energy sector stock presentation

Energy Sector Stock Presentation

Dan GeislerOlga Boder(Firdman)

Fall 2009

Agenda• S&P 500 Energy Sector

– % of index– top market cap– top performers– S&P 500 Energy Sector– Top Movers– industries within sector

• SIM energy holdings – what companies and industries– percent of portfolio– performance

• Sector/industry outlook – Oil supply/demand– Oil price forecast– Regression against stocks/sector

• Valuation – Industries in SIM– sector as a whole– potential attractive industries

• Recommendation

S&P Sector Breakdown

Consumer Discretionary, 9.11%

Consumer Staples, 11.94%

Energy, 12.35%

Financials, 14.66%

Health Care, 12.65%

Industrials, 10.09%

Information Technology, 19.04%

Materials, 3.39%

Telecommunication Services, 3.09%

Utilities, 3.68%

Cash, 0.00%

Dividend Receivables, 0.00%

S&P 500 Top Market CapNo Stock

% Weight in the Index

Um %

1 ExxonMobil 3.77 3.77

2 Microsoft 2.36 6.13

3 Procter & Gamble 1.86 7.99

4 Apple 1.85 9.84

5 JPMorgan Chase 1.80 11.64

6 Johnson & Johnson 1.78 13.42

7 IBM 1.73 15.15

8 Chevron 1.68 16.84

9 General Electric 1.66 18.50

10 AT&T 1.66 20.16

S&P 500 Top PerformersTicker Name Sector YTD Return %

S&P 500 Best Returns YTD 2009

(NYSE:THC) TENET HEALTHCARE CORP Health 373.04%

(NYSE:XL) XL CAPITAL LTD Financials 363.78%

(NYSE:GNW) GENWORTH FINANCIAL INC A Financials 319.44%

(NYSE:F) FORD MOTOR CO Consumer Durable 218.34%

(NYSE:WDC) WESTERN DIGITAL CORP Technology 207.34%

(NYSE:MU) MICRON TECHNOLOGY INC Technology 206.82%

(NASDAQ:WFMI) WHOLE FOODS MARKET INC Consumer Services 204.77%

(NASDAQ:EXPE) EXPEDIA INC Transportation 184.83%

(NYSE:FCX) FREEPORT-MCMORAN C & G Basic Material 172.87%

(NYSE:AMD) ADVANCED MICRO DEVICES Technology 169.91%

Energy and S&P 500

S&P 500 Energy Sector

• As of November 2 2009• Close : 424.18• Net Change: 1.96• % Change: 0.46• Year to_Date: 9.79

