DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse 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. 13 April 2017 Americas/Canada Equity Research Oil & Gas Canadian Oil & Gas Sector The Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross-sector and cross-border thematic insights for our clients. Research Analysts David Hewitt 416 352 4583 [email protected]Jason Frew 403 476 6022 [email protected]Brian Ho 403 476 6009 [email protected]David Phung 403 476 6023 [email protected]Robert Loebach 403 476 6021 [email protected]Andrew M. Kuske 416 352 4561 [email protected]Paul Tan 416 352 4593 [email protected]Edward Westlake 212 325 6751 [email protected]Mark Lear, CFA 212 538 0239 [email protected]Thomas Adolff 44 20 7888 9114 [email protected]STRATEGY Canadian Energy in North America Figure 1: N America SMID 18 over 17 Prod’n growth Source: Credit Suisse estimates ■ Canada on the world stage – ‘concentrated’ on the US: Canada has world class oil and gas resources, and an abundant market on its doorstep, but an overconcentration of exports to the US, in our opinion. We would suggest the Government target should be ‘Resource to markets’. ■ Canadian oil patch – growth AND cash: Coming to the end of a major capex cycle Canadian oil players are set to book both production growth and see material increases in free cash-flow. We expect the next phase of growth to be brownfield focused, with break-evens in the US$45 – 60/bbl range. BAT is still a question, i.e., will there be one at all, and in what form. ■ Canadian gas – needed those LNG imports: The Montney & Deep basins hold some of the most economic gas resources in North America; however, the US is materially increasing gas production. Large scale Canadian LNG exports would have helped, but these now seem unlikely near term. We see continued pressure on the AECO differential and prefer the liquids rich gas producers. ■ Seeking out superstars: both in Canada and within North America: We use 4 metrics to score both SMID and large cap North America universes, then use the score to try and identify possible valuation gaps. In the SMID space in Canada we prefer VII and NVA and in the US PE and EGN. For the North America large cap universe we prefer SU and ECA in Canada and PXD, CXO and DVN in the US. Finally looking at global majors SU again stands out as does RDS and BP in Europe.
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DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse 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.
13 April 2017 Americas/Canada Equity Research
Oil & Gas
Canadian Oil & Gas Sector The Credit Suisse Connections Series leverages our
exceptional breadth of macro and micro research to deliver
incisive cross-sector and cross-border thematic insights for
taking into consideration a wide AECO differential (US$1/ mmBtu), with for example Seven
Generations Nest 2 play making a 15% IRR at circa US$30/bbl, and NuVista’s Bilbo play
in the Montney at less than US$40/bbl. Condensate will likely continue to be a premium
product in Canada, given its use as a diluent in the oil sands. Additionally, both companies
continue to reduce their cost structure while improving their well performance, which
should continue to drive improving economic returns moving forward.
Gas VII: Hard times drive consolidation: We have argued before that a combination of
factors may drive consolidation in Western Canada that favors larger companies,
including:
- The Montney is a large resource, and therefore it should generally gravitate to
companies with a large balance sheet over time
- Widening basis differentials, coupled with limited infrastructure, may place greater
pressure on lesser capitalized companies
- Pipeline companies are increasingly asking for longer term contracts, and less
capitalized companies may not have the necessary credit profile to commit to longer term
contracts
- Larger scale companies with existing infrastructure may have a competitive
advantage over time
Gas 3 key themes:
Great rocks
But excess gas supply which LNG won’t fix in the short term
Favour liquids rich players, watch for consolidation
Infrastructure / Pipeline:
Canadian Mainline: As one may expect, the Canadian Mainline's ongoing rate base
erosion reflects several factors, including pipeline age along with original capital cost,
changing natural gas flows, competitive pipelines, and capital allocation decisions
reflecting available returns. In light of these factors, there should be no surprise about the
System's declining throughput appearing in Figure 47. It is important to note that the
mainline has run at 8bcf/d transmission – there is certainly capacity that could be used
going forward, although the second pipe could be converted to an oil pipeline as part of
the Energy East pipeline proposal.
13 April 2017
Canadian Oil & Gas Sector 34
Figure 47: Selected Historical Natural Gas Volume Throughputs
Note Before 2007, Canadian Mainline’s throughput volumes in the above table reflect physical deliveries to domestic and export markets. Throughput volumes reported in previous years reflected contract deliveries. However, customer contracting patterns have changed in recent years making physical deliveries a better measure of system utilization. Source: Company data.
In relation to pipeline access options, TransCanada recently announced and concluded an
open season for the Canadian Mainline. This revised open season followed an originally
failed attempt to secure longer-term shippers in late 2016. The new binding open season
for the Dawn Long Term Fixed Price Service (LTFP) was centered around a changed
tolling structure. Very simply, the tolling structure was changed with the toll being set at
C$0.77/GJ/d on a ten-year term with a sliding schedule of tolls for more reduced service
terms as appears in Figure 48.
Figure 48: TRP's Mainline Fixed Price Service Open Season
Source: Company data.
TransCanada sought and secured interest for 1.5 PJ/d of commitments from the open
season. Versus other offerings, TRP's newly proposed tolls are extremely competitive.
Yet, that toll competitiveness is only one factor to consider for producers, purchasers, and
shippers. On a fundamental basis, TRP's Mainline should best be considered as a multi-
region system with a Western leg, the Northern Ontario system, and the Eastern Triangle
portion as appears in Figure 49.
0
2
4
6
8
10
12
14
Do
me
sti
c &
Ex
po
rt V
olu
me
(b
cf/
d)
NGTL System Canadian Mainline ANR
13 April 2017
Canadian Oil & Gas Sector 35
Figure 49: Canadian Mainline
Source: Company data.
