,619
11,760
544
2,936
10,000
9,737
20,333
4,500
215,490
+0
24,650
27,136
35,551
9,201
765
3,071
12,200
9,696
20,333
4,500
185,966
-1.2
8
0
-3
-22
41
5
22
0
0
0
Source: Company reports; note where possible are data is based on costs incurred (capitalized and expensed exploration and development costs) and excluding (i) corporate acquisitions, (ii) land
acquisitions, (iii) capitalized interest, (iv) overhead costs and any non-cash charges including asset retirement costs. * Categorized as Offshore in our Onshore versus Offshore barometer.
35
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Table 14: Historical and budgeted upstream capex data by company IOCs ($m)
Company
Country
Acquired by
Bashneft
BP*
BG Group*
Chev ron*
ConocoPhillips*
ENI*
Ex x on Mobil*
GALP*
Inpex *
Lukoil
Marathon*
OMV*
Repsol*
Roy al Dutch Shell*
Tatneft
TOTAL*
Total IOC
YoY change (%)
Russia
UK
UK
US
US
Italy
US
Portugal
Japan
Russia
US
Austria
Spain
UK/Netherlands
Russia
France
2006A
($m)
258
12,562
2,241
11,961
10,184
5,984
13,636
127
1,861
5,131
1,794
1,009
2,682
15,027
443
8,304
93,205
+30
2007A
($m)
313
14,597
3,325
16,129
12,172
10,439
13,066
264
2,529
7,158
17,527
2,158
3,536
20,051
761
10,974
134,999
+45
2008A
($m )
459
17,316
4,528
17,879
13,239
14,623
19,734
287
3,133
7,967
4,029
2,779
3,883
20,821
941
12,644
144,261
+7
2009A
($m)
273
15,298
4,346
14,085
10,181
12,947
20,241
269
3,092
4,815
3,352
1,807
2,946
24,224
518
12,980
131,373
-9
2010A
($m)
273
14,846
5,487
17,552
9,823
13,351
26,265
430
2,788
5,034
3,305
1,797
3,371
21,441
616
12,807
139,186
+6
2011A
($m )
490
15,897
7,295
18,549
12,100
13,167
27,153
415
3,542
6,690
3,016
2,106
2,940
21,138
672
18,979
154,148
+11
2012A
($m )
309
19,857
7,955
23,423
16,861
13,744
30,343
782
8,180
9,285
5,383
1,958
2,866
31,148
827
20,382
193,303
+25
2013A
($m)
962
21,628
9,410
30,633
20,046
14,755
30,779
932
9,492
11,973
5,139
3,298
3,098
35,796
825
26,915
225,681
+17
2014E
($m )
1,844
20,400
9,000
35,800
16,700
14,731
32,900
1,194
10,338
11,600
5,777
4,138
3,581
36,000
700
20,800
225,502
-0
2014E
($m )
532
704
7,306
756
2,227
1,765
2,550
477
3,621
-3
0
29
-8
Source: Company reports. * Categorized as Offshore in our Onshore versus Offshore barometer.
Table 15: Historical and budgeted upstream capex data by company Canadian independents ($m)
Company
Athabasca Oil Corp.
Canada
Bay tex Energy
Canada
Canadian Natural Resources Canada
Canadian Oil Sands
Canada
Cenov us
Canada
Crescent Point Energy
Canada
EnCana
Canada
Canada
Gran Tierra
Husky Energy
Canada
Lone Pine Resources
Canada
MEG Energy
Canada
Nex en
Canada
Penn West Petroleum
Canada
Petro-Canada
Canada
Suncor
Canada
Talisman
Canada
Vermilion Energy
Canada
Western Oil Sands
Canada
Total Canada Independents
YoY change (%)
Acquired by
66
1,772
751
102
3,888
742
105
5,774
321
15
4,150
21
5,197
30
6,387
94
6,151
1,234
1,560
2,072
2,105
Marathon
1,086
255
884 1,273 2,148 2,295
399
395
355
473
700
523
1,128 1,332 1,769 1,709
1,057 1,420 1,908 2,529
4,621 5,475 5,630 5,240 5,056 4,644
1,431 1,763 2,447 3,508
3,763 4,388 3,837 3,218 3,000
57
52
94
119
325
496
452
536
611
439
88
30
43
202
11,950 15,632 21,985 25,383 27,206 33,551 20,093 27,230 34,914 38,023 32,585 30,392 20,632
+31
+41
+15
+7
+23
-40
+36
+28
+9
-14
-7
-24.7
Source: Company reports * Categorized as Offshore in our Onshore versus Offshore barometer.