Top Movers

Gainers (% price change) Last Trade Change Mkt Cap

Encore Acquisition Co. EAC 44.67 +7.60 (20.50%) 2.36B

Harvest Natural Resources HNR 5.73 +0.24 (4.37%) 190.07M

Stone Energy Corporation SGY 15.95 +0.62 (4.04%) 766.14M

Comstock Resources, Inc. CRK 42.72 +1.63 (3.97%) 1.99B

Intl. Coal Group, Inc. ICO 4.25 +0.16 (3.91%) 655.15M

Top Movers

Losers (% price change) Last Trade

Change Mkt Cap

Denbury Resources Inc. DNR 13.09 -1.51 (-10.34%) 3.27B

Global Partners LP GLP 22.2 -2.01 (-8.31%) 295.28M

Rosetta Resources Inc. ROSE 12.65 -0.88 (-6.50%) 662.30M

Bronco Drilling Co., Inc. BRNC 5.91 -0.41 (-6.49%) 160.86M

Hercules Offshore, Inc. HERO 4.8 -0.33 (-6.43%) 544.00M

Top Movers

Most Actives (dollar volume) Last Trade Change Mkt Cap

Exxon Mobil Corporation XOM 72.15 +0.48 (0.67%) 342.50B

Chevron Corporation CVX 76.64 +0.10 (0.13%) 153.70B

Petroleo Brasileiro SA PBR 46.71 +0.49 (1.06%) 204.92B

Occidental Petroleum Corp OXY 76.82 +0.94 (1.24%) 62.28B

ConocoPhillips COP 49.98 -0.20 (-0.40%) 74.12B

S& P 500 Industries Within Energy Sector

Index Value

% of 500 or Sector

Price Changes (%) 5-Year

1 Wk. YTD 2008 5-Yr CAGR BetaStd. Dev.

Coal & Consumable Fuels 89.52 1.93% 3.30% 85.20% -64.20% N/A N/A N/AIntegrated Oil & Gas 424.69 59.02% 5.10% 0.30% -23.50% 8.80% 0.7 20.7Oil & Gas Drilling 531.17 1.96% 5.10% 75.00% -62.00% 10.50% 1.3 33.8Oil & Gas Equipment & Services 445.8 14.61% 7.80% 67.30% -59.50% 11.70% 1.4 35.3Oil & Gas Exploration & Production 482.39 18.32% 3.50% 42.10% -35.00% 18.30% 1.1 31Oil & Gas Refining & Marketing 189.55 1.43% 4.30% -10.70% -64.70% -4.80% 1.2 39Oil & Gas Storage & Transportation 107.94 2.73% 3.90% 34.90% -51.60% N/A N/A N/AEnergy Sector 446.72 12.35% 3.80% 15.60% -35.90% 9.90% 0.9 23.3

SIM and S&P 500

Sector S&P 500 Weight SIM Weight +/-

Energy 12.35% 12.80% 0.45%

SIM Companies and Industries

Quantity Security Ticker Industry

14,700 BP plc. - ADR BP Major Integrated Oil & Gas

12,300 ConocoPhillips Co. COP Major Integrated Oil & Gas

10,200 Transocean Ltd. RIG Oil & Gas Drilling & Exploration

SIM Percent of Portfolio

Consumer Discretionary, 7.51%

Consumer Staples, 12.23%Financials, 6.59%

Utilities, 3.19%

Cash, 2.51%

BP plc. - ADR, 4.62%

ConocoPhillips Co., 3.43%

Energy, 12.80%

Transocean Ltd., 4.75%

Dividend Receivables, 0.08%

Materials, 4.52%Telecommunication

Services, 3.51%

Information Technology, 21.97%

Industrials, 11.97%

Health Care, 13.13%

Industry

• Current Prices:–Oil: $79.50–BP: $57.55–COP: $50.75–RIG: $85.91

Symbol Date Last RateFUTURES CHAIN 10/30/2009 $76.99

CLZ09.NYM Dec-09 $76.99 0.00%CLF10.NYM Jan-10 $77.64 4.87%CLG10.NYM Feb-10 $78.22 6.15%CLH10.NYM Mar-10 $78.85 7.14%CLJ10.NYM Apr-10 $79.30 7.05%CLK10.NYM May-10 $79.76 7.05%CLM10.NYM Jun-10 $80.10 6.75%CLN10.NYM Jul-10 $80.46 6.59%CLQ10.NYM Aug-10 $80.77 6.36%CLU10.NYM Sep-10 $81.10 6.20%CLV10.NYM Oct-10 $81.42 6.08%CLX10.NYM Nov-10 $81.86 6.10%CLZ10.NYM Dec-10 $82.18 6.00%CLF11.NYM Jan-11 $82.48 5.87%CLG11.NYM Feb-11 $82.69 5.68%CLH11.NYM Mar-11 $82.90 5.54%CLJ11.NYM Apr-11 $83.11 5.39%CLK11.NYM May-11 $83.31 5.25%CLM11.NYM Jun-11 $83.51 5.12%CLN11.NYM Jul-11 $83.70 5.01%CLQ11.NYM Aug-11 $83.87 4.88%CLU11.NYM Sep-11 $84.04 4.77%CLV11.NYM Oct-11 $84.22 4.67%CLX11.NYM Nov-11 $84.40 4.58%CLZ11.NYM Dec-11 $84.49 4.45%CLF12.NYM Jan-12 $84.72 4.40%CLG12.NYM Feb-12 $84.86 4.31%CLH12.NYM Mar-12 $85.00 4.24%CLJ12.NYM Apr-12 $85.13 4.15%CLK12.NYM May-12 $85.27 4.08%CLM12.NYM Jun-12 $85.40 4.00%CLN12.NYM Jul-12 $85.53 3.94%CLQ12.NYM Aug-12 $85.67 3.88%