The dynamics associated with natural gas shipments are rather complex, with a significant
captive load along the Western and Northern Ontario systems (power generation, natural
gas distribution utilities, and industrials). For additional perspective, please refer to our
note from September 12th, titled, "Western Canadian Natural Gas: Diving into Western
Canada Gas Production Trends and Other Topics".
The relative basin competitiveness is a critical consideration for accessing the longer-term
potential of the western Canadian resource. The prime threat for that resource tends to
come from the Marcellus and Utica basins that are geographically much closer to Western
Canada's traditional end markets of Ontario and Quebec. Yet, relative returns and pipeline
costs and existing connectivity versus prospective connectivity provide some advantages
to the incumbent positioning.
Quebec LNG (1.4bcf/d) plans to source Western Canadian gas: The project, in
Saguenay, uses 11MTpa as its design capacity (circa 1.4bcf/d). It plans to use an as yet
unconstructed 650km pipe to link to the mainline, bring Western Canadian gas to the East
and thence for export as LNG. Clearly should such a project materialize it would be a
AECO minus NYMEX (US$/mmBTU) ($1.00) ($1.00) ($1.00) ($1.00)
FX (US$/C$) 0.75 0.78 0.78 0.78
13 April 2017
Canadian Oil & Gas Sector 53
13 April 2017
Canadian Oil & Gas Sector 54
Companies Mentioned (Price as of 12-Apr-2017) ARC Resources Ltd. (ARX.TO, C$18.62) Advantage Oil & Gas (AAV.TO, C$8.92) Africa Oil Corp (AOIC.ST, Skr15.12) Aker BP (AKERBP.OL, Nkr144.9) Anadarko Petroleum Corp. (APC.N, $62.54) Antero Resources Corporation (AR.N, $22.6) Apache Corp. (APA.N, $53.81) BP (BP.L, 472.5p, OUTPERFORM, TP 520.0p) Baytex Energy Corp. (BTE.TO, C$4.62) Bellatrix Exploration Ltd (BXE.TO, C$1.11) Birchcliff Energy (BIR.TO, C$7.78) Bonavista Energy Corporation (BNP.TO, C$3.31) Cairn Energy (CNE.L, 209.6p) Callon Petroleum Company (CPE.N, $13.13) Canadian Natural Resources Limited (CNQ.TO, C$44.72) Carrizo Oil & Gas Inc. (CRZO.OQ, $28.37) Cenovus Energy Inc. (CVE.TO, C$14.45) Chesapeake Energy Corp. (CHK.N, $6.15) Chevron Corp. (CVX.N, $108.97) Concho Resources, Inc. (CXO.N, $132.27, OUTPERFORM, TP $158.0) ConocoPhillips (COP.N, $49.44) Continental Resources, Inc (CLR.N, $45.84) Crescent Point Energy Corp (CPG.TO, C$14.61) Crew Energy Inc (CR.TO, C$5.01) Denbury Resources (DNR.N, $2.41) Devon Energy Corp (DVN.N, $41.87, OUTPERFORM[V], TP $59.0) Diamondback Energy, Inc. (FANG.OQ, $106.32) Dominion Resources (D.N, $77.93) ENI (ENI.MI, €15.24) EOG Resources (EOG.N, $97.49) EP Energy Corp. (EPE.N, $5.1) EQT Corporation (EQT.N, $63.36) EQT Midstream Partners, LP (EQM.N, $77.78) Encana Corp. (ECA.N, $11.78, OUTPERFORM[V], TP $14.0) Energen Corporation (EGN.N, $54.6, OUTPERFORM[V], TP $77.0) Energy Transfer Partners, LP (ETP.N, $35.66) Enerplus Corporation (ERF.TO, C$10.75) Extraction Oil & Gas, Inc (XOG.OQ, $18.39) ExxonMobil Corporation (XOM.N, $82.97) Gran Tierra (GTE.A, $2.72) Gulfport Energy (GPOR.OQ, $16.64) Hess Corporation (HES.N, $50.57) Husky Energy Inc. (HSE.TO, C$15.47) Imperial Oil Ltd (IMO.TO, C$40.96) Jagged Peak Energy, Inc. (JAG.N, $12.75) Kelt Exploration Ltd (KEL.TO, C$7.37) Kinder Morgan, Inc. (KMI.N, $21.66) Korea Gas Corp (036460.KS, W45,900) Laredo Petroleum (LPI.N, $14.49) Lundin Petroleum (LUPE.ST, Skr189.7) MEG Energy CORP (MEG.TO, C$7.06) Marathon Oil Corp (MRO.N, $16.41) Murphy Oil Corp. (MUR.N, $28.1) Newfield Exploration (NFX.N, $36.2) Noble Energy (NBL.N, $35.24) Nostrum Oil & Gas (NOGN.L, 465.0p) NuVista Energy (NVA.TO, C$6.66, OUTPERFORM[V], TP C$8.5) OMV (OMVV.VI, €39.66) Oasis Petroleum (OAS.N, $13.36) Occidental Petroleum (OXY.N, $65.06) Ophir Energy plc (OPHR.L, 90.0p) PDC Energy (PDCE.OQ, $64.39) Painted Pony Petroleum Ltd (PPY.TO, C$5.39) Paramount Resources Ltd (POU.TO, C$18.41) Parex Resources Inc. (PXT.TO, C$17.99) Parsley Energy (PE.N, $31.46, OUTPERFORM, TP $45.0) Pengrowth Energy Corp. (PGF.TO, C$1.48) Penn West Petroleum Ltd. (PWT.TO, C$2.15) PetroChina (0857.HK, HK$5.68) Peyto Exploration & Development Corp. (PEY.TO, C$27.0) Pioneer Natural Resources (PXD.N, $186.9, OUTPERFORM, TP $220.0) Premier Oil (PMO.L, 66.25p) Range Resources (RRC.N, $28.54) Repsol (REP.MC, €14.84) Royal Dutch Shell plc (RDSa.L, 2131.0p, OUTPERFORM, TP 2450.0p) Sanchez Energy Corp. (SN.N, $9.08) Seven Generations Energy Ltd. (VII.TO, C$25.07, OUTPERFORM[V], TP C$32.0) Southwestern Energy Co. (SWN.N, $7.87) Spectra Energy Partners, LP (SEP.N, $44.44) Statoil (STL.OL, Nkr149.4) Suncor Energy (SU.TO, C$41.35, OUTPERFORM, TP C$48.0) Total (TOTF.PA, €48.64) Tourmaline Oil Corp (TOU.TO, C$29.13) TransCanada Corp. (TRP.TO, C$63.46) TransGlobe Energy Corp. (TGL.TO, C$2.17) Trilogy Energy Corp (TET.TO, C$5.27) Tullow Oil (TLW.L, 232.9p)
13 April 2017
Canadian Oil & Gas Sector 55
Vermilion Energy Inc. (VET.TO, C$50.5) Whiting Petroleum Corp. (WLL.N, $8.93) Williams Partners, LP (WPZ.N, $41.13)
Disclosure Appendix
Analyst Certification Jason Frew, David Phung, Andrew M. Kuske, Paul Tan, Edward Westlake, Mark Lear, CFA and Thomas Adolff each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for BP (BP.L)
BP.L Closing Price Target Price
Date (p) (p) Rating
23-Apr-14 485.85 495.00 N
11-Jul-14 503.80 505.00
22-Oct-14 434.25 470.00
05-Dec-14 424.50 440.00
27-Jan-15 440.60 415.00 U
05-Feb-15 450.10 420.00
28-Jul-15 392.65 410.00
08-Sep-15 340.20 350.00
27-Oct-15 380.00 365.00
26-Jan-16 356.50 340.00
02-Feb-16 335.10 330.00
19-May-16 356.00 R
04-Jul-16 446.80 430.00 N
01-Nov-16 462.05 480.00
30-Nov-16 459.45 500.00 O
22-Dec-16 503.00 530.00
07-Feb-17 457.10 510.00
01-Mar-17 464.60 520.00
* Asterisk signifies initiation or assumption of coverage.
N EU T RA L
U N D ERPERFO RM
REST RICT ED
O U T PERFO RM
13 April 2017
Canadian Oil & Gas Sector 56
3-Year Price and Rating History for Concho Resources, Inc. (CXO.N)
CXO.N Closing Price Target Price
Date (US$) (US$) Rating
24-Apr-14 133.60 120.00 N
17-Jul-14 142.78 136.00
21-Aug-14 133.09 135.00
15-Oct-14 101.74 123.00
02-Dec-14 93.28 106.00
23-Jan-15 106.72 104.00
17-Apr-15 124.75 118.00
22-Jul-15 105.41 147.00 O *
05-Aug-15 105.95 151.00
08-Sep-15 106.92 131.00
30-Sep-15 98.30 R
01-Oct-15 98.30 131.00 O
22-Oct-15 112.83 135.00
09-Dec-15 99.36 142.00
26-Jan-16 88.15 119.00
20-Apr-16 111.99 123.00
06-May-16 114.66 130.00
13-Jul-16 121.04 136.00
05-Aug-16 128.92 145.00
15-Aug-16 136.44 R
16-Aug-16 136.44 145.00 O
24-Aug-16 132.38 154.00
10-Nov-16 131.25 160.00
30-Mar-17 127.72 158.00
* Asterisk signifies initiation or assumption of coverage.
N EU T RA L
O U T PERFO RM
REST RICT ED
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Canadian Oil & Gas Sector 57
3-Year Price and Rating History for Devon Energy Corp (DVN.N)
DVN.N Closing Price Target Price
Date (US$) (US$) Rating
24-Apr-14 71.91 80.00 O
10-Jun-14 74.94 90.00
30-Jun-14 79.40 R
12-Sep-14 69.95 90.00 O
15-Oct-14 55.14 87.00
02-Dec-14 59.89 82.00
23-Jan-15 60.16 75.00
30-Mar-15 60.71 80.00
21-May-15 67.51 83.00
22-Jul-15 51.14 80.00 *
08-Sep-15 40.50 62.00
05-Nov-15 47.51 68.00
09-Dec-15 35.32 64.00
26-Jan-16 24.56 44.00
18-Feb-16 19.70 37.00
19-Feb-16 18.65 R
26-Feb-16 20.29 37.00 O
05-May-16 31.20 40.00
20-May-16 34.25 42.00
13-Jul-16 39.00 46.00
03-Aug-16 38.00 50.00
12-Sep-16 43.19 52.00
13-Oct-16 43.90 50.00
02-Nov-16 39.55 55.00
26-Feb-17 42.81 58.00
30-Mar-17 41.45 57.00
06-Apr-17 42.88 59.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
REST RICT ED
3-Year Price and Rating History for Encana Corp. (ECA.N)
ECA.N Closing Price Target Price
Date (US$) (US$) Rating
14-Apr-14 22.64 22.00 N
07-May-14 23.57 27.00
27-Jun-14 23.62 R
21-Oct-14 19.09 24.00 N
15-Dec-14 11.62 18.00
04-Feb-15 13.82 15.00
04-Mar-15 12.27 R
08-Apr-15 11.59 13.00 N
23-Jul-15 8.57 12.00
27-Jul-15 7.42 11.50
25-Aug-15 5.99 R
06-Oct-16 10.73 14.00 O
* Asterisk signifies initiation or assumption of coverage.
