2008 – thoughts to ponder ipaa private capital conference january 16, 2008 dan pickering
TRANSCRIPT
2008 – Thoughts To Ponder
IPAA Private Capital Conference
January 16, 2008
Dan Pickering
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What’s It Going To Be?
…or Uh-Oh?
Yippee!!
3
Who Is Tudor, Pickering, Holt & Co.? Energy Specialists
Research, Investment Banking, Property A&D
~ 50 Employees
Houston/Denver Offices
Our clients are:
□ Institutional Investors
□ Companies Seeking Capital
□ Companies Buying/Selling Assets
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$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
$/b
bl
Oil strip 1/14/082008 $92.162009 $88.122010 $86.45
NYMEX Current Month Oil Price
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$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
$/b
bl
Oil strip 1/14/082008 $92.162009 $88.122010 $86.45
What If Oil Falls by $20/bbl?
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What If It Doesn’t?
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08
$/b
bl
Oil strip 1/14/082008 $92.162009 $88.122010 $86.45
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What If China / India Slow?Cumulative Growth In Oil
Consumption2003 - 2006
Incremental Demand ~ 5.1 mmbbls/day
125
~2,500
~2,000
660
-160-500
0
500
1,000
1,500
2,000
2,500
3,000
US Europe Rest of OECD China/India Rest of Non-OECD
kbb
ls/d
ay
China / India
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What If China / India Accelerate?
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Does Inventory Matter?450
500
550
600
650
700
750
800
850
J an-97 J an-98 J an-99 J an-00 J an-01 J an-02 J an-03 J an-04 J an-05 J an-06 J an-07 J an-08 J an-09
Oil
& K
ey p
roduct
s in
vento
ry, m
mbbls
-10
0
10
20
30
40
50
60
70
80
90
100
WTI O
il Pri
ce, $
/bbl
Inventories (Scale Inverted) Oil Price
Scarcity Gap?
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How Scary Is The World?
Iran
Venezuela
Mexico
West Africa
Iraq
Russia
Deepwater
The Unknown
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What If The Winter Stays Cold?
2005A $8.912006A $6.732007A $6.95
Henry Hub Realized Price
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9
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Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07
$/m
cf
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What If Gas Trades At $9/mcf?
Source: Smith Bits, TPH
U.S. Rig Count by Operator Type
0
100
200
300
400
500
600
700
800
1/5/
01
4/5/
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7/5/
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MajorLarge Public E&PSmall Public E&PPrivate E&PUtility-Owned
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What If U.S. Drilling Holds Steady?
U.S. Onshore 43.2 44.9 46.4 +1.5
U.S. Offshore 7.5 7.0 7.0 0
LNG 1.5 2.2 3.0 +0.8
Canada Imports
7.9 7.7 6.9 -0.8
Total Supply 60.1 61.8 63.3 +1.5
+2.4% y/y*All figures in bcf/day
2006 2007 2008
2008 Gas Supply Snapshot
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0
2
4
6
8
10
12
14
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 2009
bcf
/d
RasGas II-T5; 0.6bcf/d
Eq. Guinea;0.5bcf/d
Snohvit;0.6bcf/d
Bonny T-6;0.6bcf/d
QatarGas II - T4;1bcf/d
QatarGas II - T5;1bcf/d
Yemen 0.9bcf/d;Tangguh 1.0bcf/d;
RasGas III, T-6; 1.0bcf/d;NWShelf, T-5 0.5bcf/d
RasGas III, T-7 1.0bcf/d;Camisea 0.6bcf/d;
QatarGas III 1.0bcf/d;Sakhalin II 1.3bcf/d
Is There Too Much LNG?
2008E = +5.5 bcf/day2009E = +4 bcf/day
Global Supply
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What If The Credit Crunch Lingers?E&P 2008 Free Cash Flow @ $7/mcf
($1,000,000)
($500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
EO
G
SD
SW
N
NF
X
CH
K
KW
K
RR
C
GD
P
PX
P
UP
L
CR
ZO
GM
XR
AR
D
BE
XP
PL
LL
RE
XX
CX
G
XC
O
BD
E
SG
Y
XT
O
DV
N
AP
C
AP
A
E&P Companies
Fre
e C
ash
Flo
w (
$000
)
Free Cash Flow ($000)
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What About Alternative Energy?
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Elections And Energy?
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What If We Were In Another Business?!
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Inde
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FinancialsRetail
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Conclusions
Everything Is Intertwined
You want lower oil prices!
Gas Is Global
Risk Management
Alternatives Are Real…And Small
Energy Is Still The Best Game In Town
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Put in Final Presentation Slide Here
Tudor, Pickering & Co. Securities, Inc. is a leading institutional brokerage firm focusing on energy-sector research for institutional investors. The Company, a NASD broker-dealer, develops investment ideas for our clients by actively covering the E&P and oil
service industries, while monitoring energy subsectors such as coal, nuclear, tankers and alternative energy.
In addition to research activities, Tudor, Pickering has executed share repurchases and helped energy companies raise equity capital via co-manager and syndicate positions in numerous energy offerings including CPX, HERO, WARR, BAS, XCO.
Our research is provided to institutional clients via published reports, concise emails, and through direct interaction with our highly rated analysts and unique, specialized sales force.
Tudor Pickering has 42 employees working from our main Houston office and two satellite offices in Denver, Colorado and New Orleans, Louisiana. The firm was established in February 2004 as Pickering Energy Partners and combined with Tudor Capital in
February 2007.
Contact UsHouston: 713-333-2960Denver: 303-300-1902
New Orleans: 504-371-5563
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