36
-77
-25
-8
-28
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Table 16: Historical and budgeted upstream capex data by company US independents ($m)
Company
Anadarko*
Apache
Berry Petroleum Company
Bill Barrett
Burlington Resources
Cabot Oil & Gas
Callon Petroleum
Chesapeake
Cimarex Energy
Clay ton Williams Energy
Cobalt*
Comstock Resources
US
US
US
US
US
US
US
US
US
US
US
US
US
Consol Energy
Continental Resources
US
Denbury
US
Dev on Energy
US
El Paso
US
Encore
US
Energy Partners Limited*
US
Energy XXI*
US
EOG Resources
US
Ev ergreen Resources
US
Ex co Resources
US
Forest Oil Corporation
US
Freeport-McMoran
US
Goodrich Petroleum
US
Hess*
US
Houston Ex ploration
US
Kerr-McGee*
US
Kodiak Oil & Gas
US
Laredo Petroleum
US
Magnum Hunter
US
Mariner Energy
US
Murphy Oil Corp*
US
New field Ex ploration Company
US
Noble Energy Inc
US
Occidental
US
Patina
US
PDC Energy
US
Penn Virginia Corporation US
PetroQuest
US
Pioneer Natural Resources US
Plains Ex ploration & Production
USCompany
Pogo Producing Company US
QEP Resources
US
Rosetta Resources
US
Southw estern Energy
US
Spinnaker Ex ploration Company
US
St. Mary
US
Stone Energy Corporation* US
Sw ift Energy
US
Tom Brow n
US
Unit Corp
US
Unocal*
US
Vintage Petroleum
US
Venoco
US
Westport Resources Corp US
XTO Energy
US
Total US Independents
YoY change (%)
Acquired by
Kinder Morgan
Denbury
Energy XXI
Pioneer
Forest Oil
Anardarko
Whiting Petroleum
2003A 2004A
($m)
($m)
2,559 2,861
1,453 2,341
43
72
136
192
1,357 1,560
160
221
50
58
590
996
151
279
77
118
Encana
2013A
($m)
6,835
9,563
2014E
($m)
8,265
8,500
458
425
1,332
176
37
251
1,610
2,657
3,270
53
500
194
595
447
764
693
1,320
300
534
347
679
855
702
403
662
270
659
41
1,501
310
2,861
2
158
1,976
480
3,000
9
255
2,966
498
287
3,324
352
3,657
225
2,865
250
3,507
307
5,998
231
7,879
220
6,095
420
813
3,400
325
5,800
30
41
11
27
328
67
502
261
724
810
925
994
696
940
1,225
525
-57
1,200
4,090
6,600
-25
-17
-20
195
2,395
606
188
186
848
112
8
280
20
1,247
228
2,559
245
132
591
728
500
1,498
230
37
103
53
557
199
464
345
70
227
249
229
297
106
288
83
1,880
307
433
18
3,159
490
119
81
320
228
357
283
3,511
864
287
11
144
3,160
697
63
5,204
877
246
80
403
531
855
647
4,979
962
817
94
7,028
1,371
356
140
580
595
1,913
1,141
5,574
1,579
881
61
8,078
1,524
361
334
520
470
2,833
1,074
6,359
1,115
184
4,765
1,402
222
757
342
725
3,237
860
5,274
1,500
215
5,200
1,950
401
800
505
1,005
4,550
960
5,227
57
278
4,969
101
511
6,161
223
802
6,435
349
785
6,290
281
3,426
667
326
280
158
2,567
1,230
99
106
137
280
145
285
113
222
70
1,664
172
2011A 2012A
($m)
($m)
4,994 6,128
5,695 8,877
545
731
628
787
328
274
499
586
5,508
1,358
368
308
158
106
551
99
5,120
904
215
2009A 2010A
($m)
($m)
4,115 4,545
3,145 3,894
138
323
333
441
227
153
290
480
4,624
1,154
349
383
143
83
159
71
573
538
527
1,140
Noble Energy
176
31
80
27
572
Freeport-McMoran
110
Plains E&P Co.
339
236
2007A 2008A
($m)
($m)
3,639 4,326
4,201 5,425
284
395
413
557
668
190
5,734
1,303
311
41
312
447
707
569
6,962
1,573
619
171
264
4,282
85
84
Cimarex
Apache
Norsk Hy dro
2005A 2006A
($m)
($m)
2,881 4,382
3,368 3,519
120
291
314
339
2,359
311
456
69
155
1,789 3,115
601
984
184
250
1,565
4,040
1,555
-22
-20
850
307
6
-39
2,700
550
-41
-43
410
484
7,380
5,960
-19
3,500
175
5,800
3
-46
0
172
944
971
890
2,019
436
1,027
1,670
1,303
2,755
545
1,335
1,891
1,578
3,155
765
1,744
1,903
1,730
4,441
417
1,690
1,266
1,142
2,986
607
1,770
1,574
2,006
3,716
2,465
2,086
2,931
6,329
3,798
1,837
3,537
8,327
4,261
2,021
4,059
7,164
3,800
1,600
4,923
8,262
82
139
106
991
430
457
464
89
327
235
319
360
175
135
236
140
1,394
592
899
649
174
631
213
413
193
1,712
1,100
1,015
667
269
1,224
286
549
275
1,300
1,097
93
157
39
363
1,582
162
311
79
984
1,082
306
398
133
2,022
2,049
254
357
109
2,789
2,077
392
439
96
2,759
647
752
140
3,100
557
-14
168
3,255
20
5
1,120
188
1,345
834
90
1,257
1,135
282
1,379
1,304
469
1,506
1,324
625
1,468
1,455
874
1,685
1,775
1,200
2,207
1,660
750
2,435
-6
-38
10
490
370
262
697
145
366
675
302
496
376
200
89
813
227
335
1,468
414
511
1,567
382
639
1,519
622
460
2,055
895
395
850
113
-5
-72
142
218
273
393
185
328
436
437
458
718
Chev ron
1,930
Occidental
250
Delisted, priv ate co.