N EU T RA L
REST RICT ED
O U T PERFO RM
13 April 2017
Canadian Oil & Gas Sector 58
3-Year Price and Rating History for Energen Corporation (EGN.N)
EGN.N Closing Price Target Price
Date (US$) (US$) Rating
17-Feb-16 24.03 R
01-Apr-16 37.23 43.00 O
20-Apr-16 40.81 45.00
06-May-16 40.19 48.00
21-Jun-16 49.24 57.00
13-Jul-16 48.50 59.00
10-Aug-16 51.86 65.00
13-Oct-16 58.24 67.00
08-Nov-16 53.80 70.00
21-Nov-16 58.54 75.00
31-Jan-17 53.89 76.00
24-Feb-17 51.75 78.00
30-Mar-17 53.83 77.00
* Asterisk signifies initiation or assumption of coverage.
REST RICT ED
O U T PERFO RM
3-Year Price and Rating History for NuVista Energy (NVA.TO)
NVA.TO Closing Price Target Price
Date (C$) (C$) Rating
16-Apr-15 8.56 11.00 O *
23-Jul-15 5.67 8.75
09-Sep-15 5.02 7.00
10-Nov-15 4.52 6.75
09-Dec-15 3.75 5.50
28-Jan-16 4.30 5.25
09-Mar-16 4.82 5.75
12-May-16 6.29 6.25
14-Jul-16 6.69 8.50
10-Aug-16 6.67 9.00
11-Oct-16 7.10 R
31-Oct-16 6.82 9.50 O
31-Mar-17 6.15 8.50
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
REST RICT ED
13 April 2017
Canadian Oil & Gas Sector 59
3-Year Price and Rating History for Parsley Energy (PE.N)
PE.N Closing Price Target Price
Date (US$) (US$) Rating
17-Jun-14 22.59 31.00 O *
17-Jul-14 23.35 32.00
21-Aug-14 20.08 31.00
15-Oct-14 17.18 29.00
02-Dec-14 12.96 20.00
23-Jan-15 16.83 19.00
17-Apr-15 16.43 20.00
22-Jul-15 15.39 21.00 *
20-Aug-15 15.11 23.00
17-Sep-15 16.54 R
18-Sep-15 15.79 21.00 O
06-Nov-15 18.13 22.00
09-Dec-15 18.86 R
10-Dec-15 18.86 23.00 O
26-Jan-16 17.57 22.00
01-Mar-16 18.93 25.00
20-Apr-16 23.60 27.00
06-May-16 23.81 28.00
23-May-16 25.07 R
24-May-16 25.35 28.00 O
13-Jul-16 28.04 31.00
05-Aug-16 32.50 42.00
13-Oct-16 36.26 41.00
04-Nov-16 33.17 42.00
10-Jan-17 36.67 R
11-Jan-17 36.67 42.00 O
12-Jan-17 36.48 45.00
07-Feb-17 33.33 R
08-Feb-17 31.04 46.00 O
30-Mar-17 31.90 45.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
REST RICT ED
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Canadian Oil & Gas Sector 60
3-Year Price and Rating History for Pioneer Natural Resources (PXD.N)
PXD.N Closing Price Target Price
Date (US$) (US$) Rating
24-Apr-14 197.32 215.00 O
17-Jul-14 222.58 251.00
21-Aug-14 205.95 250.00
15-Oct-14 171.58 230.00
02-Dec-14 146.37 190.00
23-Jan-15 152.86 170.00
17-Apr-15 177.93 187.00
22-Jul-15 125.00 186.00 *
06-Aug-15 128.27 189.00
08-Sep-15 121.70 150.00
22-Oct-15 136.89 157.00
04-Nov-15 144.92 170.00
09-Dec-15 143.10 179.00
26-Jan-16 113.54 143.00
20-Apr-16 154.73 168.00
26-Apr-16 165.36 183.00
15-Jun-16 162.50 R
16-Jun-16 162.50 183.00 O
21-Jun-16 157.03 199.00
13-Jul-16 154.16 202.00
29-Jul-16 162.57 212.00
03-Nov-16 173.17 216.00
24-Jan-17 180.75 217.00
09-Feb-17 191.59 221.00
30-Mar-17 182.48 220.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
REST RICT ED
3-Year Price and Rating History for Royal Dutch Shell plc (RDSa.L)
RDSa.L Closing Price Target Price
Date (p) (p) Rating
23-Apr-14 2247.00 2450.00 O
02-May-14 2354.00 2550.00
11-Jul-14 2389.50 2600.00
04-Aug-14 2414.00 2700.00
22-Oct-14 2185.50 2625.00
07-Nov-14 2230.50 2660.00
05-Dec-14 2149.00 2500.00
27-Jan-15 2191.00 2380.00
30-Jan-15 2018.00 2350.00
09-Apr-15 2004.00 2250.00
21-Apr-15 2100.00 2310.00
30-Apr-15 2059.50 2325.00
31-Jul-15 1840.00 2400.00
08-Sep-15 1629.50 2175.00
29-Oct-15 1711.50 2125.00
26-Jan-16 1422.50 1970.00
08-Jun-16 1800.00 2070.00
28-Jul-16 1984.50 2150.00
01-Nov-16 2115.00 2325.00
03-Feb-17 2193.00 2450.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
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Canadian Oil & Gas Sector 61
3-Year Price and Rating History for Seven Generations Energy Ltd. (VII.TO)
VII.TO Closing Price Target Price
Date (C$) (C$) Rating
09-Dec-14 17.94 23.50 O *
04-Feb-15 18.41 21.00
22-Apr-15 19.66 R
24-Apr-15 20.65 21.00 O
22-Jul-15 14.85 21.00 *
10-Aug-15 14.45 23.00 *
09-Sep-15 12.65 19.50
09-Nov-15 13.76 20.00
09-Dec-15 14.18 19.50
09-Feb-16 14.38 R
03-Mar-16 17.00 19.50 O
09-Mar-16 18.00 22.00
04-May-16 22.69 26.00
06-Jul-16 25.10 R
22-Aug-16 29.05 35.00 O
31-Mar-17 24.30 32.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
REST RICT ED
3-Year Price and Rating History for Suncor Energy (SU.TO)
SU.TO Closing Price Target Price
Date (C$) (C$) Rating
21-Apr-14 40.41 48.00 O
14-Jul-14 44.99 52.00
30-Sep-14 40.53 50.00
21-Oct-14 38.86 45.00
04-Feb-15 37.49 44.00
08-Apr-15 38.84 46.00
23-Jul-15 33.65 45.00
09-Sep-15 34.77 43.00
31-Jan-16 33.18 38.00
21-Apr-16 36.06 41.00
18-Jul-16 36.19 42.00
24-Oct-16 39.33 44.00
05-Dec-16 43.09 48.00
* Asterisk signifies initiation or assumption of coverage.
