bernstein energy – finding...
TRANSCRIPT
December 2013
Bernstein Energy – Finding Petroleumgy gFinding Opportunities in the Middle East & Levant
A Forgotten Role In Global Energy Markets?
Oswald Clint PhD, ACASenior Research Analyst
European & Russian Oil & Gas
Rob West, CFASenior Research Associate
European & Russian Oil & GasEuropean & Russian Oil & Gas
Oswald Clint PhD, ACASenior Research Analyst
[email protected] 20 7959 5089
Iain Pyle, CFA, ACASenior Research Associate
Rob West, CFASenior Research Associate
European & Russian Oil & Gas
BernsteinResearch.com
See Disclosure Appendix of this publication for important disclosures and analyst certifications
+44 20 7959 5089 +44 20 7170 0564 +44 20 7170 0589
The Forgotten Role Of OPEC Oil Supply...
690
hes 2004: 3x More
S h F OPEC2013: 3x More
S h F Sh l
4
5
60
70
80
4 (M
bpd)
ogle
Sea
rch Searches For OPEC
Than ShaleSearches For Shale
Than OPEC
2
3
30
40
50
h Si
nce
2004
mbe
r of G
oo
0
1
2
0
10
20
30
Gro
wth
Rel
ativ
e N
um
00
Jan-
04M
ar-0
4Ju
n-04
Sep-
04D
ec-0
4Fe
b-05
Ma y
-05
Aug-
05N
ov-0
5Ja
n-06
A pr-
06Ju
l-06
Oct
-06
Dec
-06
Mar
-07
Jun-
07Se
p-07
Dec
-07
Feb-
08M
a y-0
8Au
g-08
Nov
-08
Jan-
09A p
r-09
Jul-0
9O
ct-0
9D
ec-0
9M
ar-1
0Ju
n-10
Sep-
10N
ov-1
0Fe
b-11
May
-11
Aug-
11O
ct-1
1Ja
n-12
Apr-
12Ju
l-12
Sep-
12D
ec-1
2M
ar-1
3Ju
n-13
Sep-
13N
ov-1
3R
New Supply from OPEC New Supply from US Shale
Google Searches for Shale Google Searches for OPEC
BernsteinResearch.com 1
Source: Google Trend, IEA, EIA, HPDI, Bernstein Estimates
All but three OPEC countries receive a lower share of news coverage than their global share of production – Iraq, Nigeria and Libya
16.0%
USA12.0%
14.0%
RussiaChina
Norway8.0%
10.0%
New
s Fl
ow
IraqBrazil
AustraliaIndia
CanadaUKItaly2 0%
4.0%
6.0%
% o
f N
Libya Saudi ArabiaIranOther Opec
Countries
y
Mozambique
2 0%
0.0%
2.0%
-2.0%-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
% of Global Oil and Gas Production
BernsteinResearch.com 2
Source: Company Reports, Bernstein Estimates
A Portrait of a Hydrocarbon Exporter: The Middle East Has 73-years of oil reserves and 150-years of gas reserves, producing 3x its oil demand levels
56%
% % %
60%
46%51
%
44%
51%
44%
%
51%
44%50%
l
26%
%
27%
25%
26%
36%
27%
28%
30%
40%
Glo
bal T
otal
% 10%
9%
19%
%8%
13%
11%
%9%
16%
13%
8%9%
15%
12%
9%
20%% o
f G
7%
9 8%8 89 89 9
0%
10%
Oil Reserves Oil Production Oil Demand Gas Gas GasDemand LNG Supply RefiningOil Reserves Oil Production Oil Demand Gas Reserves
Gas Production
GasDemand LNG Supply Refining Capacity
2003 2008 2013 2018
BernsteinResearch.com 3
Source: BP Stat Review, IEA, Company Reports, Bernstein Estimates
The Middle East Represents Just One-Eight of the Global Majors’ Portfolios
100%
80%
Reg
ion
Offshore Gas, 24.7%
60%
tion
With
in
Onshore Gas, 14.1%
Offshore Oil,
20%
40%
% o
f Pro
duct
,35.8%
Onshore Oil, 25.5%
0%
20%
st a U % a a % e % c
%
Mid
dle
Eas
12.4
%
Nor
th
Amer
ica
15.3
%
FSU
9.7%
Latin
Am
eric
a16
.6%
Afric
a17
.4%
Euro
p16
.7%
Asia
Pac
ific
11.9
%
BernsteinResearch.com 4
Source: Company Reports, Bernstein Estimates
Countries in the Middle East Have Average “Total Fiscal Takes” of 85% versus a global average of 71%
IRANIRAQ100%
PSC SAUDI
UAE, QAT
SYRIA
YEM70%
80%
90%Royalty / Tax Non‐OECD
Royalty / Tax OECD RUSSIANORWAY
SAUDI ARABIA
Oman
50%
60%
70%
Take
(%) Middle East
US
CANADA
CHINA
30%
40%
Fiscal CHINA
10%
20%
0%0 1 10 100 1,000 10,000 100,000
2012 Hydrocarbon Production (kboed)
BernsteinResearch.com 5
Source: Company Reports, IEA, Bernstein Estimates
The Majors’ Exposure In the Middle East Is Dominated By Gas (And Condensate) in Qatar and BP/Exxon/Shell/TOTAL’s UAE JV
9001,000
st
500600700800900
s M
iddl
e Ea
sn
(kbo
ed)
200300400500
obal
Maj
ors
Prod
uctio
n
0100
ar eG
as
quid
s
quid
s
quid
s
n quid
s
quid
s
one
quid
s
E eGas
E eGas
en
eGas
n quid
s
an
eGas
quid
s
Gl o
Qat
aO
ffsho
r
UAE
O
nsho
reLi
q
UAE
O
ffsho
reLi
q
Qat
ar
Offs
hore
Liq
Om
anO
nsho
reLi
q
Iraq
Ons
hore
Liq
Neu
tral Z
oO
nsho
reLi
q
UAE
Offs
hor
UAE
Ons
hor
Yem
eO
nsho
r
Yem
enO
nsho
reLi
q
Om
aO
nsho
r
Qat
ar
Ons
hore
Liq
ExxonMobil BP Shell Chevron Total ConocoPhillips Eni
Petrobras Statoil BG Tullow Oil Premier Oil Repsol Galp
BernsteinResearch.com 6
Source: Company Reports, Bernstein Estimates
Petrobras Statoil BG Tullow Oil Premier Oil Repsol Galp
Clear winners in a year of exceptionally high dispersion...