168
292
254
128
174
208
192
Kerr-McGee
298
370
Ex x on Mobil
460
584 1,387 2,145 2,756 3,833 2,946
24,636 29,372 37,899 44,042 52,627 63,588 41,314 52,369 73,705 87,109 80,363 93,168 60,431
+19
+29
+16
+19
+21
-35
+27
+41
+18
-8
+16
-20.0
Source: Company reports * Categorized as Offshore in our Onshore versus Offshore barometer.
37
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Table 17: Historical and budgeted upstream capex data by company International independents ($m) and Independents Totals
Company
Afren
Alliance Oil
Cairn Energy
EnQuest*
Genel Energy
Lundin Petroleum*
Norsk Hydro*
Nov atek
Oil Search
Ophir Energy
Pacific Rubiales
Premier Oil*
Range Resources
Santos
Tullow
Woodside*
Total Intl. Independents
YoY change (%)
Total Independents
YoY change (%)
Acquired by
UK
Russia
UK
UK
UK
Sw eden
Norw ay
Russia
PNG
UK
Colombia
UK
Australia
Australia
UK
Australia
Alliance Group
Statoil
19
170
110
283
113
273
35
1,452
76
76
162
1,574
228
80
248
2,797
192
256
377
3,726
170
266
70
103
487
75
324
2,822
92
176
683
177
557
3,918
+39
133
313
731
351
1,203
6,616
+69
138
535
974
583
1,467
8,623
+30
581
695
519
691
320
1,252
338
529
581
92
257
170
215
300
815
926
597
1,093 1,361 1,219
735
879 1,185
2,412 4,449 4,265
7,366 11,453 10,378
-15
+55
-9
2014E
($m )
845
530
1,200
650
2,080
317
863
350
1,450
-40
-28
-46
-30
793
868 1,030 1,310 1,600 1,500
1,357 1,561 1,845 1,660 1,065
58
79
359
389
600
325
759 1,096 1,650 1,892 2,300 1,200
512
656
756
864 1,160
820
892 1,365 1,466 1,236 1,225 1,440
1,728 3,171 3,478 4,220 3,153 1,637
1,235 1,432 1,870 1,800 2,100 1,900
3,636 3,429 1,528
586 1,120
13,364 17,170 16,849 18,338 19,628 12,638
+29
+28
-2
+9
+7
-27.5
-6
39,408 48,921 66,501 78,048 87,199 108,592 71,785 92,962 125,789 141,981 131,286 143,188 93,672
+24
+36
+17
+12
+25
-34
+30
+35
+13
-8
+9
-22.2
Source: Company reports * Categorized as Offshore in our Onshore versus Offshore barometer.
38
-46
-48
-29
18
-48
-10
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
39
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
come under pressure and will also increase the risk of impairments of its MC library.
The weak seismic market should also give TGS the opportunity to add quality data to
its MC library at lower costs. In the long term, we believe this can help deliver higher
MC sales to investment returns. We expect TGS to continue its buyback program in
2015 and grow its dividend using its strong balance sheet.
Valuation
Our Dec-15 NOK165 per share price target is based on a target 2015 P/BV multiple
of 1.5x and a BV of $14.2. Our 1.5x target 2015 P/BV multiple is at a 7% discount to
current levels, as we expect further multiple compression into 2015 as the market
weakens. TGSs asset light model, net cash position, strong dividend yield and share
buyback plan should help provide a floor to excessive multiple compression.
Risks to Rating and Price Target
Key upside risks that could keep our rating and price target from being achieved
include: 1) seismic market being better than expected in 2015, 2) oil prices increasing
materially from current levels budgets, 3) greater-than-expected interest in the key
multi-client regions US Gulf of Mexico, Norway and Barents Seas;
Downside risks to our rating and price target include: 1) lower pre-funding than
expected, 2) delays to licensing rounds leading to lower late sales, and 3) increased
investments in MC surveys with lower pre-funding than average thus depressing
short-term earnings.