O U T PERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less att ractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as Euro pean ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiv eness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.
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Canadian Oil & Gas Sector 62
Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 45% (64% banking clients) Neutral/Hold* 39% (61% banking clients) Underperform/Sell* 14% (54% banking clients) Restricted 2% *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determin ed on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.
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Target Price and Rating Valuation Methodology and Risks: (12 months) for BP (BP.L)
Method: We set our TP based on our DCF valuation and comparative multiples. It is a 50/50 weighted valuation approach. Our DCF valuation derives a value of ~520p/share, which is based on a nominal WACC of 7.5%. Our preferred comparative multiple is EV/DACF, which gives us a value of ~515p/share. Combining the two we get to a rounded value of ~520p/share, which implies an EV/DACF of 6.5x on mid-cycle earnings. Our Outperform rating is because it has relatively more upside than peers.
Risk: Key risks to our 520p target price and Outperform rating include commodity prices, refining margins, delays and cost overruns on development projects.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Concho Resources, Inc. (CXO.N)
Method: Our $158 price target for CXO is based on our proved developed plus projects net asset value (NAV) estimate, which is based on long-term prices of $62.50 per barrel oil and $3.25 per million Btu (MMBtu). Our NAV is derived from our discounted cash flow model, which values total proved developed reserves (395 million barrels of oil equivalent or MMBoe) at $18 per barrel of oil equivalent (Boe) to which we assign an NAV of $40 per share net of debt. To this estimate we add another $118 per share for undeveloped and unbooked reserves totalling 3,405 MMBoe. Our Outperform Rating is a function of total shareholder return over the next twelve months and the relative risk/reward versus our coverage universe.
Risk: Risks to achievement of our $158 target price and Outperform rating for CXO are (1) a protracted downturn in oil and gas prices would impact the company's ability to grow within cash flow and deliver the current long-term growth plan, (2) higher than expected decline rates in producing wells, (3) rising well costs.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Devon Energy Corp (DVN.N)
Method: Our 12-month Target Price for Devon Energy is $59 per share, which assumes the stock trades at parity with our net asset value (NAV) estimate. Our NAV is based on the company's proved developed reserves and our estimate of undeveloped reserves that the company
will exploit over the next 5 years. Our OUTPERFORM rating is a function of total shareholder return over the next twelve months and the relative risk/reward versus our coverage universe.
Risk: DVN faces a number of risks that could prevent the stock from reaching our $59 target price and Outperform rating including; DVN has oil sands operations in Canada, that could be adversely affected with changes in Canadian Royalty and/or environmental regulations. In general, DVN and oil and gas companies are subject to changes in global commodity supply/demand, accidents, equipment malfunctions, as well as a number of geological related issues that could adversely affect the company's ability to conduct its operations as planned.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Encana Corp. (ECA.N)
Method: Our rating and valuation for Canadian oil and gas producers reflect our fundamental analysis of potential cash flows, balance sheet strength and growth potential. Our Outperform rating for ECA aligns with our view of the company's competitive position within the sector. More specifically, our 12-month target of US$14 is in line with our PD Plus NAV and equates to 6.4x 2018e EBIDAX.
Risk: The risk factors that could cause us to review our Outperform rating and 12-month target price of US$14 for ECA include: (1) financial performance is dependent on oil and gas prices and the value of the Canadian dollar, all of which are volatile; (2) operating and capital costs could reflect market conditions that are different than currently forecast; (3) the uncertain nature of regulatory requirements, fiscal terms, and weather conditions (4) availability of capital, and; (5) changes to strategy and management.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Energen Corporation (EGN.N)
Method: Our $77 price target and Outperform rating for EGN is based on our proved developed plus projects net asset value (NAV) estimate, which is based on long-term prices of $62.50 per barrel oil and $3.25 per million Btu (MMBtu). Our NAV is derived from our discounted cash flow model, which values total proved developed reserves (161 million barrels of oil equivalent or MMBoe) at $17 per barrel of oil equivalent (Boe) to which we assign an NAV of $24 per share net of debt. To this estimate we add another $53 per share for undeveloped and unbooked reserves totaling 1,069 MMBoe. Our Outperform Rating is a function of total shareholder return over the next twelve months and the relative risk/reward versus our coverage universe.
Risk: Risks to achievement of our $77 target price and Outperform rating for EGN include: (1) a protracted downturn in oil and gas prices, (2) higher than expected decline rates in producing wells, (3) rising well costs, and (4) infrastructure constraints that would impede EGN from getting its production to market.
Target Price and Rating Valuation Methodology and Risks: (12 months) for NuVista Energy (NVA.TO)
Method: For North American E&P companies, Credit Suisse utilizes a PD Plus NAV methodology that combines proved developed reserves, balance sheet and our expectation of value that may be converted over a six year drilling program, after taking into consideration funding and infrastructure requirements, balance sheet quality and anticipated cash flows, as well as non-E&P and other assets. Our PD Plus NAV methodology yields a target price of C$8.50 for NuVista. Our Outperform rating reflects an asset portfolio that is at the low end of the cost curve in the Montney, despite low commodity prices, and a reasonably strong balance sheet that provides for flexibility, among other considerations.