CLU12.NYM Sep-12 $85.81 3.82%CLV12.NYM Oct-12 $85.96 3.77%CLX12.NYM Nov-12 $86.10 3.72%CLZ12.NYM Dec-12 $86.24 3.67%CLF13.NYM Jan-13 $86.38 3.62%CLG13.NYM Feb-13 $86.53 3.58%CLH13.NYM Mar-13 $86.66 3.55%CLJ13.NYM Apr-13 $86.80 3.50%CLK13.NYM May-13 $86.94 3.47%CLM13.NYM Jun-13 $87.08 3.43%CLN13.NYM Jul-13 $87.22 3.40%CLQ13.NYM Aug-13 $87.36 3.36%CLU13.NYM Sep-13 $87.51 3.33%CLV13.NYM Oct-13 $87.65 3.31%CLX13.NYM Nov-13 $87.79 3.28%CLZ13.NYM Dec-13 $87.94 3.25%CLF14.NYM Jan-14 $88.09 3.23%CLG14.NYM Feb-14 $88.24 3.20%CLH14.NYM Mar-14 $88.40 3.19%CLJ14.NYM Apr-14 $88.56 3.17%CLK14.NYM May-14 $88.72 3.15%CLM14.NYM Jun-14 $88.88 3.13%CLN14.NYM Jul-14 $89.04 3.11%CLQ14.NYM Aug-14 $89.20 3.10%CLU14.NYM Sep-14 $89.36 3.08%CLV14.NYM Oct-14 $89.52 3.06%CLX14.NYM Nov-14 $89.68 3.05%CLZ14.NYM Dec-14 $89.84 3.03%CLM15.NYM Jun-15 $90.84 2.96%CLZ15.NYM Dec-15 $91.84 2.90%CLM16.NYM Jun-16 $92.95 2.86%CLZ16.NYM Dec-16 $94.06 2.82%CLM17.NYM Jun-17 $95.23 2.80%CLZ17.NYM Dec-17 $96.39 2.78%

Crude Oil vs. Sector Performance

Correlation 0.829

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700

0 20 40 60 80 100 120 140 160

ENERGY (SPENS) / Data Set #1

Crude Oil Price: West Texas IntermediateUnits: $ Per Barrel / Data Set #1

Scatterplot of ENERGY (SPENS) vs Crude Oil Price: West Texas Intermediate

Units: $ Per Barrel of Data Set #1

Correlation 0.902

0

20

40

60

80

100

120

140

160

180

0 20 40 60 80 100 120 140 160

TRANSOCEAN (RIG) / Data Set #1


Scatt erplot of TRANSOCEAN (RIG) vs Crude Oil Price: West Texas Intermediate


Correlation 0.291

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20

30

40

50

60

70

80

90

0 20 40 60 80 100 120 140 160

BP ADR (BP) / Data Set #1


Scatterplot of BP ADR (BP) vs Crude Oil Price: West Texas IntermediateUnits: $ Per Barrel of Data Set #1

Correlation 0.761

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20

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90

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0 20 40 60 80 100 120 140 160

CONOCOPHILLIPS (COP) / Data Set #1


Scatterplot of CONOCOPHILLIPS (COP) vs Crude Oil Price: West Texas Intermediate


Regression Analysis

Multiple Adjusted StErr ofSummary R R-Square Estimate

0.8292 0.6875 0.6820 56.09811657

Degrees of Sum of Mean of ANOVA Table Freedom Squares Squares

Explained 1 387782.1552 387782.1552 123.2229 < 0.0001Unexplained 56 176231.9262 3146.998682

StandardRegression Table Error Lower Upper

Constant 180.4599063 24.21859216 7.4513 < 0.0001 131.9442364 228.9755763Crude Oil Price: West Texas 3.626348692 0.326681042 11.1006 < 0.0001 2.971927927 4.280769458

R-Square

F-Ratio p-Value

Coefficient t-Value p-ValueConfidence Interval 95%


0.9025 0.8144 0.8111 14.22309978




Constant -8.732094167 6.140374649 -1.4221 0.1605 -21.03274269 3.568554359Crude Oil Price: West Texas 1.298474042 0.082826614 15.6770 < 0.0001 1.132552396 1.464395688