42
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
746
3.3%
42
5.6%
Ratio Analysis
FY13 FY14E FY15E FY16E in millions, except per share data
697
660
663
668 Shares in issue (mn)
(6.6%) (5.3%) 0.4% 0.8% DPS (cents)
58
64
68
70 Dividend payout ratio
8.3%
(14)
(18)
28
41
28
41
3.7%
5.8%
(10)
(10)
(161)
(31)
0
0
(143)
0
(19)
(3)
(13.4%) 1421.1%
(2)
0
(207)
(7)
15
29
(71.2%)
86.7%
(171.84)
(5.67)
12.69
23.58
(70.9%)
85.7%
FY12
232
117
91
141
351
100
250
583
FY13
222
114
81
141
291
105
187
514
182
144
Non-current liabilities
231
237
Total Liabilities
Shareholders' equity
Minority Interests
Total liabilities & SE
Net debt / (Net Cash)
Capital Employed
412
167
4
583
63
230
380
131
3
514
60
191
Valuation
9.7% 10.3% 10.5% P/E adjusted
P/BV
(16)
(18)
(18) P/CF
49
50
52 EV/CE
49
50
52 EV/Sales
7.4% 7.5% 7.8% EV/EBITDA
(9)
(10)
(10) FCFF Yield
(3)
(1)
(1) Dividend Yield
0
1
1
38
40
42
(8)
(8)
(9)
21.2% 21.0% 21.0% Ratios
(1)
(1)
(1) Net Debt (Cash) / Equity
28
30
32 Net Debt / EBITDA
32
33
35 ROE
12.9% 2.3% 5.7% ROCE
23.00 24.91 26.15
26.48 27.10 28.64 Market Cap
12.3% 2.3% 5.7%
Cash flow statement
FY14E FY15E FY16E in millions, except per share data
263
265
267 Profit before tax
113
113
113 Depreciation & impairment
123
125
127 (Increase)/Decrease in WC
140
139
139 Other CFO
286
296
309 Cash flow from operations
69
79
99 Capex
217
218
210 Other CFI
549
561
576 Cash flow from Investing activities
Dividends paid
136
135
134 Other financing CF
Cash flow from Financing Activities
268
268
268 Net Change in Cash
FCFF
404
403
402 Operating CFPS
142
155
169 FCFF per share
3
4
4
549
561
576
126
115
93
268
269
263
15.1
8.1
7.3
7.1
6.7
1.4
1.8
1.6
1.5
1.4
8.0
6.5
39.6
4.8
4.0
0.9
1.4
1.6
1.3
1.2
0.4
0.4
0.5
0.5
0.5
7.0
5.0
5.6
5.1
4.7
11.3% 11.2% (18.9%) 15.8% 20.1%
7.3% 7.3%
7.3% 7.3% 7.3%
37.1% 45.2%
1.5
1.0
5.4% 19.4%
6.6% 15.4%
233
43
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
3,414
7.6%
1,036
30.4%
(366)
(1,213) (560) (390)
(341)
(399) (486) (351)
329
(417) (138)
93
329
(417) (138)
93
9.6% (11.1%) (4.6%) 3.3%
(157)
(192) (200) (185)
(20)
0
(49)
0
153
(609) (387)
(93)
(99)
(83)
(79)
32
64.6% (13.6%) (20.5%) (35.0%)
20
(7)
(64)
(5)
(17)
(8)
(7)
(5)
74
(699) (530)
(65)
74
(699) (530)
(65)
(377.9%) (1041.8%) (24.2%) (87.7%)
0.46
(3.95) (2.99) (0.37)
0.45
(3.95) (2.99) (0.37)
(358.1%) (970.8%) (24.3%) (87.7%)
FY12
4,859
935
2,416
2,483
2,483
2,483
1,160
350
3,473
1,520
1,953
8,333
1,558
596
2,354
530
1,824
8,263
1,281
540
1,780
185
1,595
7,457
1,126
535
1,741
248
1,493
7,334
1,222
1,544
1,173
1,113
Non-current liabilities
LT borrowings
Other LT liabilities
2,519
2,253
266
2,829
2,496
333
2,916
2,583
333
2,914
2,581
333
Total Liabilities
Shareholders' equity
Minority Interests
Total liabilities & SE
Net debt / (Net Cash)
Capital Employed
3,741
4,493
99
8,333
785
5,278
4,373
3,800
90
8,263
2,218
6,018
4,089
3,270
98
7,457
2,448
5,718
4,027
3,205
103
7,334
2,383
5,588
44
FY16E
2,738
(1.4%)
877
Ratio Analysis
$ in millions, except per share data
Shares in issue (mn)
DPS (cents)
Dividend payout ratio
32.0% Valuation
P/E adjusted
(365) P/BV
(335) P/CF
177 EV/CE
177 EV/Sales
6.5% EV/EBITDA
(186) FCFF Yield
0 Dividend Yield
(9)
3
(35.0%)
15 Ratios
(5) Net Debt (Cash) / Equity
9 Net Debt / EBITDA
9 ROE
(113.8%) ROCE
0.05
0.05 Market Cap
(113.8%)
Cash flow statement
FY16E $ in millions, except per share data
5,565 Net income
1,536 Depreciation & impairment
2,483 (Increase)/Decrease in WC
1,001 Other CFO
545 Cash flow from operations
1,740 Capex
267 Other CFI
1,473 Cash flow from Investing activities
7,305 Dividends paid
Share issue
1,107 Debt issued
Debt repayment
2,876 Other financing CF
2,542 Cash flow from Financing Activities
333 Net Change in Cash
FCFF
3,983 Operating CFPS
3,214 FCFF per share
108
7,305
2,325
5,539
FY12
162
-
12.3
NM
NM
NM 110.0
0.20
0.26
0.30 0.31 0.31