Risk: Risks to our C$8.50 target price and Outperform rating for NuVista include, but are not limited to: (1) operations risk - financial performance is dependent on oil and gas production, which is dependent on operations execution; (2) exploration risk - there is no guarantee of exploration success should the company decide to conduct step-out drilling or appraise new discoveries; (3) commodity pricing risk - underlying asset values are dependent on commodity prices, which can be volatile.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Parsley Energy (PE.N)
Method: Our $45 price target for PE and our rating are based on our proved developed plus projects net asset value (NAV) estimate, which is based on long-term prices of $62.50 per barrel oil and $3.25 per million Btu (MMBtu). Our NAV is derived from our discounted cash flow model, which values total proved developed reserves (106 million barrels of oil equivalent or MMBoe) at $22 per barrel of oil equivalent (Boe) to which we assign an NAV of $3 per share net of debt. To this estimate we add another $42 per share for undeveloped and unbooked reserves totalling 2,141 MMBoe. Our Outperform Rating is a function of total shareholder return over the next twelve months and the relative risk/reward versus our coverage universe.
Risk: Risks to achievement of our $45 target price and Outperform rating for PE are (1) a protracted downturn in oil and gas prices, (2) delays and lower recovery factors than projected in PE's heavy oil recovery projects, (3) higher than expected decline rates in producing wells, (4) rising well costs, and (5) infrastructure constraints that would impede PE from getting its production to market.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Pioneer Natural Resources (PXD.N)
Method: Our $220 price target and Outperform rating for PXD is based on our proved developed plus projects net asset value (NAV) estimate, which is based on long-term prices of $62.5 per barrel oil and $3.25 per million Btu (MMBtu). Our NAV is derived from our discounted
13 April 2017
Canadian Oil & Gas Sector 64
cash flow model, which values total proved developed reserves (675 million barrels of oil equivalent or MMBoe) at $17 per barrel of oil equivalent (Boe) to which we assign an NAV of $61 per share net of debt. To this estimate we add another $159 per share for undeveloped and unbooked reserves totalling 4,881 MMBoe. Our Outperform Rating is a function of total shareholder return over the next twelve months and the relative risk/reward versus our coverage universe.
Risk: Risks to achievement of our $220 target price and Outperform rating for PXD are (1) a protracted downturn in oil and gas prices, (2) delays and lower recovery factors than projected in PXD's heavy oil recovery projects, (3) higher than expected decline rates in producing wells, (4) rising well costs, and (5) infrastructure constraints that would impede PXD from getting its production to market.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Royal Dutch Shell plc (RDSa.L)
Method: We set our TP based on our DCF valuation and comparative multiples. We weight these two metrics 50/50. Our DCF using a nominal WACC of ~7.5% derives a value of ~2450p/share. Our preferred comparative multiple is EV/DACF. Our TP of 2450p/share implies a 2017-2019E EV/DACF of ~7.5x. We are Outperform on the stock because we see one of the biggest upside in the sector; we think the stock is misunderstood and believe the dividend is affordable and sustainable.
Risk: Key risks to our 2450p/share target price and Outperform rating are commodity prices, refining margins, delays and cost overruns on development projects. RDS may see a worsening in the cash flow leak (eg Nigeria onshore, higher maintenance activities, LNG marketing uncertainty).
Target Price and Rating Valuation Methodology and Risks: (12 months) for Seven Generations Energy Ltd. (VII.TO)
Method: For North American E&P companies, Credit Suisse utilizes a PD Plus NAV methodology that combines proved developed reserves, balance sheet and our expectation of value that may be converted over an eight year drilling program, after taking into consideration funding and infrastructure requirements, balance sheet quality and anticipated cash flows, as well as non-E&P and other assets. Our PD Plus NAV methodology yields a target price of C$32 for Seven Generations. Our Outperform rating reflects the company's condensate rich Montney assets that are at the low end of the cost curve in North America, improving well results that lead to higher capital efficiency and good execution to date, among other considerations.
Risk: Risks to our C$32 target price and Outperform rating for Seven Generations include, but are not limited to: (1) operations risk - financial performance is dependent on oil and gas production, which is dependent on operations execution; (2) exploration risk - there is no guarantee of exploration success should the company decide to conduct step-out drilling or appraise new discoveries; (3) commodity pricing risk - underlying asset values are dependent on commodity prices, which can be volatile.
Target Price and Rating Valuation Methodology and Risks: (12 months) for Suncor Energy (SU.TO)
Method: Our rating and valuation for Canadian oil and gas producers reflect our fundamental analysis of potential cash flows, balance sheet strength and growth potential. Our Outperform rating for SU.TO aligns with our view of the company's competitive position within the sector. More specifically, our 12-month target of C$48 equates to 7.3x 2018e EBIDAX, in line with peers.