.2%175%
Performance By Sector and Geography from 01-Jan-13 to 09-Dec-1314
1
125%
150%
e
7.6%
% % % % 8% %50%
75%
100%
Perfo
rman
ce
37
24.8
22.2
%
21.5
%
19.1
%
16.4
%
14.1
%
12.2
%
10.7
%
10.1
%
1.5%
1.4% 4.7%
26.8
14.4
%
11.2
%
20.8
%
0%
25%
50%P
-1.3
%
-4.5
%
-6.8
%
-7.5
%
-10.
6%
-11.
7%
-12.
9%
-19.
8%
30.8
%
31.0
%
-4.1
%
-50%
-25%
-3 -3
-75%
DN
O
Gen
el
Afre
n
BG
Con
oco
Rep
sol
Nov
atek
Che
vron BP
Exx
on
TOTA
L
Cai
rn
Sta
toil
Gal
p
She
ll
Eni
Luko
il
Gaz
prom
Pre
mie
r
Lund
in
Ros
neft
Cob
alt
Tullo
w
Bre
nt
SP
X
SD
LE15
EF
Inde
x
TSE
100
CI W
orld
BernsteinResearch.com 7
C G M
MX
E FT
MS
Source: Bloomberg, Bernstein Estimates
Kurdistan Still has an c90% total fiscal take, but nevertheless leaves $5-6/boe of net income after relatively low, $1-2/boe of upfront capex/boe
Taq Taq - Kurdistan PSC ModelResources 822 Mboe 4 000
5,000
6,000
7,000
s ($
M)
Resources 822 MboePeak Oil Production Target 200 kbpdBrent Oil Price 90 $/bblInternational Discount / Premium to Brent 1% percentInternational Realization Oil Price 90.9 $/bblDomestic Oil Price 60.3 $/bbl -1,000
0
1,000
2,000
3,000
4,000
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
Net
Cas
h Fl
ow
Decline Rate 10% /yearGas Oil Ratio 10% percentGas Price Assumption 4.0 $/mcfCentral Processing Facility Size 100 kbpdCentral Processing Facilities Required 2 #C t P C t l P i F ilit 290 $M
201
2012
2013
2014
2015
2016
2017
2018
2019
2020
202
2022
2023
2024
2025
2026
2027
2028
2029
2030
Net Cash Flow Capex Production Cost Royalty Cost Transportation Cost KRG Carry PSC Take Concession Tax
90%
100%
Cost Per Central Processing Facility 290 $MFacility Cost 2.9 $M/kbpdProduction Per Well 10 kbpdWell Cost 8.0 $M/wellLifting Costs 3.1 $/bblTrucking Costs 16 8 $/kboe/km
35.7 43.2 49.2 54.9 56.0 57.0 57.0 57.060%
70%
80%
90%
and
Inco
me
Trucking Costs 16.8 $/kboe/kmPipeline Transportation Cost 0.3 $/bblPipeline Construction Cost 1.8 $M/kmRecoverable Capex per barrel 1.3 $/boeRoyalty Rate 10% percentKRG Stake 25% percent
5.56.2 6.9 7 6 7 7 7 9 7 9 7 9
20%
30%
40%
50%
Shar
e of
Cos
t a
KRG Stake 25% percentIncome Tax Rate 15% percentCapacity Charge 30% percentDiscount Rate 10% percentNPV 2,210 $MNPV/boe 2.69 $/boe
5.8 5.1 5.4 5.8 5.9 6.0 6.0 6.0
3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1
6.9 7.6 7.7 7.9 7.9 7.9
0%
10%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
NI / boe Production Cost Royalty Cost Transportation Cost KRG Carry Concession Tax PSC Take Other
BernsteinResearch.com 8
y y p y
Five of the world’s top 10 regions of undiscovered resource are in the Middle East
200,000Mbo
e Mean Undiscovered Resources By Region - Top 10 Regions (Mboe)
I i lA ibili
140,000160,000180,000200,000
sour
ces
-M International Accessibility
Low High
80,000100,000120,000
ocar
bon
Res
20,00040,00060,000
ered
Hyd
ro
0
Sib
eria
n Ba
sin
ali B
asin
Fold
Bel
t
pota
mia
n ee
p Ba
sin
ger D
elta
nlan
d R
ift
asin
s
r Gha
war
pl
ift
Cas
pian
as
in
t Cen
tral
stal
Afri
ca
Cas
pian
as
in
Und
isco
v e
Wes
t B
Rub
Al K
h
Zagr
os
Mes
o pFo
rede Nig
Gre
en Ba
Gre
ater Up
Sout
h Ba
Wes
tC
oas
Nor
th B
BernsteinResearch.com 9
Source: USGS, IEA, Bernstein Estimates
The Middle East’s 73-years of oil reserves are 1.5x higher than the global average and 3x the non-OPEC average of 26-years
299
1000
ars)
World Top 50 Oil Producers: Reserves:Production Ratios14
013
697 96 92 81 65 54 45 41 41 41 39 37 36 4 3 2
100
n R
atio
(Yea
4 4 4 3 3 3 34 33 32 28 24 22 22 21 21 21 19 19 19 19 19 18 18 18 17 17 16 16 15 12 11 11 10 10 9 8 7 610Prod
uctio
n
6
Res
erve
s:
1
enez
uela
Iraq
Can
ada
Kuw
ait
Iran
Liby
aEm
irate
sdi
Ara
bia
tal W
orld
zakh
stan
Nig
eria
Gab
onSu
dan
Qat
arVi
etna
mC
had
Italy
Ecua
dor
Yem
enM
alay
sia
eder
atio
nPe
ruAu
stra
liaAn
gola
S yria
zerb
aija
nAl
geria
zbek
ista
nBr
azil
Rom
ania
al G
uine
aIn
dia
Brun
eiC
ongo
Om
an&
Toba
go US
Egyp
tTu
nisi
and
ones
iaAr
gent
ina
Mex
ico
Den
mar
kC
hina
Nor
way
men
ista
nKi
ngdo
mC
olom
bia
Ve
Uni
ted
Arab
Sa
udTo
tKa
z MR
ussi
an F
e A
Az Uz R
Equa
toria
Trin
idad
& In A D
Turk
mU
nite
d C
BernsteinResearch.com 10
U
Source: BP Stat Review, IEA, Company Reports, Bernstein Estimates
