1、Global Research 1 February 2019EquitiesAustralian EnergyAustraliaEnergyAustraliaEnergyBattle of the titansGlyn Lawcock Analyst +61-2-9324 3675Joseph Wong Analyst +61-3-9242 6853Glyn Lawcock Analyst +61-2-9324 3675Joseph Wong Analyst +61-3-9242 6853A deep dive into the Australian E&P majorsWith oil a

2、nd LNG prices having rebounded from the lows of 2016, the Australian E&P majors (WPL, STO and OSH) have shifted their focus to growth. In this report we undertake a deep dive into the growth profile, FCF and b/sheet of each company to highlight the opportunities/risks for investors. STO is our prefe

3、rred play in the sector with 8.1% production CAGR (18-25), 13% FCF yield in 2019 and trading on 2019e EV/EBITDAX of 5.0 x (vs 6.6x for WPL and 8.4x for OSH).All 3 are expected to deliver production CAGR of between 7-12% (2018-25)STOs production CAGR of 8.1% is largely driven by the acquisition of Qu

4、adrant. Meanwhile WPLs production CAGR of 7.4% will be phased over the next decade with the ramp up of Wheatstone and start-up of various projects across 3 time horizons. OSH has the highest production CAGR (12.2%), however this is due to a low base in 2018 which was impacted by a major earthquake.

5、ExcL the impact of the earthquake OSH*s production CAGR is 9.7% (2018-25). The growth is weighted towards themid- 2020s with first oil in Alaska and first gas from PNG expansion in 2023-25.Can this growth be funded from existing capital structures?Including discretionary capex STO has the lowest b/e

6、ven 2019 FCF of US$25/bbl as the additional earnings from Quadrant and hedging profile should offset ramp up in capex from the companys brownfield assets. The second is WPL with 2019 FCF breakeven of US$31/bbL OSH is forecast to have the highest b/even 2019 FCF (of US$60/bbl) given ramp up of capex

7、in 2019 for exploration and FEED of Alaska in 2H19. We forecast that all the Aus. majors have b/sheet capacity to fund their growth projects but note that b/sheets could come under stress if oil price falls to 1 SSB SBg(PEN %。9) nu alf-ol /MN(p*su%9Z.)1uoln-d + q6nooq8s(P*M-00L)L9sd usPxsir次 09) SMO

8、mp xstrSource: UBSeEV/EBITDAXSource: UBSeFCF(US$m)12.0 x -10.0 x8.Ox6.Ox4.0 x2.0 xO.Ox Jan-14 Jan-15 Jan-161 yrfwd EV/EBITDAX SD +1 SD-1Jan-17 Jan-18 Jan-195 yr Avg SD +2 SD -28,0006,0004,0002,0000(2,000)(4,000)(6,000)(8,000) LO9Zlr-r-OOOCNCXJCXJ SZOZ 百N /ON 目ON Hoe 。eoe 657 85eVCFO CFI FCFSource: U

9、BSeSource: Company data, UBSeFigure 23: Production growth (mmboe)Figure 27: Financial SummaryWoodside PetroleumWoodside PetroleumMARKET INFORMATIONRating:Price (as of 01-Feb-19):Price Target (12 months):Issued Capital:Market Capitalisation:Avg. daily turnover (US$m)Year end:Website:Major Shareholder

10、s:Analyst/s: Glyn Lawcock; Joseph WongEmail: ; 01-Feb-19Buy33.8837.30936.232,128.755.3December COMPANY DESCRIPTIONWoodside Petroleum Limited (WPL) operates the North West Shelf (NWS) Venture, which includes five LNG trains with a combined capacity of 16.3mmtpa (WPL 16.7%). Woodside also operates the

11、 4.3mmtpa Pluto LNG project (WPL 90%) in Western Australia, which commenced production in 2012. Woodside acquired a 13% stake in the Wheatstone LNG project in late 2014 from Apache Corp; the project commenced production in late 2017. Woodside is progressing towards FID of the Browse FLNG project (WP

12、L 30.6% and operator). In 2013, Woodside moved to returning 80% of its underlying NPAT back to shareholders whilst it pursues opportunities to replenish its growth portfolio.INVESTMENT SUMMARYOPERATIONAL ASSUMPTIONSNote: UBS valuations are stated before goodwill, exceptionals and other spcieal items