1.0
1.1
1.2
1.1
1.1
0.3
0.6
0.6
0.6
0.6
0.5
0.8
1.1
1.2
1.2
1.7
2.7
3.8
4.0
3.8
14.8% (86.6%) (3.1%) 25.3% 24.6%
-
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Ratio Analysis
FY12 FY13 FY14E FY15E FY16E $ in millions, except per share data
143
184
196
244
306 Shares in issue (mn)
33.4% 29.2% 6.4% 24.4% 25.4% DPS (cents)
93 121
125
157
200 Dividend payout ratio
Valuation
65.5% 65.8% 63.7% 64.2% 65.3% P/E adjusted
P/BV
P/CF
(14) (17)
(19)
(24)
(26) EV/CE
77 104
105
132
174 EV/Sales
77 104
105
132
174 EV/EBITDA
54.1% 56.4% 53.6% 54.2% 56.8% FCFF Yield
(23) (29)
(19)
(19)
(16) Dividend Yield
(3)
(2)
(7)
0
0
51
73
79
114
157
(3)
(4)
(3)
(6)
(16)
5.4% 5.3% 3.6% 5.0% 10.0% Ratios
(0)
(1)
(2)
(2)
(2) Net Debt (Cash) / Equity
0
6
7
0
0 Net Debt / EBITDA
48
74
82
106
140 ROE
48
74
82
106
140 ROCE
117.0% 53.8% 10.3% 30.2% 31.8%
0.16 0.25 0.24 0.30 0.40 Market Cap
0.16 0.25 0.24 0.30 0.40
117.0% 53.8% (2.4%) 26.4% 31.8%
Cash flow statement
FY12 FY13 FY14E FY15E FY16E $ in millions, except per share data
459
495
622
790
838 Profit before tax
456
490
618
787
835 Income Tax Paid
3
5
4
4
4 Depreciation & impairment
40
91
89
93
104 (Increase)/Decrease in WC
2
47
42
35
32 Others
38
44
47
58
73 Cash flow from operations
499
586
711
883
943 Capex
Other CFI
83
43
38
45
54 Cash flow from Investing activities
Capital Increase / (Share Buyback)
229
359
313
379
301 Dividends paid
102
254
228
282
258 Debt issue
127
105
86
98
43 Debt repayment
312
402
352
424
354 Other financing cash flow
186
183
357
454
582 Cash flow from Financing Activities
1
1
3
4
6 Net Change in Cash
499
586
711
883
943 FCFF
274
327
280
354
278 Operating CFPS
461
510
637
808
861 FCFF per share
FY12
300
0.00
0.0%
8.9
2.3
5.0
1.8
5.4
8.2
14.0%
0.0%
5.8
5.9
2.3
1.3
3.8
4.2
1.7
1.3
4.4
3.9
6.7
6.2
14.2% (6.6%)
0.0% 1.6%
4.7
3.6
1.1
0.8
3.4
2.8
1.2
0.9
3.5
2.5
5.4
3.8
1.6% 21.0%
2.2% 2.8%
FY12
51
(2)
17
(7)
26
85
(30)
4
(25)
0
(1)
10
(49)
(22)
(62)
(2)
60
0.28
0.20
45
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
1,045
(8.9%)
(64)
(6.1%)
(25)
(89)
(89)
(8.5%)
0
(110)
(1)
(0.7%)
(110)
(110)
(249.6%)
(0.42)
(0.42)
(237.5%)
FY12
390
181
166
44
676
263
413
1,067
Valuation
7.0% 11.4% 10.0% 10.7% P/E adjusted
P/BV
P/CF
(24)
(23)
(25) (25) EV/CE
53
96
69
86 EV/DACF
53
96
69
86 EV/Sales
4.8% 9.2% 7.3% 8.3% EV/EBITDA
FCF Yield
0
17
0
0 Dividend Yield
32
104
60
81 Buyback Yield
(1)
(1)
(1)
(1)
3.4% 0.9% 1.7% 1.2% Ratios
31
103
59
80 Net Debt (Cash) / Equity
31
86
59
80 Net Debt / EBITDA
(127.8%) 178.4% (30.7%) 34.7% ROE
0.12
0.33
0.17 0.23 ROCE
0.12
0.27
0.17 0.23
(127.8%) 129.8% (36.0%) 34.7% Market Cap
622
491
462
422
458
38
140
134
132
160
660
406
632
443
596
656
554
701
618
761
1,067
(104)
302
1,075
(184)
259
1,253
(274)
382
46
Ratio Analysis
FY13 FY14E FY15E FY16E $ in millions, except per share data
1,092 1,046
941 1,035 Shares in issue (mn)
4.4% (4.2%) (10.0%) 10.0% DPS (cents)
77
119
94 111 Dividend payout ratio
1,255 1,379
(258) (290)
443
471
FY12
260
0.00
0.0%
NM
12.8
5.6
1.6
3.4
8.4
0.9
1.2
0.8
19.2
15.0
23.1
0.4
0.3
0.2
NM
4.3
2.0
58.7% 38.2% (1.8%)
0.0% 0.0% 0.0%
-
8.7
6.5
6.4
4.8
0.6
0.5
30.8
44.6
0.3
0.2
2.8
2.0
1.6% 12.1%
2.9% 3.9%
-
FY12
(89)
(22)
25
301
(2)
250
(17)
(2)
(19)
0
(21)
(149)
83
22
231
0.96
0.89
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
1,518
21.1%
(642)
(38)
(61)
776
51.1%
(138)
(345)
294
294
19.3%
(61)
(4)
228
(43)
18.8%
(0)
186
186
450.1%
0.86
0.85
451.9%
FY12
2,437
143
140
1,438
382
335
837
390
446
3,274
369
Non-current liabilities
LT borrowings
Other LT liabilities
983
916
67
Total Liabilities
Shareholders' equity
Minority Interests
Total liabilities & SE
Net debt / (Net Cash)
Capital Employed
1,352
1,922
0
3,274
527
2,448
Ratio Analysis
FY13 FY14E FY15E FY16E $ in millions, except per share data
1,502 1,437 1,265 1,265 Shares in issue (mn)