The Middle East Countries Have Some of the Most “Low Maintenance” Resources Globally, As Defined By The Required Rig Counts
140
116
10095
88100
120
rage
)
88 87
80
g (T
TM A
ve
4641
240
60
kbpd
per
rig
27
126
20
k
0Saudi Arabia
UAE Norway Qatar Kuwait UK Iraq Mexico Russia US
BernsteinResearch.com 11
Source: Baker Hughes Rig Count, IEA, Bernstein Analysis
The Marginal Cost of Supply is the best predictor of oil prices justified by the fundamentals and was c$105 / barrel in 2012
Marginal Cost of Supply Curve
140
104.5
120
1402012 2011
HSECHK APC
92.3
80
100
ost (
$/bb
l)
BG
INPEX
IMO, REP
40
60
Mar
gina
l Co
M OR A R PC I P EX
XY
20
40
XOM
CEOST
L
PBR
CVX
RD
SA
PTR
TOT
CO
P
BP
ON
GC
EN SN
PEMO
X
00 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000
Oil Production (mbd)
BernsteinResearch.com 12
Source: Company Reports, Bernstein Estimates
The industry needs this level of oil prices to just break-even
10YrUS$/boe 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAGR Y-o-YWTI 25.96 26.17 31.06 41.51 56.59 66.09 72.23 99.92 61.99 79.51 95.05 94.10 14% -1%Brent 24.40 25.02 28.87 38.32 54.51 65.42 72.71 97.69 62.04 79.73 111.05 111.94 16% 1%
Revenue 14.35 15.66 19.57 28.62 38.20 44.86 48.70 60.91 40.91 52.44 67.64 68.26 16% 1%Realization Spread 10.05 9.36 9.30 9.70 16.31 20.56 24.01 36.78 21.13 27.29 43.41 43.68 17% 1%Realization as % of Brent 59% 63% 68% 75% 70% 69% 67% 62% 66% 66% 61% 61%
Production Costs 3.52 3.96 4.72 6.02 7.60 9.00 10.39 16.65 13.21 16.60 21.51 22.64 19% 5%Exploration Expense 0.63 0.62 0.68 0.82 0.91 1.27 1.69 1.91 1.85 1.80 2.05 2.53 15% 23%DD&A 2.61 3.37 3.55 4.54 5.06 6.04 7.17 8.75 8.39 9.32 10.23 11.84 13% 16%SG&A & Other 0.54 0.87 0.73 1.10 1.72 1.56 1.90 2.41 2.18 2.02 3.04 2.66 12% -12%Unit Costs 7.30 8.82 9.68 12.48 15.30 17.87 21.16 29.72 25.63 29.73 36.84 39.67 16% 8%
Income Tax 2.97 2.95 3.90 8.56 11.99 14.06 14.54 14.45 6.88 10.42 13.94 13.44 16% -4%Implied CT Rate 42% 43% 39% 53% 52% 52% 53% 46% 45% 46% 45% 47%Net Income 4.08 3.89 5.99 7.58 10.91 12.93 13.00 16.74 8.40 12.29 16.86 15.15 15% -10%Net Income Margin 28% 25% 31% 26% 29% 29% 27% 27% 21% 23% 24.9% 22.2%
Organic F&D Costs 5.11 5.79 6.55 10.26 12.67 13.31 16.43 20.01 10.92 16.70 15.44 22.28 14% 44%Reserve Replacement Ratio 107% 136% 113% 97% 95% 121% 87% 90% 149% 101% 147% 109%Recycle Ratio 143% 136% 156% 126% 133% 152% 133% 137% 171% 140% 189% 133%
Cash Flow (Pro-Forma) 7.32 7.89 10.22 12.94 16.89 20.23 21.87 27.41 18.64 23.40 29.15 29.53 14% 1%Capex 6.72 9.24 8.38 10.59 14.20 18.82 19.37 24.21 18.95 26.76 26.76 28.60 12% 7%Capex/DD&A 2.57 2.74 2.36 2.33 2.80 3.12 2.70 2.77 2.26 2.87 2.61 2.41Free Cash Flow 0.60 (1.35) 1.84 2.35 2.69 1.41 2.50 3.19 (0.31) (3.36) 2.39 0.92 -7% -61%Re-Investment Ratio 92% 117% 82% 82% 84% 93% 89% 88% 102% 114% 92% 97%
Maginal Cost of Production 25.30 29.50 36.27 45.17 57.55 54.39 63.81 96.14 67.80 83.23 92.26 104.52 13% 13%Cash Cost of Production 9.69 9.72 12.45 15.00 21.66 23.04 24.35 32.36 24.02 28.87 39.65 44.20 16% 11%
WTI/ Marginal Cost 1.03 0.89 0.86 0.92 0.98 1.22 1.13 1.04 0.91 0.96 1.03 0.90WTI/ Unit Cost 3.56 2.97 3.21 3.33 3.70 3.70 3.41 3.36 2.42 2.67 2.58 2.37Brent/ Marginal Cost 0 96 0 85 0 80 0 85 0 95 1 20 1 14 1 02 0 92 0 96 1 20 1 07
BernsteinResearch.com 13
Source: Bloomberg, Bernstein analysis and estimates
Brent/ Marginal Cost 0.96 0.85 0.80 0.85 0.95 1.20 1.14 1.02 0.92 0.96 1.20 1.07Brent/ Unit Cost 3.34 2.84 2.98 3.07 3.56 3.66 3.44 3.29 2.42 2.68 3.01 2.82
Mature regions have seen vast numbers of wildcats, near-constant drilling...
BernsteinResearch.com 14
Source: IHS, Petroleum Atlas, Company Reports, Bernstein Estimates
“Negligible” exploration occurred in 2005-2010 in core OPEC countries
BernsteinResearch.com 15
Source: IHS, Petroleum Atlas, Company Reports, Bernstein Estimates
5,000 wildcats in the Middle East have had an average success rate of 33%, which is well above the global average success rate of 27%
35%30000
Total Wells (1900-2010) Success Rates (%) 1400
d Pe
r
25%
30%
35%
25000
30000
dcat
s
1000
1200
Dis
cove
red
15%
20%
25%
15000
20000
ess
Rat
e (%
)
mbe
r of W
ild
600
800
Res
ourc
es D
Dis
cove
ry
5%
10%
15%
5000
10000 Succ
e
Num
200
400
n A
vera
ge R
0%
5%
0
5000
Eas
t
C.I.
S.