13、. For some companies, the data represents an extract of the full company accounts.US$m20172018E2019E2020E1H18E2H18E20172018E2019E2020ENet profit reported ($m)1024135914431838ProductionNet profit adjusted ($m)1024138414431838Gas (PJ)18.117.544.635.632.536.2EPS reported ($)122147154196LNG (mmt)3.84.26

14、.98.18.08.3EPS adjusted, diluted (c)122150154196Condensate (mmbbl)4.25.08.0EPS Growth (%)23%3%27%LPG (kt)35.438.372.973.767.262.7PER adjusted (x)20.216.416.012.5Oil (mmbbl)Dividend (c)98123123158Total Production (mmboe)44.347.284.491.491.9104.3Payout ratio (%)81%84%80%80%

15、Dividend Yield (%)4.05.04.96.3Production RatesFCF Yield (%)3.4%7.6%5.6%9.9%Gas production rate (TJ/d)99.195.9122.197.589.299.1Franking (%)100%100%100%100%Cond. production rate (kbbl/d)25.223.923.6Shares period-average, diluted (m)840.3922.0936.2936.2Oil production rate (kbbl/d)13.77.118.

16、610.416.741.6Total production rate (kboe/d)242.5258.4231.2250.5251.8285.8VALUATIONValuation per share (NAV 9% ($)37.26AssumptionsShare Price Target 12 months ($)37.30Brent Oil Price (US$/bbl)71.668.573.0Price/NAV 9% disc rate (x)Operating Assets0.91A$mCA$/US$ exchange rate0.770.720.760.7

17、50.700.71NWS5,079543i DIVISIONAL BREAKDOWN EBITNWS Oil16518(US$m)1H18E2H18E20172018E2019E2020EPluto LNG (base case)17,1901836NWS LNG and domgas396462757858804786Wheatstone7,304780NWS Oil145144657460Vincent41744Pluto7248571,0051,5811,3321,522Enfield-144-15Enfield45(9)900Greater Enfield1,743186Vincent

18、58(30)2382852149Gross Assets31,7543392Laminaria000000Net Cash (Debt)-3,781-404Wheatstone00(13)245347396Corporate Costs-826-88Corporate & Other(208)(6)(373)(459)(187)94Base asset valuation27,1472900NWS tolling revenue27229Senegal Phase 1 development (risked at 100%)1,375119 PROFIT & LOSSScarborough +

19、 Pluto curtailment (risk ed at 75%)4,314461(US$m)1H18E2H18E20172018E2019E2020EBrowse (risk ed at 60%)2,037218Sales Revenue2,2512,5763,6164,8274,7315,615Total valuation3726Operating Cash Profit1,9192,2453,1444,1654,1375,015Depn & Amortisation(705)(727)(1,188)(1,432)(1.453)(1,739)ENTERPRISE VALUEOpera

20、ting Profit1,2141,5181,9562,7322,6843,275(US$m)20172018E2019E2020EExploration Expensed(180)(93)(193)(273)(165)(169)Enterprise Value25,46725,46725,46725,467Corporate/Other Expenses(47)(87)(113)(134)(97)(99)EV/EBITDAX (x)5.2EBIT9871,3381,6502,3262,4223,007EV/Operating Free Cash Flow (x)10.67.

21、58.97.0Net interest(92)(97)(84)(189)(167)(151)EV/DACF (x)6.3Profit before tax8951,2421,5662,1372,2542,857EV/2P Reserves (A$/boe)16.816.317.118.3Tax expense(277)(372)(446)(649)(708)(914)Equity Associated NPAT000000EPS sensitivitiesMinority Interests000000BaseCommodityChange2019E2020EDividend

22、s 537098123123158Net Profit reported5418171,0241,3591,4431,838Oil-US$5/bbl-12%-8%Abnormal GainZ(Loss) after Tax(25)00(25)00Currency-5c0%0.0%Net Profit adjusted5668171,0241,3841,4431,838CASH FLOWEBITDA margin (%)79.878.779.382.2(US$m)20172018E2019E2020ENet Interest Cover EBIT (x)19.612.314.520.0Opera

23、ting income (EBIT, UBS)1,6502,3262,4223,007Tax Rate (%)28%30%31%32%Depreciation & Amortisation1,1881,4321,4531,739EBIT/Total Assets (%)6%9%9%11%Exploration Expense193273165169NPAT/Equity (%)6%8%8%10%Net change in working capital450(16)(1)EBIT/Avg Cap Employed (%)8%11%12%14%Other (operating)(62)43421