(1.1%) (4.3%) (11.9%) (0.0%) DPS (cents)
(571)
(636)
(582) (591) Dividend payout ratio
(39)
(39)
(38)
(37)
(63)
(58)
(60)
(55) Valuation
829
704
585
582 P/E adjusted
55.2% 49.0% 46.3% 46.0% P/BV
(145)
(209)
(184) (188) P/CF
(302)
(309)
(286) (279) EV/CE
382
186
115
116 EV/Sales
382
186
115
116 EV/EBITDA
25.4% 12.9%
9.1% 9.1% FCFF Yield
(41)
(64)
(40)
(41) Dividend Yield
(13)
(28)
(5)
(5)
328
94
70
69
(90)
(60)
(21)
(17)
27.3% 63.3% 30.0% 25.0% Ratios
0
0
0
0 Net Debt (Cash) / Equity
238
35
49
52 Net Debt / EBITDA
238
35
49
52 ROE
28.5% (85.5%) 41.7% 6.5% ROCE
1.11
0.16
0.23 0.24
1.10
0.16
0.23 0.24 Market Cap
29.1% (85.4%) 41.7% 6.5%
Cash flow statement
FY13 FY14E FY15E FY16E $ in millions, except per share data
2,781 2,956 3,009 3,170 Net income
165
165
165
165 Depreciation & impairment
140
140
140
140 (Increase)/Decrease in WC
1,630 1,696 1,683 1,783 Other CFO
577
714
784
851 Cash flow from operations
270
242
237
232 Capex
763
744
773
699 Investments in MC library
264
265
350
276 Other CFI
500
479
423
423 Cash flow from Investing activities
3,544 3,700 3,782 3,870 Dividends paid
Debt issued
391
384
341
366 Debt repayment
Other financing CF
1,088 1,248 1,341 1,370 Cash flow from Financing Activities
1,020 1,179 1,272 1,301 Net Change in Cash
69
69
69
69 FCFF
Operating CFPS
1,479 1,632 1,682 1,736 FCFF per share
2,066 2,068 2,100 2,134
0
0
0
0
3,544 3,700 3,782 3,870
767
935
944 1,071
2,832 3,003 3,044 3,205
6.0
4.7 32.2
0.58 0.54 0.54
1.5
1.4
1.8
0.7
0.7
0.7
1.0
1.2
1.4
2.0
2.2
2.8
8.7% (3.2%) (9.3%)
5.5% 7.6% 1.6%
22.7 21.3
0.53 0.52
1.9
2.0
0.7
0.7
1.6
1.7
3.4
3.7
4.1% (6.3%)
1.5% 1.6%
FY12
186
484
47
36
753
(358)
(297)
(2)
(658)
(42)
156
(191)
(53)
(129)
(34)
97
3.46
0.45
47
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
2,298
132
222
4
2,657
1.5%
157
5.9%
a.
Depreciation
(8)
a.
198
12
2
(63)
149
149
5.6%
8
(0)
1
158
(22)
13.6%
(3)
133
133
3.0%
2.48
2.48
3.0%
2,132
Non-current liabilities
Total Liabilities
Shareholders' equity
Minority Interests
Total liabilities & SE
Net debt / (Net Cash)
Capital Employed
FY12
162
71
34
57
2,484
617
1,867
2,646
71
2,203
432
12
2,646
(266)
473
48
Ratio Analysis
FY13 FY14E FY15E FY16E in millions, except per share data
2,614 2,960 3,050 3,150 Shares in issue (mn)
79
85
220
350 DPS (cents)
153
83
90
100 Dividend payout ratio
8
3
2
2
2,854 3,131 3,362 3,602 Valuation
7.4% 9.7% 7.4% 7.1% P/E adjusted
157
170
180
196 P/BV
5.5% 5.4% 5.4% 5.4% P/CF
EV/CE
(9) (12)
(10)
(10) EV/Sales
EV/EBITDA
220
236
244
255 FCFF Yield
(4)
(3)
7
18 Dividend Yield
(1)
(0)
0
0
(67)
(74)
(81)
(86) Ratios
148
158
170
186 Net Debt (Cash) / Equity
148
158
170
186 Net Debt / EBITDA
5.2% 5.1% 5.1% 5.2% Book-to-bill
5
7
7
8 Sales/Backlog (t-1)
0
0
0
0 ROE
(3)
(1)
0
0 ROCE
151
164
177
194
(22)
(30)
(34)
(39) Market Cap
14.6% 18.1% 19.0% 20.0%
(1)
0
0
0
128
135
143
155
128
135
143
155
(4.3%) 5.5% 6.3% 8.3%
2.38 2.51 2.66 2.88
2.38 2.51 2.66 2.88
(4.3%) 5.5% 6.3% 8.3%
Cash flow statement
FY13 FY14E FY15E FY16E in millions, except per share data
174
172
172
172 Profit before tax
71
71
71
71 Depreciation & impairment
42
40
40
40 (Increase)/Decrease in WC
61
61
61
61 Other CFO
2,189 2,429 2,635 2,853 Cash flow from operations
591
676
752
836 Capex
1,598 1,753 1,883 2,017 Other CFI
2,363 2,601 2,806 3,025 Cash flow from Investing activities
Dividends paid
1,840 2,025 2,173 2,328 Other financing CF
Cash flow from Financing Activities
84
84
84
84 Net Change in Cash
FCFF
1,924 2,109 2,257 2,412 Operating CFPS
434
488
545
609 FCFF per share
4
4
4
4
2,363 2,601 2,806 3,025
(485) (443) (472) (539)
473
533
590
654
FY12
54
1.40
56.2%
14.2
4.4
2,400.0
3.0
0.5
8.3
(0.5%)
4.0%
14.8
4.4
22.4
2.8
0.5
8.4
3.6%
4.0%
14.0
3.9
11.1
2.5
0.4
7.3
8.5%
4.3%
13.2
3.5
11.0
2.1
0.3
6.5
8.6%
4.5%
12.2
3.1
10.2
1.7
0.3
5.5
9.3%
4.8%
FY12
136
8
(101)
(43)
1
(11)
(2)
(13)
(73)
0
(78)
(91)