Afric
a
eric
a
East
alas
ia
rope
h a (e
x-)
0
200
East
.I.S.
frica
eric
a
East
asia
rope
Mea
n
Mid
dle C A
Latin
Am
e
Far
Aust
r a Eu
Nor
tAm
eric
aU
S)
Mid
dle
E C A f
Latin
Am
e
Far E
Aust
ral
Eur
BernsteinResearch.com 16
World Energy Usage – c13Bn Toe, 29% coal, 31% oil, 21% gas
BernsteinResearch.com 17
Source: IEA, Company Reports, Bernstein Estimates
Middle East Energy Usage – 47% oil, 52% gas
BernsteinResearch.com 18
Source: IEA, Company Reports, Bernstein Estimates
Hence our oil price forecasts are calculated as a multiple of marginal cost, driven by OPEC effective spare capacity as per the historical relationship
1 1
1.2
1.3
7%
8%
9%
(Rat
io)
man
d (%
) R‐Squared = 70%
0.9
1.0
1.1
4%
5%
6%
argi
nal C
ost
As
a %
of D
em
0.6
0.7
0.8
1%
2%
3%
Oil
Pric
e / M
a
e C
apac
ity A
0.50%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
E
2014
E
2015
E
2016
E
2017
E
2018
E
2019
E
2020
E
WTI
O
Spar
e
Spare Capacity % of Demand WTI / Marginal Cost
BernsteinResearch.com 19
Source: IEA, Bernstein Analysis
“OPEC Spare Capacity” today is really “Saudi Arabian Spare Capacity”?
7
5
6
Mbp
d)
3
4
Capa
city
(M
1
2Spar
e
0
1
-08
r-08
y-08 -08
-08
-08
-09
r-09
y-09 -09
-09
-09
-10
r-10
y-10 -10
-10
-10
-11
r-11
y-11 -11
-11
-11
-12
r-12
y-12 -12
-12
-12
-13
r-13
y-13 -13
-13
Jan
Ma r
May Ju
lS
e pN
ov Jan
Ma r
May Ju
lS
e pN
ov Jan
Ma r
May Ju
lS
e pN
ov Jan
Ma r
May Ju
lS
e pN
ov Jan
Mar
May Ju
lS
e pN
ov Jan
Ma r
May Ju
lS
e p
Saudi Arabia Nigeria UAE Angola Iran Algeria Ecuador Kuwait Libya Qatar Venezuela Iraq
BernsteinResearch.com
Source: IEA, Bernstein Analysis & Estimates
20
Oil Production Forecasts By Country
Neutral Syria1%
Yemen1%35%35
Qatar3%
Zone2% Oman
4%
1% 1%Other
1%30%
35%
25
30
35
al (%
)
untr
y (M
bpd)
Saudi Arabia
UAE11%
20%
25%
10
15
20
of G
loba
l Tot
a
ctio
n B
y C
ou
41%
Kuwait10%10%
15%
0
5
10
4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 0 2 3 4 5 6 7 8 9 0 2 E E E E E E E E
% o
Oil
Prod
uc
Iran13%
Iraq13%
1984
1985
1986
1987
1988
1989
1990
1991
199 2
1993
1994
1995
1996
1997
1998
1999
2000
2001
200 2
2003
2004
2005
2006
2007
2008
2009
2010
2011
201 2
2013
E20
14E
2015
E20
16E
2017
E20
18E
2019
E20
20E
Saudi Arabia Iran IraqKuwait UAE QatarKuwait UAE QatarNeutral Zone Oman SyriaYemen Other % of World Supply
BernsteinResearch.com 21
Source: IEA, BP Stat Review, Bernstein Estimates
Barriers to ramping back up?
140 0%
Our Iraqi production forecast is just 6.1Mbpd by 2020
Iranian Carbonates Decline Rapidly Without EOR
10
12
)
-5.0%
0.0%
e Per
Wel
l
Median =
UpperQ =
Lower Qu
6
8
duct
ion
(Mbp
d
-15.0%
-10.0%
ual D
eclin
e Rat
e ‐25.4% declin
‐18.4%
uartile = ‐30.45 7 3.
1 3.6 4.
1 4.4 4.6 4.9 5.
2 5.6 6.
1
2
4Iraq
Prod
-20.0%
Aver
age A
nn
ne 4%2.
52.
1
1.3 2.
01.
8 2.0 2.1 2.4
2.4
2.5 2.7 3
0
2
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020 -30.0%
-25.0%
SCB Base CaseIEA Projections (2012)Rystad Energy (2012)Wood Mac (2011 Forecasts)Iraq Revised Target (2012)Iraq Original Target - Signed PSCs
-35.0%
SIAG
06
SIAH
03
SIAG
03
SIAH
02
SIAG
02
SIAH
01
SIAG
01
SIAG
04
SIAH
06
SIAH
04
SIAH
05
BernsteinResearch.com
Source: IEA, Rystad Energy, Wood Mackenzie, News Reports, Bernstein Analysis; Taheri & Sajjadian, 2006. Use of Reservoir Simulation for Optimizing Recovery Performance of One of Iran's Oil Fields
Iraq Original Target Signed PSCs
22
While prices falling into the low 90s $/bbl Brent increases the proportion of OPEC countries approaching budget deficits forcing widespread cuts
60%
% of World Supply From Oil Producing Countries (OPEC + Russia) In Deficit
201350%
60%
ply
(%) World Supply from OPEC + Russia
Cuts ?2013
30%
40%
rld O
il Su
p
Deficit Surplus
Cuts ?
201220%
30%
rtio
n of
Wo
0%
10%
Prop
or
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100
102
104
106
108
110
112
114
116
118
120
122
124
126
128
130
132
134
136
138
140
Brent Oil Price ($/bbl)
BernsteinResearch.com 23
Source: IMF, IEA, Bernstein Estimates
Our oil price forecasts are well above the forward curve
180
$142
$153 $160
$146$153
140
160
($/b
bl)
$111 $109 $110 $111 $113 $120
$128
$121
$135
$146
120
140
e Fo
reca
sts
(
$80 $95 $94 $96
$101 $103 $111
100
Oil
Pric
e
$80
$96
60
80
2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Brent Crude ($/bbl) WTI Crude ($/bbl) Forward Curve Brent ($/bbl) Forward Curve WTI ($/bbl)
BernsteinResearch.com 24
Source: Bloomberg, Bernstein Analysis
Disclosure AppendixDisclosure Appendix
BernsteinResearch.com 25
Valuation Methodology – European Integrated Oils
Our target prices for the European Integrated Oils are calculated by applying our estimates for 2013 cashflow per share (CFPS) to a forward price-to-cashflow (P/CF) multiple. This P/CF multiple is generated through the relationship, and historically strong correlation, between 12 month forward P/CF multiples and Return on Average Capital Employed (ROACE) within the Integrated Oils group Our calculation utilizes this relationshipAverage Capital Employed (ROACE) within the Integrated Oils group. Our calculation utilizes this relationship and an estimated long term, through the cycle ROACE to generate the target P/CF multiple. We use $110/bbl Brent and $4.25/mcf for US gas in 2013 and $111/bbl Brent and $4/mcf Henry Hub in 2014.