24、248Pre-tax op cash flow3,0144,4654,2364,962BALANCE SHEET Selected ItemsInterest (paid) / received(17)(158)(167)(151)(US$m)20172018E2019E2020ETax paid(411)(845)(930)(890)Net Working capital(317)(568)(582)(582)Other(186)(80)(279)(283)Fixed Assets23,06923,46523,45623,399Operating cash flow2,4003,3822,8

25、603,639Net Other(2,125)(2,100)(1,886)(1,778)Capital expenditure(1,039)(1,193)(1,380)(1,146)Capital Employed20,62720,79620,98921,039Exploration expenditure(522)(357)(220)(225)Net Cash / (Debt)(4,747)(2,459)(2,398)(1,967)Free cash flow8391,8321,2612,268Total Equity incl. minorities15,88018,33718,59119

26、,072Net (acquisitions) / disposals0(444)0(480)Minorities830826826826Dividends paid (Common)(826)(909)(1,189)(1,357)Gearing (ND/(ND+E)23%12%11%9%Shares issued/(repurchased)09400Book Value per Share($)16.9619.5919.8620.37Source: Company data, UBSeOil Search - A$8.20 PT, NeutralOSH is Papua New Guinea*

27、s (PNG) largest E&P company and a key participant in the ExxonMobil-operated PNG LNG project. The US$19bn project (OSH interest 29%) was bought online in 1H14. The focus for OSH is PNG expansion and development of its recently acquired oil field on the Alaskan North Slope.With first oil from Alaska

28、in 2023 and first LNG from PNG expansion expected in 2024/25 we do not forecast any material production growth for OSH for the next 3 years beyond ramp up of production to pre-earthquake levels with 3 year CAGR of 8.5%. While production CAGR through 2018-25 is forecast to be 12.2%, the result is inf

29、lated by PNG LNG downtime in 2018 as a result of the earthquake earlier in the year.FEED entry for the PNG expansion is slated for mid-19 (with FID in 2020) however with a number of items still to be finalised including commercial arrangements to integrate Papua LNG with PNG LNG there is a risk that

30、 FEED could be again be delayed.Figure 28: 2018 prodn by type76%Condens ate 12%鬻Oil 4/0 8%Source: Company dataFigure 29: Production growth (mmboe)602018 Prodn PNG LNG& PNG Alaska 2025OSH operated expansion assets to pre earthquakeProductionFigure 30: Un-risked NPV (A$/sh)12Base Asset PNG Alaska (60%

31、 Risked Valn Unrisked ValnValn expansion risked)(50% risked)Source: UBSeSource: UBSeFigure 32: FCF(US$m)Figure 31: EV/EBITDAX1 yrfwd EV/EBITDAX5 yr Avg SD +1SD +2 SD -1 SD-2in955(NCXI85泮 cZ.OCX1。N0CXJFO c geoe 3。z 啟。z 8ZFCF RozSource: UBSeSource: Company data, UBSeIn 2017 OSH acquired interests in t

32、he Alaska North Slope for US$400m (with US$450m option to double its interest by Jun-19) (refer here). OSH commenced appraisal drilling in 4Q18 and FID is targeted in 2020 for first oil in 2023/24. Capex for Alaska and the PNG expansion is forecast to lead to peak debt in 2023. However OSH has suffi

33、cient number of levers to pull to ensure additional equity is not required to fund the growth.Figure 33: Financial SummaryOil Search (OSH.AX)Analyst/s: Glyn Lawcock, Joseph WongEmail: ; 01-Feb-19MARKET INFORMATIONCOMPANY DESCRIPTIONRating:Price (as of 01-Feb-19):Price Target (12 months):Issued Capit

34、al:Market Capitalisation: Avg. daily turnover (US$m)Year end:Neutral7.758.201,523.611,899.622.4DecemberOil Search Limited (OSH) is Papua New Guineas (PNG) largest E&P company and a key participant in the ExxonMobil-operated PNG LNG Project. The US$19bn project (OSH: 29% interest) was brought online

35、ahead of schedule in 1H14. Output was initially expected to be 6.9 mtpa, but has operated as high as 8.5 mtpa. Oil Search is seeking to participate in LNG expansion in PNG, with gas from the Pnyang gas field (OSH: 38.5% interest) and the Elk/Antelope gas field (OSH: 22.8% interest), expected to prov