Risk: The risk factors that could cause us to review our Outperform rating and 12-month target price of C$48 for SU.TO include: (1) financial performance is dependent on oil and gas prices and the value of the Canadian dollar, all of which are volatile; (2) operating and capital costs could reflect market conditions that are different than currently forecast; (3) the uncertain nature of regulatory requirements, fiscal terms, and weather conditions; (4) availability of capital, and; (5) changes to strategy and management.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names The subject company (BP.L, ECA.N, SU.TO, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, EGN.N, XOG.OQ, VET.TO, CPG.TO, POU.TO, KEL.TO, CRZO.OQ, PWT.TO, CR.TO, NFX.N, BXE.TO, PDCE.OQ, MEG.TO, HSE.TO, IMO.TO, CVE.TO, OPHR.L, TLW.L, PMO.L, NOGN.L, HES.N, MUR.N, APA.N, AR.N, CHK.N, CLR.N, CPE.N, DNR.N, EOG.N, EPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, MRO.N, SN.N, NBL.N, OAS.N, RRC.N, SWN.N, OMVV.VI, OXY.N, TOTF.PA, REP.MC, STL.OL, ENI.MI, COP.N, CVX.N, XOM.N, TRP.TO, 0857.HK, D.N, EQM.N, ETP.N, SEP.N, WPZ.N, JAG.N, KMI.N, APC.N, ERF.TO, GTE.A, TOU.TO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (BP.L, ECA.N, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, EGN.N, XOG.OQ, NFX.N, PDCE.OQ, MEG.TO, IMO.TO, CVE.TO, AR.N, CHK.N, CPE.N, DNR.N, EPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, OAS.N, RRC.N, SWN.N, OXY.N, TOTF.PA, STL.OL, ENI.MI, COP.N, XOM.N, TRP.TO, D.N, EQM.N, ETP.N, SEP.N, WPZ.N, JAG.N, KMI.N, APC.N, TOU.TO) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (BP.L, RDSa.L, VET.TO, CHK.N, EPE.N, EQT.N, MRO.N, TOTF.PA, REP.MC, STL.OL, ENI.MI, XOM.N, TRP.TO, 0857.HK, D.N, EQM.N, ETP.N, WPZ.N, APC.N) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (BP.L, ECA.N, VII.TO, PE.N, PXD.N, CXO.N, NVA.TO, XOG.OQ, MEG.TO, IMO.TO, CVE.TO, AR.N, CPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, OAS.N, SWN.N, TOTF.PA, XOM.N, TRP.TO, D.N, ETP.N, WPZ.N) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (BP.L, ECA.N, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, EGN.N, XOG.OQ, NFX.N, PDCE.OQ, MEG.TO, IMO.TO, CVE.TO, AR.N, CHK.N, CPE.N, DNR.N, EPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, OAS.N, RRC.N, SWN.N, OXY.N, TOTF.PA, STL.OL, ENI.MI, COP.N, XOM.N, TRP.TO, D.N, EQM.N, ETP.N, SEP.N, WPZ.N, JAG.N, KMI.N, APC.N, TOU.TO) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BP.L, ECA.N, SU.TO, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, EGN.N, AAV.TO, PPY.TO, PEY.TO, XOG.OQ, TET.TO, CPG.TO, POU.TO, KEL.TO, CRZO.OQ, PGF.TO, PWT.TO, BNP.TO, BIR.TO, CR.TO, NFX.N, BXE.TO, PDCE.OQ, MEG.TO, HSE.TO, CNQ.TO, IMO.TO, CVE.TO, OPHR.L, CNE.L, TLW.L, PMO.L, TGL.TO, NOGN.L, HES.N, MUR.N, APA.N, AR.N, CHK.N, CLR.N, CPE.N, DNR.N, EOG.N, EPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, MRO.N, SN.N, NBL.N, OAS.N, RRC.N, SWN.N, WLL.N, OMVV.VI, OXY.N, TOTF.PA, REP.MC, STL.OL, ENI.MI, COP.N, CVX.N, XOM.N, TRP.TO, 0857.HK, D.N, EQM.N, ETP.N, SEP.N, WPZ.N, JAG.N, KMI.N, APC.N, ERF.TO, GTE.A, PXT.TO, TOU.TO) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (BP.L, RDSa.L, VET.TO, CHK.N, EPE.N, EQT.N, MRO.N, TOTF.PA, REP.MC, STL.OL, ENI.MI, XOM.N, TRP.TO, 0857.HK, D.N, EQM.N, ETP.N, WPZ.N, APC.N) within the past 12 months As of the date of this report, Credit Suisse makes a market in the following subject companies (XOM.N, 0857.HK). A member of the Credit Suisse Group is party to an agreement with, or may have provided services set out in sections A and B of Annex I of Directive 2014/65/EU of the European Parliament and Council ("MiFID Services") to, the subject issuer (BP.L, ECA.N, SU.TO, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, PPY.TO, PEY.TO, XOG.OQ, VET.TO, CPG.TO, POU.TO, KEL.TO, CRZO.OQ, PGF.TO, PWT.TO, BNP.TO, BIR.TO, CR.TO, NFX.N, PDCE.OQ, BTE.TO, MEG.TO, HSE.TO, CNQ.TO, IMO.TO, CVE.TO, OPHR.L, LUPE.ST, CNE.L, TLW.L, PMO.L, TGL.TO, NOGN.L, AOIC.ST, HES.N, MUR.N, AR.N, CHK.N, CLR.N, CPE.N, DNR.N, EOG.N, EPE.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, SN.N, NBL.N, OAS.N, RRC.N, SWN.N, WLL.N, OMVV.VI, TOTF.PA, REP.MC, STL.OL, ENI.MI, XOM.N, TRP.TO, 0857.HK, ARX.TO, D.N, EQM.N, ETP.N, SEP.N, WPZ.N, JAG.N, KMI.N, APC.N, ERF.TO, GTE.A, PXT.TO, TOU.TO) within the past 12 months. As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (EGN.N, TET.TO, TLW.L, 0857.HK, EQM.N). Credit Suisse beneficially holds >0.5% long position of the total issued share capital of the subject company (TET.TO, PDCE.OQ, EQM.N). Credit Suisse has a material conflict of interest with the subject company (POU.TO) . Credit Suisse is acting as a strategic advisor on Seven Generations' acquisition of Paramount Resources Ltd's Montney Nest assets. Credit Suisse has a material conflict of interest with the subject company (RRC.N) . Credit Suisse Securities (USA) LLC acted as exclusive financial advisor to Range Resources Corporation in its acquisition of Memorial Resource Development Corporation. Credit Suisse has a material conflict of interest with the subject company (CVX.N) . Credit Suisse is engaged as the Sole Financial Advisor and Joint Financier to the Consortium (consists of AC Energy, Star Energy Group Holdings Pte. Ltd., Star Energy Geothermal Pte. Ltd., and Electricity Generating Public Company Ltd.) for the purchase of Chevron’s geothermal operations in Indonesia and the Philippines. Credit Suisse has a material conflict of interest with the subject company (XOM.N) . Kofi Adjepong-Boateng, a Senior Advisor of Credit Suisse, is a Senior Advisor to Exxon Mobil (XOM) Credit Suisse has a material conflict of interest with the subject company (0857.HK) . Any Nielsen Media Research material contained in this report represents Nielsen Media Research's estimates and does not represent facts. NMR has neither reviewed nor approved this report and/or any of the statements made herein. Credit Suisse has a material conflict of interest with the subject company (SEP.N) . Credit Suisse is acting as lead financial advisor to Enbridge Inc. (ENB) as it relates to its potential merger with Spectra Energy Corp. (SE).