BernsteinResearch.com 26
Valuation Methodology – European E&P’s Our target prices for the European Integrated Oils are calculated by applying our estimates for 2013 cashflow per share (CFPS) to a forward
price-to-cashflow (P/CF) multiple. This P/CF multiple is generated through the relationship, and historically strong correlation, between 12 month forward P/CF multiples and Return on Average Capital Employed (ROACE) within the Integrated Oils group. Our calculation utilizes this relationship and an estimated long term, through the cycle ROACE to generate the target P/CF multiple. We use $110/bbl Brent and $4.25/mcff US i 2013 d $111/bbl B t d $4/ f H H b i 2014
Our price targets for the European E&Ps are set using Net Asset Valuation models assuming a long term real oil price of $90/bbl.Exploration potential from the next 12 months worth of drilling activity is also captured by risking each company identified prospect based on basin location and historical trends for wildcat exploration.
for US gas in 2013 and $111/bbl Brent and $4/mcf Henry Hub in 2014.
Our price target for GALP is based on a Sum-of-the-Parts valuation. We value the Upstream production assets using DCFs and a long term real oil price of $90/bbl; we value exploration on a risked basis as for E&Ps; forward P/E multiple and DCFs are used to value Refining & Marketing; and DCFs are used for Gas & Power.
GALP Net Reserves ValuationSummary Country Total NPV NPV NPV/share
EV M Boe $M EUR M EUR/share
Upstream Production 116 1,936 1,434 1.73Development 1997 9,816 7,271 8.77Exploration 551 2157 1598 1.93
Downstream R&M - Spain and Portugal 4,582 3,394 4.09
Gas & Power Spain and Portugal 3,835 2,840 3.43
Associates 648 480 0.58
Net Debt (End 2012 E) (243) (180) (0.22)
Minority Interest (1,537) (1,139) (1.37)
BernsteinResearch.com 27
Equity value 2,664 21,193 15,699 19.00
Source: Bernstein estimates
Valuation Methodology – European E&P’s (cont’d)
We value R
Net A
sset Vsegm
ents w
UpstreamC
ountry / Blo
Producing / Under D
eC
alculated based on DC
Europe
Trinidad & Tob aS
outh America
North Am
ericaA
frica
Brazil
Identified FieldsB
M-S
-9B
M-S
-9B
M-S
-9B
M-S
-9B
M-S
-9B
M-S
-7B
M-S
-48B
M-S
-48B
M-C
-33B
M-C
-33B
M-S
-44
Brazil ExplorationTotal B
razil JV
Other Identified Explo
LiberiaP
eruC
olumbia
Alaska
Algeria
Kazakhstan
US TO
TALIrelandN
orway
Norw
ayN
orway
Mauritania
Angola P
re-SaltE
ast Canada
East C
anadaLibyaK
urdistanK
urdistanN
amibia
Other Exploration
Total Upstream
Other Segm
ents
LNG
Refining &
Chem
icalsM
arketingG
as Natural Fenosa
Net D
ebtC
orporate Costs
YPF Investment
YPF Com
pensationM
inority Interests
Repsolon a su
Valuation, using
we apply long t
ockField
velopment Assets Excludi n
CF
ago(E
xcluding Brazil)
Carioca
Sapinhoa
Abare W
estIguaçu N
orteA
bareP
iracucaV
ampira
Panoram
ixP
ao de AcucarG
aveaS
agitario
orationLB-10B
lock 57 (x3)JaripeoN
orth Slope (x2)S
E IlliziA
daiG
oM P
rospectsD
unquinB
onnaB
rattholmen
Imsa
TA-10 Block
t3 W
ellsC
upidsM
argareeN
C 186 / N
C 115
Piram
agrunQ
ala Dze
License 0010
Methodology
Assum
e no value follos
DC
F with 10%
discounD
CF w
ith 10% discoun
Current Enterprise Va
End 2013 estim
ate, asM
ultiple of 2014 cost eM
arket value of 11.9%A
ssume $5B
n value oB
ook Value at YE 201 um
of the parts g a $90/bbl reaterm
average P
Stake
Gross
Reserves (M
boe)
ng Brazil15%
89315%
2,95315%
58715%
40015%
10022%
64524%
6724%
021%
50021%
30015%
3006,745
10%200
54%250
30%150
70%150
26%50
30%500
Var.940
25%1700
40%100
50%100
30%100
70%50
25%1000
25%250
20%250
82%200
100%150
80%150
44%496
owing sale to Shell
nt factor.nt factor.