36、ide the feedstock for additional LNG trains. We forecast FID for LNG expansion in 2020.Website:Major Shareholders:IPIC: 12.9%INVESTMENT SUMMARYOPERATIONAL ASSUMPTIONSNote: UBS valuations are stated before goodwill, exceptionals and other spcieal items. For some companies, the data represents an extr

37、act of the full company accounts.US$m20172018E2019E2020E1H182H18E20172018E2019E2020ENet profit reported ($m)302368490589ProductionNet profit adjusted ($m)302368490589LNG (mmt)EPS reported (C)20.39Condensate (mmbbl)3.03.53.3EPS adjusted, diluted (c)20.

38、39LPG (kt)0.00.00.00.00.00.0EPS Growth (%)22%33%20%Oil (mmbbl)2.03.34.0PER adjusted (x)28.423.317.514.6Total Production (mmboe)10.215.030.3Dividend (c)10111620Payout ratio (%)48%46%50%52%Production RatesDividend Yield (%)1.2%1.4%2.1%2.6%Cond. production rate (kbbl/d)8.3

39、9.69.1FCF Yield (%)6.6%5.0%4.8%2.6%Oil production rate (kbbl/d)5.06.010.9Franking (%)Shares period-average, diluted (m)1,5231,5241,5241,524Total production rate (kboe/d)56.182.085.5VALUATIONAssumptionsValuation per share NAV 10% ($)8.20Brent Oil Price (US$/bbl)54.77

40、1.668.5Share Price Target 12 months ($)8.20A$/US$ exchange rate0.770.720.740.760.750.70Price/NAV 10% disc rate (x)0.94Operating AssetsA$mCO DIVISIONAL BREAKDOWN EBITSE Gobe oil20(US$m)1H182H18E20172018E2019E2019EGobe Main00SE Gobe111111Kutubu39826Gobe Main000100Moran513Kutubu01430144660Hides gas664M

41、oran(4)221(3)2546PNG LNG - Trains 1 and 213,030855Hides gas(3)212(V2728Gross Assets13,547889PNG LNG226505571731823926Net Cash (Debt)(4,589)(301)Corporate Costs(523)(34) PROFIT & LOSSTotal base asset valuation8,435554(US$m)1H182H18E20172018E2019E2019EPNG LNG Train 3 (50% risked)1,03168Sales Revenue55

42、89781,4461,5361,7861,973Papua LNG - Trains 4 and 5 (50% risked)49633Operating Cash Profit3997991,1141,1981,4491,612Tolling revenue - Papua LNG to PNG LNG16011Depn & Amortisation(131)(188)(381)(319)(373)(394)Alaska (60% risked)2,374156Operating Profit2676117338791,0751,217Valuation10,122820Exploratio

43、n Expensed(12)(54)(36)(66)(88)(90)ENTERPRISE VALUECorporate/Other Expenses(35)(34)(62)(69)(66)(67)(US$m)20172018E2019E2020EEBIT2205246367449221,061Enterprise Value11,19511,43811,62111,791Net interest(100)(99)(195)(199)(201)(195)EV/EBITDA (x)10.6Profit before tax120424441545721866EV/Operati

44、ng Free Cash Flow (x)13.313.412.410.2Tax expense(41)(136)(139)(177)(231)(277)EV/DACF (x)11.9Equity Associated NPAT000000EV/2P Reserves (A$/boe)23.025.126.728.9Minority Interests000000Dividends (c)2910111620lEPS sensitivitiesNet Profit reported79289302368490589BaseCommodityChange11620.61179

45、1.4Abnormal Gain/(Loss) after Tax000000Net Profit adjusted79289302368490589Oil-US$5/bbl-16%-15%EBITDA margin (%)76.576.680.781.3Currency-5c0%0%Net Interest Cover EBIT (x)5.4CASH FLOWTax Rate (%)31%32%32%32%(US$m)20172018E2019E2020EEBIT/Total Assets (%)6%7%9%10%Operating income (EBIT, UBS)63

46、67449221,061NPAT/Equity (%)6%7%9%10%Depreciation & Amortisation381319373394EBIT/Avg Cap Employed (%)8%9%11%12%Exploration Expenditure36668890Net change in working capital Other (operating)(56)(46)72(14) BALANCE SHEET Selected Items!108106(156)16(US$m)20172018E2019E2019EPre-tax op cash flow1,1041,189