(10)
0.01
(0.19)
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
FY12
932
53.2%
(7)
(84)
(3)
(36)
802
86.0%
(12)
(387)
402
402
43.1%
5
(0)
407
(123)
30.2%
284
284
66.7%
2.79
2.75
66.4%
FY13
883
(5.2%)
(20)
(81)
(4)
(45)
733
83.0%
(16)
(330)
387
387
43.8%
4
(9)
381
(112)
29.5%
269
269
(5.4%)
2.63
2.60
(5.1%)
FY14E
915
3.6%
(5)
(101)
(5)
(43)
762
83.3%
(16)
(390)
356
356
38.9%
7
(0)
363
(102)
28.0%
261
261
(2.9%)
2.57
2.54
(2.5%)
FY15E
744
(18.7%)
(7)
(74)
(5)
(43)
614
82.6%
(16)
(331)
268
268
36.0%
7
0
275
(82)
30.0%
192
192
(26.4%)
1.89
1.87
(26.4%)
FY16E
767
3.2%
(8)
(77)
(5)
(43)
635
82.8%
(16)
(336)
284
284
37.0%
6
0
290
(87)
30.0%
203
203
5.5%
2.00
1.97
5.4%
Ratio Analysis
$ in millions, except per share data
Shares in issue (mn)
DPS (cents)
Dividend payout ratio
Valuation
P/E adjusted
P/BV
P/CF
EV/CE
EV/Sales
EV/EBITDA
FCFF Yield
Dividend Yield
Ratios
Net Debt (Cash) / Equity
Net Debt / EBITDA
ROE
ROCE
Market Cap
FY12
104
1.06
38.6%
8.3
2.02
3.6
2.7
2.2
2.5
3.3%
4.6%
8.8
1.82
4.3
2.2
2.3
2.8
3.5%
4.9%
9.0
1.66
3.6
1.9
2.2
2.7
7.9%
4.9%
12.2
1.57
4.1
1.8
2.7
3.2
6.0%
4.8%
11.6
1.48
4.3
1.7
2.6
3.2
4.3%
4.8%
FY12
407
400
(80)
(89)
25
663
(509)
(55)
(563)
(103)
(5)
(25)
(5)
6
(97)
3
79
6.40
0.76
(1)
(148)
(58)
82
5.26
0.80
0
(137)
48
185
6.41
1.79
0
(117)
24
141
5.63
1.37
0
(112)
(10)
102
5.33
0.99
49
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or
intervention.
Important Disclosures
Market Maker/ Liquidity Provider: J.P. Morgan Securities plc and/or an affiliate is a market maker and/or liquidity provider in
Cape, CGG, Gulf Marine Services, Lamprell PLC, Petroleum Geo-Services, Tecnicas Reunidas, TGS Nopec.
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Gulf Marine
Services, Lamprell PLC, Petroleum Geo-Services within the past 12 months.
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Cape, Gulf Marine
Services, Lamprell PLC, Petroleum Geo-Services, Tecnicas Reunidas.
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment
banking clients: Gulf Marine Services, Lamprell PLC, Petroleum Geo-Services.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Lamprell PLC, Petroleum GeoServices, Tecnicas Reunidas.
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,
and the services provided were non-securities-related: Petroleum Geo-Services.
Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Gulf
Marine Services, Lamprell PLC, Petroleum Geo-Services.
Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Cape, Gulf Marine Services, Lamprell PLC, Petroleum Geo-Services.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Lamprell PLC, Petroleum Geo-Services, Tecnicas Reunidas.
Broker: J.P. Morgan Securities plc acts as Corporate Broker to Cape, Lamprell PLC.
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
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50
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
Date
03-Jun-11
OW
534
750
19-Aug-11 OW
465
697
09-Nov-11 OW
465
596
01-Feb-12 OW
392
518
06-Mar-12 OW
445
576
22-Mar-12 OW
464
633
25-May-12 OW
205
551
01-Aug-12 OW
187
399
25-Oct-12
OW
273
391
02-Jan-13
OW
212
311
15-May-13 OW
273
308
28-Aug-13 OW
281
323
29-Aug-13 OW
281
320
26-Sep-13 N
261
299
15-Nov-13 N
270
288
30-Jun-14
OW
296
350
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jun 03, 2011.
27-Aug-14 OW
301
355
12-Nov-14 OW
282
350
Date
OW 596p
OW 633pOW 391p
N 299p
OW 350p
885
OW 697pOW 576p
OW 399p
OW 320p
OW 355p
708
OW 750p OW 518p
OW 551pOW 311p
OW 308p
OW N
323p
288p OW 350p
Price(p)
531
354
177
0
Apr
08
Jan
09
Oct
09
Jul
10
Apr
11
Jan
12
Oct
12
Jul
13
Apr
14
Jan
15
85
N 25.4
68
OW 28
51
UW 21.7
OW 12.5
OW 17.5
N 18 N 18.4
UW 23
OW 25.1
N 20.4
N 18.5
OW 26.9
OW 21.5
N 7.2
N 29.1
OW 22.1
N 18.6
Price()
34
17
0
Sep
06
Mar
08
Sep
09
Mar
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Mar 24, 2009.