alue02/12/2013
ssuming LN
G sale
estimate
% stake
of bonds for compensation
2
basis. For the al long term
oil P
E ratios
Net
Reserves (M
boe)R
isk
Net
Re(
134100%
443100%
88100%
60100%
15100%
14270%
1670%
070%
105100%
63100%
45100%
1,111
40020%
2010%
13520%
4520%
105100%
13100%
15010%
48620%
4250%
400%
500%
3015%
3520%
25020%
6315%
5015%
16420%
15020%
12020%
2185%
Upstream
busiprice. For the o
t Risked
eserves M
boe)N
PV per boe ($)
( U
1344.7
4438.2
884.6
603.7
153.7
994.6
112.5
02.5
1054.6
634.6
454.6
1,0646.0
805.0
24.0
273.0
96.0
1058.0
12.92.5
156.0
508.0
02.0
05.0
05.0
55.0
72.5
506.0
96.0
86.0
332.0
302.5
242.5
114.0
2013 Earnings (EU
Rm
)M
-400
Total SOTP Valu iness w
e use aother business
NPV
USD
M)
NPV
(EUR
M)
NPV(E
136101
5,0113,712
4,7713,534
4,1263,056
2,6971,998
16,74012,400
634470
3,6112,674
405300
222164
5641
457339
2821
00
483358
290215
207153
6,3924,735
400296
86
8160
5440
840622
3224
9067
396294
00
00
00
2317
1813
300222
5642
4533
6649
7556
6044
4432
1,620
PE M
ultipleValuation (EU
Rm
)Valuashare
0-515
5,84010,220
-8,05210x
-4,0001,9043,704-741
ation
BernsteinResearch.com 28
a
Source: Bernstein estimates
V/Share EU
R)0.082.852.712.351.53
9.51
0.362.050.230.130.030.260.020.000.270.160.123.63
0.233.86
0.000.050.030.480.020.050.230.000.000.000.010.010.170.030.030.040.040.030.02
1.24
14.62
ation per e (EU
R)
0.00-0.404.487.84
-6.18-3.071.462.84
-0.57
21.00
Valuation Methodology – European E&P’s (cont’d)BG NAV
BG NAV Model
mcf/boe conversion factor 6.0
Our price target for BG is also based on a Sum-of-the-Parts valuation so that we capture the value from two key assets, namely, the Brazilian
Country Regime Oil Gas Total NPV10 ($90/bbl) NPV NPV NPVMbbls Bcf Mboe $/boe $M £M £/share
Brazil Lula 1,913 338 2,250 7.5 16,914 11,127 3.26Brazil Cernambi 660 116 776 6.6 5,070 3,336 0.98Brazil Sapinhoa 728 129 857 7.2 6,301 4,145 1.22Brazil Carioca 897 158 1,056 4.2 4,295 2,825 0.83Brazil Iara 1,026 181 1,208 3.6 4,114 2,707 0.79y , y,
Santos Basin reserves and the Australian coal-bed methane-to-LNG assets
Australia 0 8,616 1,436 9,790 6,441 1.89Concession LNG 0 7,986 1,331 7.0 9,317 6,129 1.80Concession 0 631 105 4.5 473 311 0.09
UK Concession 197 1,236 403 15.0 6,054 3,983 1.17Kazakhstan PSC 358 2,409 759 4.8 3,643 2,397 0.70Egypt PSC 22 3,249 564 4.4 2,480 1,631 0.48Tunisia Concession 31 752 156 10 0 1 564 1 029 0 30
More specifically, we use DCF's to value the Upstream assets using a long term real oil price of $90/bbl; forward price-to-earnings multiple for
Tunisia Concession 31 752 156 10.0 1,564 1,029 0.30US Shale Gas Concession 5 2,713 457 2.4 1,097 722 0.21
Trinidad 13 2,181 376 4.2 1,730 1,138 0.33PSC 7 2,011 342 4.7 1,606 1,057 0.31Concession 6 171 34 3.6 123 81 0.02
Thailand Concession 12 648 120 12.4 1,488 979 0.29India PSC 26 278 72 10.2 735 483 0.14forward price to earnings multiple for
LNG business; and utility multiples to value the downstream power and transmission businesses.
Bolivia PSC 30 682 144 4.0 575 378 0.11Norway Concession 90 104 107 6.0 644 424 0.12Algeria PSC 0 157 26 2.4 63 41 0.01
Total 10,766 66,554 43,785 12.84
ResourcesAustralian CBM 0 11,385 1,898 4.5 8,539 5,618 1.65Brazil (Parati Corcovado Abare West) 300 0 300 3 5 1 050 691 0 20Brazil (Parati, Corcovado, Abare West) 300 0 300 3.5 1,050 691 0.20US Shale Gas 0 5,787 964 2.4 2,315 1,523 0.45
Risked ExplorationGlobal 4,583 2.0 9,166 6,030 1.77
Total 18,511 87,623 57,647 16.91
Upstream DCF 87,623 57,647 16.9
BernsteinResearch.com 29
Source: Bernstein estimates
p , ,LNG Business (Includes Liquefaction) EV/EBITDA Multiple 18,996 12,497 3.7Net Debt -11,856 -7,800 -2.3Market Value 94,763 62,344 18.00
Valuation Methodology – Russian Oil & Gas
We use DCF valuations to determine our price targets, incorporating WACC rates ranging from 12-15% and terminal growth rates ranging from 0% to 3%
DCF CUR WACC Terminal Growth
Target Price
Ga prom $ 12 9% 1 0% 12 0Gazprom $ 12.9% 1.0% 12.0Novatek $ 11.7% 3.0% 137.0Rosneft $ 12.7% 1.0% 7.3Lukoil $ 13.4% 1.0% 57.0SurgutNG $ 14.5% 1.0% 8.0SurgutNG $ 14.5% 1.0% 8.0
BernsteinResearch.com 30
Source: Bernstein estimates
Risks
Oil prices forecasts are heavily dependent on GDP expectations. As such, should GDP be stronger than expected or weaker than expected it could materially change the outlook for oil demand and prices and for the cash flow generation of the peer group. In addition supply disruptions caused by weather or terrorism remain a material risk and would place further upward pressure on pricing. The greatest risk to our target prices is a significant decline in crude oil prices, as these stocks commonly trade in line with commodity prices. Additionally, downward revisions to production volume targets could adversely impact share y y p y, p g y pprices. For the European Majors, the greatest risk to our target prices is a significant decline in crude oil prices, as the Majors commonly trade in line withcommodity prices. Additionally, downward revisions to production volume targets could adversely impact share prices.
For BG specifically unsuccessful pilot test results or delays associated with the Brazilian Lula sub-salt wells, material delays to the ramp up of production from Brazilian fields and further cost increases for Australian CBM-LNG.
For GALP specifically further weakness in European refining margins represent a key risk. Unsuccessful pilot test results or delays associated with the Brazilian Lula development would also impact the shares.
Risks to our Statoil price target include: further weakness in oil prices given the high correlation with the E&P stocks and oil prices, and unsuccessful exploration results in the Barents Sea and the Ultra Deepwater Gulf of Mexico Failure to meet production guidance would also materially impact theexploration results in the Barents Sea and the Ultra Deepwater Gulf of Mexico. Failure to meet production guidance would also materially impact the company's shares due to the weaker than average historical performance.
For Repsol, specific risks to our rating include: delays to the company's major Upstream projects and resultant cost increases; potential downgrades of the credit rating; further weakness in the European refining & marketing environment; any political change affecting the company's Venezuelan projects.
Specific risks to our Tullow price target include unsuccessful exploration holes offshore in the Atlantic and in Uganda given the high implied market expectations for continued exploration success in the region. Additionally, downward revisions to production volume targets or delays to production increases in Ghana & Uganda would also adversely impact the share price.
Risks to our Premier price target include further weakness in oil prices given the high correlation with the E&P stocks and oil prices, and exploration success providing a material transformational discovery, which would make the company more attractive relative to peers.
Risks to our Cairn price target include further weakness in oil prices given the high correlation with the E&P stocks and oil prices. Furthermore, underlying negative performance in Cairn India, dry well catalysts and additional acquisitions all present risks
Russian equities fall into the emerging market (EM) category and are therefore sensitive to the risks associated with EM economies such as currency
BernsteinResearch.com 31
Russian equities fall into the emerging market (EM) category and are therefore sensitive to the risks associated with EM economies such as currency devaluation, debt default and political risk, all of which could materially alter the outlook for the companies.