47、1,2991,547Net Working capital(21)(66)6(8)Interest (paid) / received(186)(187)(189)(183)Fixed Assets8,4148,8269,3639,851Tax paid(60)(113)(135)(178)Net Other(712)(747)(843)(942)Other(15)(36)(35)(30)Capital Employed7,6818,0138,5268,901Operating cash flow8448539401,156Net Cash / (Debt)(2,744)(2,827)(3,1

48、08)(3,168)Capital expenditure (non-maint.)(255)(402)(513)(942)Total Equity incl. minorities4,9385,1875,4185,733Free cash flow589451428214Minorities0000Net (acquisitions) / disposals0(415)(450)0Dividends paid (Common)(99)(114)(259)(274)Net Debt/ (Net Debt + Equity) (%)36%35%36%36%Shares issued/(repur

49、chased)0000Book Value per Share($)3.243.403.563.76Source: Company data, UBSeGlobal Research 1 February 2019Woodside Petroleum LimitedMaster of its own destiny for growthInvestment Thesis: Progressive growth over the next decadeInvestment thesis for WPL is for progressive production growth over the n

50、ext 10 years as a number of growth projects are expected to systematically come online. The first stage of growth will be driven by the ramp up of Wheatstone and start-up of Greater Enfield (in 2H19). This will be followed by Senegal (in 2022), Scarborough (2023) and Browse (2026). While Senegal, Sc

51、arborough and Browse have yet to reach FID we anticipate the timeline to be broadly in line with WPLs estimate given it is operator for all 3 expansion opportunities. With WPL having raised A$2,5bn equity in Feb-18 (refer here), we do not anticipate the need for additional equity to fund growth. Our

52、 forecast growth capex is in line with guidance and we recognise that company guidance factors a level of conservatism. That said there is a risk of cost overruns for deep-water projects.Key catalystsThe key catalysts centre on the progress of growth projects towards FID. The current timeline is: FI

53、D for Senegal in 2Q19, Scarborough in 2020 (for upstream prodn in 2023) and Browse in 2020 (for first gas in 2026). However over the next 18 months we expect incremental news flow on: FID for Pluto- NWS interconnector, FID for Senegal phase 1 and FEED entry for Scarborough and Browse.Maintain Buy: W

54、PLs Burrup Hub concept to drive growth in the medium term We believe the market will, overtime, realise the value of WPLs growth. With WPL providing 10% (2018-21) EPS CAGR and 5% div. yield (in 2019) we maintain our Buy rating.Valuation: A$37.26, DCF 9%PT and valn = DCF of producing assets + Senegal

55、 Phase 1 & NWS tolling + Scarborough (75% risked) + Browse (60% risked). Our un-risked valn is A$40.44/sh.Woodside Petroleum LimitedMaster of its own destiny for growthInvestment Thesis: Progressive growth over the next decadeInvestment thesis for WPL is for progressive production growth over the ne

56、xt 10 years as a number of growth projects are expected to systematically come online. The first stage of growth will be driven by the ramp up of Wheatstone and start-up of Greater Enfield (in 2H19). This will be followed by Senegal (in 2022), Scarborough (2023) and Browse (2026). While Senegal, Sca

57、rborough and Browse have yet to reach FID we anticipate the timeline to be broadly in line with WPLs estimate given it is operator for all 3 expansion opportunities. With WPL having raised A$2,5bn equity in Feb-18 (refer here), we do not anticipate the need for additional equity to fund growth. Our

58、forecast growth capex is in line with guidance and we recognise that company guidance factors a level of conservatism. That said there is a risk of cost overruns for deep-water projects.Key catalystsThe key catalysts centre on the progress of growth projects towards FID. The current timeline is: FID

59、 for Senegal in 2Q19, Scarborough in 2020 (for upstream prodn in 2023) and Browse in 2020 (for first gas in 2026). However over the next 18 months we expect incremental news flow on: FID for Pluto- NWS interconnector, FID for Senegal phase 1 and FEED entry for Scarborough and Browse.Maintain Buy: WP

60、Ls Burrup Hub concept to drive growth in the medium term We believe the market will, overtime, realise the value of WPLs growth. With WPL providing 10% (2018-21) EPS CAGR and 5% div. yield (in 2019) we maintain our Buy rating.Valuation: A$37.26, DCF 9%PT and valn = DCF of producing assets + Senegal