Sep
12
Mar
14
UW 3.5
24-Mar-09 OW
9.50
12.50
04-Aug-09 OW
14.70
17.50
04-Feb-10 N
18.26
18.00
21-Apr-10
23.86
28.00
23-Sep-10 N
16.56
18.40
19-Jan-11
UW
22.18
23.00
19-Aug-11 OW
15.62
25.10
14-Dec-11 N
14.68
20.40
01-Feb-12 UW
20.38
21.70
23-Mar-12 N
21.65
25.40
25-Oct-12
24.21
29.10
29-Jan-13
OW
22.41
26.90
14-May-13 OW
19.04
22.10
31-Jul-13
18.90
21.50
10-Sep-13 N
18.26
18.50
07-Nov-13 N
15.66
18.60
29-Oct-14
5.19
3.50
7.95
7.20
OW
OW
UW
03-Dec-14 N
51
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
170
Price(p) 136
Date
102
01-May-14 N
160
165
68
34
0
Apr
14
May
14
Jul
14
Sep
14
Nov
14
Jan
15
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage May 01, 2014.
Date
N 172p
OW 180p
825
OW 395p
660
OW 470p
UW 76p
N 166p OW 175p
Price(p) 495
330
165
0
Oct
06
Apr
08
Oct
09
Apr
11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Mar 01, 2010.
52
Oct
12
Apr
14
01-Mar-10 OW
244
23-Sep-10 OW
323
389
23-Nov-10 OW
317
395
19-Aug-11 OW
297
444
01-Feb-12 OW
300
411
22-Mar-12 OW
337
470
16-May-12 N
295
266
08-Jun-12
109
156
26-Jul-12
UW
85
76
03-Oct-12
UW
110
35
29-Jan-13
UW
130
114
19-Jun-13
143
164
28-Aug-13 N
141
166
29-Aug-13 N
143
172
26-Sep-13 OW
142
175
16-Apr-14
OW
144
165
01-Jul-14
OW
156
175
28-Aug-14 OW
155
180
12-Jan-15
112
154
OW
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
OW NKr128
Date
21-Apr-10
255
OW
OW
NKr78
NKr109
OW NKr134 OW NKr105
87.95
103.00
54.30
84.00
OW
63.15
78.00
74.00
80.00
01-Feb-12 N
75.10
78.00
23-Mar-12 OW
81.25
109.00
27-Sep-12 OW
92.35
135.00
25-Oct-12
OW
91.60
134.00
29-Jan-13
OW
97.15
128.00
10-Sep-13 OW
77.75
115.00
25-Oct-13
OW
73.90
105.00
29-Oct-14
UW
35.35
24.00
Date
14-Dec-11 OW
204
N NKr103
OWNNKr84
NKr78
OW NKr135OW NKr115
UW NKr24 22-Dec-11
23-Jan-12
Price(NKr) 153
102
51
0
Feb
07
Aug
08
Feb
10
Aug
11
Feb
13
Aug
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Apr 21, 2010.
95
OW 40.8
OW 47
76
OW OW OW
51 58
OW 40.4
OW 36.4 N 44.3 N 38.2
UW 40 OW 48.5
Price() 57
38
19
0
Sep
06
Mar
08
Sep
09
Mar
11
Sep
12
Mar
14
01-Mar-10 OW
41.30
23-Sep-10 OW
38.90
51.00
19-Jan-11
OW
44.85
58.00
19-Aug-11 OW
23.64
40.40
01-Feb-12 OW
27.70
36.40
22-Mar-12 OW
31.66
40.80
25-Oct-12
39.00
44.30
05-Aug-13 N
33.10
38.20
26-Nov-13 UW
39.28
40.00
03-Sep-14 OW
42.11
48.50
07-Nov-14 OW
38.34
47.00
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Mar 01, 2010.
53
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
330
UW NKr214
N NKr189
264
N NKr137
UW NKr190
UW NKr218N NKr209
N NKr127
Price(NKr) 198
132
66
Date
21-Apr-10
128.80
137.00
06-Jun-12
UW
147.90
190.00
25-Oct-12
UW
188.90
218.00
29-Jan-13
UW
204.80
214.00
10-Sep-13 N
184.50
209.00
22-Oct-13
157.00
189.00
29-Oct-14
159.50
127.00
0
Feb
07
Aug
08
Feb
10
Aug
11
Feb
13
Aug
14
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Apr 21, 2010.
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return is
compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear
in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research
website, www.jpmorganmarkets.com.
Coverage Universe: Bhat, Rahul: CGG (GEPH.PA), Cape (CIU.L), Petroleum Geo-Services (PGS.OL), TGS Nopec (TGS.OL),
Tecnicas Reunidas (TRE.MC)
J.P. Morgan Equity Research Ratings Distribution, as of January 1, 2015
J.P. Morgan Global Equity Research Coverage
IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
45%
56%
45%
75%
Neutral
(hold)
43%
49%
48%
67%
Underweight
(sell)
12%
33%
7%
52%
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upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
54
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
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55
Rahul Bhat
(44-20) 7134-9059
rahul.bhat@jpmorgan.com
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56