Source: Bernstein estimates
Disclosure Appendix
Disclosure Appendix
SRO REQUIRED DISCLOSURES
References to "Bernstein" relate to Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, Sanford C. Bernstein (Hong Kong) Limited, and Sanford C. Bernstein (business registration number 53193989L) it f Alli B t i (Si ) Ltd hi h i li d tit d th S iti d F t A t d i t d ith C R i t ti N 199703364C ll ti l53193989L), a unit of AllianceBernstein (Singapore) Ltd. which is a licensed entity under the Securities and Futures Act and registered with Company Registration No. 199703364C, collectively.
Bernstein analysts are compensated based on aggregate contributions to the research franchise as measured by account penetration, productivity and proactivity of investment ideas. No analysts are compensated based on performance in, or contributions to, generating investment banking revenues.
Bernstein rates stocks based on forecasts of relative performance for the next 6-12 months versus the S&P 500 for stocks listed on the U.S. and Canadian exchanges, versus the MSCI Pan Europe Index for stocks listed on the European exchanges (except for Russian companies), versus the MSCI Emerging Markets Index for Russian companies and stocks listed on emerging markets exchanges outside of the Asia Pacific region, and versus the MSCI Asia Pacific ex-Japan Index for stocks listed on the Asian (ex-Japan) exchanges - unless otherwise specified. We have three categories of ratings:
Outperform: Stock will outpace the market index by more than 15 pp in the year ahead.
Market-Perform: Stock will perform in line with the market index to within +/-15 pp in the year ahead.
Underperform: Stock will trail the performance of the market index by more than 15 pp in the year ahead.
Not Rated: The stock Rating, Target Price and estimates (if any) have been suspended temporarily.
As of 06/11/2013, Bernstein's ratings were distributed as follows: Outperform - 38.4% (0.9% banking clients) ; Market-Perform - 49.0% (0.4% banking clients); Underperform - 12.6% (0.0% banking clients); Not Rated - 0.0% (0.0% banking clients). The numbers in parentheses represent the percentage of companies in each category to whom Bernstein provided investment banking services within the last twelve (12) months.
Accounts over which Bernstein and/or their affiliates exercise investment discretion own more than 1% of the outstanding common stock of the following companies BG/.LN / BG Group PLC, PMO.LN / Premier Oil PLC, TLW.LN / Tullow Oil PLC, BP/.LN / BP PLC, RDSA.LN / Royal Dutch Shell PLC, RDSA.NA / Royal Dutch Shell PLC, RDSB.LN / Royal Dutch Shell PLC, RDSB.NA / Royal Dutch Shell PLC.
The following companies are or during the past twelve (12) months were clients of Bernstein, which provided non-investment banking-securities related services and received compensation for such servicesThe following companies are or during the past twelve (12) months were clients of Bernstein, which provided non investment banking securities related services and received compensation for such services BP / BP PLC, BP/.LN / BP PLC.
An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies BP / BP PLC, BP/.LN / BP PLC.
This research publication covers six or more companies. For price chart disclosures, please visit www.bernsteinresearch.com, you can also write to either: Sanford C. Bernstein & Co. LLC, Director of Compliance, 1345 Avenue of the Americas, New York, N.Y. 10105 or Sanford C. Bernstein Limited, Director of Compliance, 50 Berkeley Street, London W1J 8SB, United Kingdom; or Sanford C. Bernstein (Hong Kong) Limited, Director of Compliance, Suites 3206-11, 32/F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong, or Sanford C. Bernstein (business registration number 53193989L) a unit of AllianceBernstein (Singapore) Ltd which is a licensed entity under the Securities and Futures Act and registered with Company Registration No 199703364Cregistration number 53193989L) , a unit of AllianceBernstein (Singapore) Ltd. which is a licensed entity under the Securities and Futures Act and registered with Company Registration No. 199703364C, Director of Compliance, 30 Cecil Street, #28-08 Prudential Tower, Singapore 049712.
BernsteinResearch.com 32
Disclosure Appendix12-Month Rating History as of 06/19/2013
Ticker Rating Changes BG/.LN O (IC) 01/22/09 BP M (IC) 08/03/10 BP/.LN M (IC) 08/03/10 CNE.LN M (RC) 01/29/13 O (IC) 01/22/09 ( ) ( )E M (RC) 03/09/12 EAD.FP M (RC) 02/15/13 O (RC) 12/17/09 ENI.IM M (RC) 03/09/12 FP.FP O (IC) 08/03/10 GALP.PL O (RC) 05/26/10 LKOD.LI M (RC) 06/28/12 U (IC) 01/15/09 NVTK LI O (RC) 06/28/12 M (RC) 04/20/11NVTK.LI O (RC) 06/28/12 M (RC) 04/20/11 OGZD.LI O (RC) 07/16/09 PMO.LN O (RC) 06/28/12 M (RC) 08/23/11 RDS/A M (RC) 03/09/12 RDS/B M (RC) 03/09/12 RDSA.LN M (RC) 03/09/12 RDSA.NA M (RC) 03/09/12 RDSB LN M (RC) 03/09/12RDSB.LN M (RC) 03/09/12 RDSB.NA M (RC) 03/09/12 ROSN.LI M (RC) 01/29/13 O (RC) 06/28/12 U (IC) 01/15/09 SGGD.LI M (RC) 06/28/12 U (IC) 01/15/09 STL.NO M (RC) 06/28/12 U (RC) 04/20/11 TLW.LN O (IC) 01/22/09 TOT O (IC) 08/03/10 Rating Guide: O - Outperform, M - Market-Perform, U - Underperform, N - Not Rated Rating Actions: IC ‐ Initiated Coverage, DC ‐ Dropped Coverage, RC ‐ Rating Change
OTHER DISCLOSURES
A price movement of a security which may be temporary will not necessarily trigger a recommendation change. Bernstein will advise as and when coverage of securities commences and ceases. Bernstein has no policy or standard as to the frequency of any updates or changes to its coverage policies. Although the definition and application of these methods are based on generally accepted industry practices and models, please note that there is a range of reasonable variations within these models. The application of models typically depends on forecasts of a range of economic variables, which may include, but not limited to, interest rates, exchange rates, earnings, cash flows and risk factors that are subject to uncertainty and also may change over time. Any valuation is dependent upon the subjective opinion of the analysts carrying out this valuation.