R-Square

F-Ratio p-Value



0.2915 0.0850 0.0686 7.683778595


Explained 1 307.0074607 307.0074607 5.2000 0.0264Unexplained 56 3306.265396 59.0404535


Constant 56.26309385 3.317229017 16.9609 < 0.0001 49.61788561 62.90830209Crude Oil Price: West Texas 0.102035223 0.044745616 2.2803 0.0264 0.012398982 0.191671463

R-Square

F-Ratio p-Value



0.7607 0.5786 0.5711 9.665865551




Constant 29.73507724 4.172932533 7.1257 < 0.0001 21.37568888 38.09446561Crude Oil Price: West Texas 0.493592875 0.056288076 8.7690 < 0.0001 0.38083431 0.60635144

R-Square

F-Ratio p-Value


Valuation RatiosCOP Absolute High Low Median CurrentP/Trailing E 13.6 3.5 7.6 13.6P/Forward E 11.3 5.3 8.0 8.9P/B 2.3 0.8 1.5 1.3 Overvalued by >20%P/S 0.9 0.2 0.6 0.6 Inline within 20%P/CF 8.2 2.3 5.2 5.1 Undervalued by >20%

BP Absolute High Low Median CurrentP/Trailing E 16.0 4.5 10.7 13.4P/Forward E 13.8 4.7 10.3 10.5P/B 3.3 1.4 2.6 1.8 Overvalued by >20%P/S 1.1 0.3 0.8 0.8 Inline within 20%P/CF 9.7 3.3 7.6 7.1 Undervalued by >20%

RIG Absolute High Low Median CurrentP/Trailing E 160.8 3.4 25.2 6.4P/Forward E 49.0 3.1 12.1 8.2P/B 4.7 0.9 2.8 1.5 Overvalued by >20%P/S 9.4 1.3 6.8 2.2 Inline within 20%P/CF 33.8 2.8 18.4 5.1 Undervalued by >20%

Valuation Ratios (cont.)Energy Absolute High Low Median CurrentP/Trailing E 14.9 6.1 11.7 12.1P/Forward E 16.2 7.8 11.5 15.4P/B 3.8 1.4 3.0 2.1 Overvalued by >20%P/S 1.4 0.5 1.1 1.0 Inline within 20%P/CF 9.4 4.1 7.3 5.4 Undervalued by >20%

Energy Relative to S&P 500

High Low Median Current

P/Trailing E 0.88 0.53 0.70 0.68P/Forward E 1.20 0.57 0.74 0.91P/B 1.40 0.80 1.10 1.00 Overvalued by >10%P/S 1.00 0.60 0.80 0.9 Inline within 10%P/CF 0.90 0.50 0.70 0.50 Undervalued by >10%

Oil Drilling Relative to S&P 500 High Low Median Current

P/Trailing E 3.70 0.28 0.98 0.41 P/Forward E 2.00 0.28 0.68 0.79 P/B 1.70 0.50 1.00 0.80 Overvalued by >10%P/S 4.30 1.40 2.90 1.80 Inline within 10%P/CF 1.80 0.40 1.00 0.50 Undervalued by >10%

Valuation Ratios (cont.)Oil Integrated Relative to S&P 500 High Low Median Current


Oil Exploration Relative to S&P 500 High Low Median Current


Oil Equipment Relative to S&P 500 High Low Median Current


Valuation Ratios (cont.)Oil Refining Relative to S&P 500 High Low Median Current


Coal Relative to S&P 500 High Low Median Current


Price/Oil High Low Median CurrentEnergy Sector 10.1 4.1 6.3 5.9BP (BP) 1.3 0.5 1.1 0.8 Overvalued by >20%ConocoPhillips (COP) 1.4 0.6 1.0 0.7 Inline within 20%Transocean (RIG) 1.6 0.7 1.2 1.2 Undervalued by >20%

Recommendation

• Hold the overall % for the sector.• Hold Transocean Ltd. since it’s a buy right now.• Reduce the % of BP plc. – ADR and

ConocoPhillips Co.• Diversify our energy sector by purchasing a

stock with an exposure to a non-oil energy type, like natural gas companies.

• Possible purchases: Chesapeake Energy the largest producers of natural gas in the nation.

Questions?

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