For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=294205&v=-n8e4zzvkgyav6crnf6ru7as8 .
Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. The following disclosed European company/ies have estimates that comply with IFRS: (BP.L, RDSa.L, CNE.L, TLW.L, PMO.L, OMVV.VI, REP.MC, STL.OL, ENI.MI, XOM.N). Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (BP.L, ECA.N, VII.TO, RDSa.L, PE.N, PXD.N, CXO.N, DVN.N, NVA.TO, EGN.N, AAV.TO, XOG.OQ, KEL.TO, CRZO.OQ, NFX.N, PDCE.OQ, MEG.TO, IMO.TO, CVE.TO, HES.N, AR.N, CHK.N, CPE.N, DNR.N, EQT.N, FANG.OQ, GPOR.OQ, LPI.N, SN.N, OAS.N, RRC.N, SWN.N, TOTF.PA, COP.N, XOM.N, TRP.TO, 0857.HK, D.N, EQM.N, ETP.N, WPZ.N, KMI.N, APC.N) within the past 3 years. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. This research report is authored by: Credit Suisse Securities (USA) LLC ..................................................................................................................Edward Westlake ; Mark Lear, CFA Credit Suisse International .................................................................................................................................................................. Thomas Adolff
Credit Suisse Securities (Canada), Inc. ..... David Hewitt ; Jason Frew ; Brian Ho ; David Phung ; Robert Loebach ; Andrew M. Kuske ; Paul Tan To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the FINRA 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse International .................................................................................................................................................................. Thomas Adolff Credit Suisse Securities (Canada), Inc. ..... David Hewitt ; Jason Frew ; Brian Ho ; David Phung ; Robert Loebach ; Andrew M. Kuske ; Paul Tan
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Any investor interested in purchasing a structured product should conduct their own investigation and analysis of the product and consult with their own professional advisers as to the risks involved in making such a purchase. Some investments discussed in this report may have a high level of volatility. High volatility investments may experience sudden and large falls in their value causing losses when that investment is realised. Those losses may equal your original investment. Indeed, in the case of some investments the potential losses may exceed the amount of initial investment and, in such circumstances, you may be required to pay more money to support those losses. Income yields from investments may fluctuate and, in consequence, initial capital paid to make the investment may be used as part of that income yield. Some investments may not be readily realisable and it may be difficult to sell or realise those investments, similarly it may prove difficult for you to obtain reliable information about the value, or risks, to which such an investment is exposed. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of CS, CS has not reviewed any such site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to CS's own website material) is provided solely for your convenience and information and the content of any such website does not in any way form part of this document. Accessing such website or following such link through this report or CS's website shall be at your own risk.
This report is issued and distributed in European Union (except Switzerland): by Credit Suisse Securities (Europe) Limited, One Cabot Square, London E14 4QJ, England, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Germany: Credit Suisse Securities (Europe) Limited Niederlassung Frankfurt am Main regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht ("BaFin"). United States and Canada: Credit Suisse Securities (USA) LLC; Switzerland: Credit Suisse AG; Brazil: Banco de Investimentos Credit Suisse (Brasil) S.A or its affiliates; Mexico: Banco Credit Suisse (México), S.A. (transactions related to the securities mentioned in this report will only be effected in compliance with applicable regulation); Japan: by Credit Suisse Securities (Japan) Limited, Financial Instruments Firm, Director-General of Kanto Local Finance Bureau ( Kinsho) No. 66, a member of Japan Securities Dealers Association, The Financial Futures Association of Japan, Japan Investment Advisers Association, Type II Financial Instruments Firms Association; Hong Kong: Credit Suisse (Hong Kong) Limited; Australia: Credit Suisse Equities (Australia) Limited; Thailand: Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thailand, having registered address at 990 Abdulrahim Place, 27th Floor, Unit 2701, Rama IV Road, Silom, Bangrak, Bangkok10500, Thailand, Tel. +66 2614 6000; Malaysia: Credit Suisse Securities (Malaysia) Sdn Bhd; Singapore: Credit Suisse AG, Singapore Branch; India: Credit Suisse Securities (India) Private Limited (CIN no.U67120MH1996PTC104392) regulated by the Securities and Exchange Board of India as Research Analyst (registration no. INH 000001030) and as Stock Broker (registration no. INB230970637; INF230970637; INB010970631; INF010970631), having registered address at 9th Floor, Ceejay House, Dr.A.B. Road, Worli, Mumbai - 18, India, T- +91-22 6777 3777; South Korea: Credit Suisse Securities (Europe) Limited,
Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.