Analysts Handbook: Energy

Yardeni Research, Inc.

November 19, 2013

Dr. Edward Yardeni

516-972-7683 eyardeni@yardeni.com

Mali Quintana
480-664-1333 aquintana@yardeni.com

Please visit our sites at www.yardeni.com blog.yardeni.com

thinking outside the box

Table Of Contents

Table Of Contents
1 2 3 4 5 6

S&P 500 Energy S&P 500: Energy S&P 500/400/600 Energy YTD Earnings Revenues & Margins Earnings Growth & Valuation

November 19, 2013 / Analysts Handbook: Energy

Yardeni Research, Inc.

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S&P 500 Energy

Figure 1.
795 695 11/19 595 495 395 595 495 395

S&P 500 ENERGY INDEX*

795 695

295

295

195

195

95 200-day moving average. * Ratio scale. Source: Standard & Poors Corporation and Haver Analytics.

yardeni.com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

95

Figure 2.
.6 .6

S&P 500 ENERGY (as a ratio of S&P 500)

.5 .5

.4 11/15

.4

.3

.3

.2

.2

.1 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10

yardeni.com 12 14 16

.1

Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Monthly through December 1990, then weekly. Source: Standard & Poors Corporation.

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S&P 500: Energy

Figure 3.
700 650 600 550 500 450 400 350 300 250 200 150 02 650 600 550 500 11/19 450 550 400 450 350 300 250 200 150 02 1100 1000 900 800 700 600 500 400 300 200 100 02 03 04 05 06 07 08 09 10 11 12 13 14 15 02 03 04 05 06 07 08 09 10 11 12 200-day moving average Source: Standard and Poors Corporation. yardeni.com 13 14 15 11/19 11/19 03 04 05 06 07 08 09 10 11 12 13 14 15 02 03 04 05 06 07 08 09 10 11 12 13 14 15 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 350 250 150 50 03 04 05 06 07 08 09 10 11 12 13 14 15 02 03 04 05 06 07 08 09 10 11 12 13 14 15 950 850 750 650 11/19

S&P 500 ENERGY

11/19

S&P 500 OIL & GAS EQUIPMENT & SERVICES

(BHI BJS CAM DO FTI HAL NOV SLB)

900 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100

S&P 500 INTEGRATED OIL & GAS

(COP CVX HES MRO MUR OXY XOM) 11/19

S&P 500 OIL & GAS EXPLORATION & PRODUCTION

(APA APC CHK COG DNR DVN EOG NBL NFX PXD QEP RRC SWN XTO)

S&P 500 OIL & GAS DRILLING

(HP NBR RDC)

S&P 500 OIL & GAS REFINING & MARKETING

(MPC SUN TSO VLO)

Page 2 / November 19, 2013 / Analysts Handbook: Energy

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S&P 500/400/600 Energy YTD

30 20

Figure 4. S&P 500 LargeCap

25.4

45 35 25 15 5 -5 -15 70 50

S&P 400 MidCap

26.7

45 35 25 15 5 -5 -15 70 50 23.6 30 10 -10 -30 45 21.6 25 5 -15 -35 -55 50 40 30 20 10 0 -10 -20

S&P 600 SmallCap

33.3

All Sectors

10 0 -10 -20 70 50

Energy Sector

30 10 -10 -30 45 25

19.8

30 10 -10 -30 45 25

38.1

Oil & Gas Drilling

5 -15 -35 -55 50 40 30 20 10 0 -10 -20 20 10

14.7

5 -15 -35 -55 50 40 30 20 10 0 -10 -20

2.9

Oil & Gas Equipment & Services

31.4

33.8

41.0

13.7

Integrated Oil & Gas

0 -10 -20 70 50

70 50 28.1 30 10 -10 -30 43.6

70 50 30 10 -10 -30 39.0

Oil & Gas Exploration & Production

30 10 -10 -30 100 80 60 40 20 0 -20 20 10 0 -10 -20

Jan Feb Mar Apr May Jun Jul 2013 Aug Sep Oct

Oil & Gas Refining & Marketing

28.8

20 9.4 10 0 -10
Nov Dec

Oil & Gas Storage & Transportation

-2.4

-20

yardeni.com Jan Feb Mar Apr May Jun Jul 2012 Aug Sep Oct Nov Dec

Source: Standard & Poors Corporation.

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Earnings
Figure 5.
85 75 65 55 12 45 35

S&P 500 ENERGY OPERATING EARNINGS PER SHARE

(analysts average forecasts, ratio scale)
13 14 11/14

85 75 65 55 45 35

25

25

15

15

Consensus Forecasts
Annual estimates Forward earnings*
yardeni.com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter. Source: Thomson Reuters I/B/E/S.

Figure 6.
50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 yardeni.com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * Three-month moving average of the number of estimates up less number of estimates down, expressed as a percentage of the total number of estimates. Source: Thomson Reuters I/B/E/S. Nov

S&P 500 ENERGY NET EARNINGS REVISIONS*

50 40 30 20 10 0 -10 -20 -30 -40 -50 -60

Page 4 / November 19, 2013 / Analysts Handbook: Energy

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Revenues & Margins

Figure 7.
800 750 700 650 600 550 13 12 14 11/14

S&P 500 ENERGY REVENUES PER SHARE

(analysts average forecasts, ratio scale)

800 750 700 650 600 550

500

500

450

450

Consensus Forecasts
Annual estimates
400

Forward revenues*
yardeni.com 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

400

350 * Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter. Source: Thomson Reuters I/B/E/S.

350

Figure 8.
12

S&P 500 ENERGY PROJECTED PROFIT MARGIN

(using analysts average earnings and revenues forecasts)

12

11

11

10 13 9 14 12 8 11/14

10

Consensus Forecasts
Annual estimates Forward profit margin*

5 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Time-weighted average of the consensus estimates for current and next year. Monthly through December 2005, weekly thereafter. Source: Thomson Reuters I/B/E/S.

yardeni.com 2015

Page 5 / November 19, 2013 / Analysts Handbook: Energy

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Earnings Growth & Valuation

Figure 9.
60 50 40 30 20 10 0 -10 -20 -30 -40 -50 yardeni.com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * STEG: 12- month (52-week) forward consensus expected earnings growth. LTEG: 5-year forward consensus expected earnings growth. Monthly data through 2005, weekly thereafter. Source: Thomson Reuters I/B/E/S. 11/14

S&P 500 ENERGY LTEG VS STEG

(percent)

60 50

LTEG* (9.4) STEG* (10.9)

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

Figure 10.
35 30 25 20 15 11/14 10 5 3.5 Relative P/E capped at 3.0 3.0 2.5 2.0 1.5 1.0 .5 * Price divided by 12-month forward consensus expected operating earnings per share. ** Sector or industry forward P/E relative to S&P 500 forward P/E. *** Sector or industry forward P/E relative to sector or industry consensus 5-year LTEG forecast. Source: Thomson Reuters I/B/E/S. 11/14 yardeni.com 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10 5 3.5

S&P 500 ENERGY VALUATION

35 30 25

Forward P/E* (12.8)

20 15

Relative P/E** (0.9) PEG Ratio*** (1.4)

3.0 2.5 2.0 1.5 1.0 .5

Page 6 / November 19, 2013 / Analysts Handbook: Energy

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