This document may not be passed on to any person in the United Kingdom (i) who is a retail client (ii) unless that person or entity qualifies as an authorised person or exempt person within the meaning of
BernsteinResearch.com 33
y p y p g ( ) ( ) p y q p p p gsection 19 of the UK Financial Services and Markets Act 2000 (the "Act"), or qualifies as a person to whom the financial promotion restriction imposed by the Act does not apply by virtue of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or is a person classified as an "professional client" for the purposes of the Conduct of Business Rules of the Financial Conduct Authority.
Disclosure AppendixTo our readers in the United States: Sanford C. Bernstein & Co., LLC is distributing this publication in the United States and accepts responsibility for its contents. Any U.S. person receiving this publication and wishing to effect securities transactions in any security discussed herein should do so only through Sanford C. Bernstein & Co., LLC.
To our readers in the United Kingdom: This publication has been issued or approved for issue in the United Kingdom by Sanford C. Bernstein Limited, authorised and regulated by the Financial Conduct Authority and located at 50 Berkeley Street, London W1J 8SB, +44 (0)20-7170-5000.
To our readers in member states of the EEA: This publication is being distributed in the EEA by Sanford C. Bernstein Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and holds a passport under the Markets in Financial Instruments Directive.
To our readers in Hong Kong: This publication is being distributed in Hong Kong by Sanford C. Bernstein (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission (Central Entity No. AXC846). This publication is solely for professional investors only, as defined in the Securities and Futures Ordinance (Cap. 571).
To our readers in Singapore: This publication is being distributed in Singapore by Sanford C. Bernstein, a unit of AllianceBernstein (Singapore) Ltd., only to accredited investors or institutional investors, as defined in the Securities and Futures Act (Chapter 289). Recipients in Singapore should contact AllianceBernstein (Singapore) Ltd. in respect of matters arising from, or in connection with, this publication. AllianceBernstein (Singapore) Ltd. is a licensed entity under the Securities and Futures Act and registered with Company Registration No. 199703364C. It is regulated by the Monetary Authority of Singapore ( g p ) y g p y g g y y y g pand located at 30 Cecil Street, #28-08 Prudential Tower, Singapore 049712, +65-62304600. The business name "Sanford C. Bernstein" is registered under business registration number 53193989L.
To our readers in Australia: Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited and Sanford C. Bernstein (Hong Kong) Limited are exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 in respect of the provision of the following financial services to wholesale clients:
providing financial product advice;
dealing in a financial product;g
making a market for a financial product; and
providing a custodial or depository service.
Sanford C. Bernstein & Co., LLC., Sanford C. Bernstein Limited, Sanford C. Bernstein (Hong Kong) Limited and AllianceBernstein (Singapore) Ltd. are regulated by, respectively, the Securities and Exchange Commission under U S laws by the Financial Conduct Authority under U K laws by the Hong Kong Securities and Futures Commission under Hong Kong laws and by the Monetary Authority of SingaporeCommission under U.S. laws, by the Financial Conduct Authority under U.K. laws, by the Hong Kong Securities and Futures Commission under Hong Kong laws, and by the Monetary Authority of Singapore under Singapore laws, all of which differ from Australian laws.
One or more of the officers, directors, or employees of Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, Sanford C. Bernstein (Hong Kong) Limited, Sanford C. Bernstein (business registration number 53193989L) , a unit of AllianceBernstein (Singapore) Ltd. which is a licensed entity under the Securities and Futures Act and registered with Company Registration No. 199703364C, and/or their affiliates may at any time hold, increase or decrease positions in securities of any company mentioned herein.
Bernstein or its affiliates may provide investment management or other services to the pension or profit sharing plans, or employees of any company mentioned herein, and may give advice to others as to i t t i h i Th titi ff t t ti th t i il t diff t f th d d h iinvestments in such companies. These entities may effect transactions that are similar to or different from those recommended herein.
Bernstein Research Publications are disseminated to our customers through posting on the firm's password protected website, www.bernsteinresearch.com. Additionally, Bernstein Research Publications are available through email, postal mail and commercial research portals. If you wish to alter your current distribution method, please contact your salesperson for details.
Bernstein and/or its affiliates do and seek to do business with companies covered in its research publications. As a result, investors should be aware that Bernstein and/or its affiliates may have a conflict of interest that could affect the objectivity of this publication. Investors should consider this publication as only a single factor in making their investment decisions.
This publication has been published and distributed in accordance with Bernstein's policy for management of conflicts of interest in investment research a copy of which is available from Sanford C Bernstein
BernsteinResearch.com 34
This publication has been published and distributed in accordance with Bernstein s policy for management of conflicts of interest in investment research, a copy of which is available from Sanford C. Bernstein & Co., LLC, Director of Compliance, 1345 Avenue of the Americas, New York, N.Y. 10105, Sanford C. Bernstein Limited, Director of Compliance, 50 Berkeley Street, London W1J 8SB, United Kingdom, or Sanford C. Bernstein (Hong Kong) Limited, Director of Compliance, Suites 3206-11, 32/F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong, or Sanford C. Bernstein (business registration number 53193989L) , a unit of AllianceBernstein (Singapore) Ltd. which is a licensed entity under the Securities and Futures Act and registered with Company Registration No. 199703364C,
Disclosure AppendixDirector of Compliance, 30 Cecil Street, #28-08 Prudential Tower, Singapore 049712. Additional disclosures and information regarding Bernstein's business are available on our website www.bernsteinresearch.com.
CERTIFICATIONS
I/(we), Oswald Clint, Ph.D., ACA, Senior Analyst(s)/Analyst(s), certify that all of the views expressed in this publication accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this publication.
Copyright 2013, Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, Sanford C. Bernstein (Hong Kong) Limited, and AllianceBernstein (Singapore) Ltd., subsidiaries of AllianceBernstein L.P. ~1345 Avenue of the Americas ~ NY, NY 10105 ~212/756-4400. All rights reserved.
This publication is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Bernstein or any of their subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. p , y y g j y y g g q jThis publication is based upon public sources we believe to be reliable, but no representation is made by us that the publication is accurate or complete. We do not undertake to advise you of any change in the reported information or in the opinions herein. This publication was prepared and issued by Bernstein for distribution to eligible counterparties or professional clients. This publication is not an offer to buy or sell any security, and it does not constitute investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investors must make their own investment decisions in consultation with their professional advisors in light of their specific circumstances. The value of investments may fluctuate, and investments that are denominated in foreign currencies may fluctuate in value as a result of exposure to exchange rate movements. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance of, future performance.
BernsteinResearch.com 35