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E&P Update-Relative Value Tables

E&P Update-Relative Value Tables

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The IEA Monthly Oil Market Report was released on 9/13/2017. Global oil demand grew very strongly year-on-year in 2Q 2017, by 2.3 million b/d, up 2.4%. For 2017, the agency has revised upwards its growth estimate to 1.6 million b/d. “Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the IEA said. OECD demand growth continues to be stronger than expected, particularly in Europe and the U.S. Hurricanes Harvey and Irma are projected to slow U.S. oil demand growth in 3Q 2017.

Reason for Report: 
Industry Update
Roth Covered Companies
Mentioned in this Report:
CPE $10.52 Buy
EPM $6.95 Buy
ESTE $10.13 Buy
FANG $93.97 Buy
GDP $9.36 Buy
HK $6.22 Buy
LONE $2.96 Buy
MCF $4.27 Buy
PQ $1.93 Buy
REI $13.02 Buy
RSPP $31.23 Buy
SRCI $8.05 Buy
Stock prices are as of previous day’s

Global oil supply fell by 720,000 b/d in August due to unplanned outages and scheduled maintenance, mainly in non-OPEC countries. The first decline in four months cut supply to 97.7 million b/d. Compared to a year ago, output was up 1.2 million b/d as non-OPEC continued to show substantial growth.

OPEC crude output fell in August for the first time in five months, after renewed turmoil in Libya disrupted flows and others pumped less. Output decreased by 210,000 b/d from a 2017 high to 32.67 million b/d. The 12 members bound by OPEC’s supply pact raised their compliance rate to 82% from 75% during July. For the year as whole their compliance rate is 86%.

OECD commercial stocks were unchanged in July at 3,016 million barrels. The surplus over the five-year average fell to 190 million barrels. OECD product stocks were only 35 million barrels above the five-year average at end-July and could soon fall below it because of the impact of Hurricane Harvey.
The IEA also said the impact from Hurricane Harvey on U.S. oil markets in the Gulf Coast was easing and its impact on global markets was likely to be relatively short-lived, although it would possibly help inventories rebalance more quickly.

The IEA revised down the global refinery throughput forecast for the third quarter of 2017 by 0.7 million b/d due to Harvey. “This results in global refined product undersupply for the second consecutive quarter,” the IEA said.

On 9/11/2017, Reuters reported worsening clashes among tribes and a political void is threatening security at oil installations in Iraq’s main southern oil producing region, officials and security sources said. Iraq has concentrated security forces in the north and west to retake territory lost to the Sunni extremist group Islamic State in 2014. That has created a void in the south, home to Iraq’s biggest oilfields, where fighting between rival Shi‘ite Muslim tribes over farmland, state construction contracts and land ownership has worsened in the past few weeks. The surge in violence risks undermining government plans to lure new investment to the oil and gas sector it needs to revive an economy hit by a surge in security spending and destruction by Islamic State. Stability in Basra, the main southern city at the edge of the Gulf, is of vital importance as a hub for oil exports accounting for over 95 percent of government revenues. Officials said tribal clashes had not affected oil output yet. But this could change as recent fighting with mortars and machine guns had come close to the key West Qurna oil phase 1, West Qurna phase 2 and Majnoon oilfields north of Basra city.
Important Disclosures & Regulation AC Certification(s) are located on the last page of this report.

Regulation Analyst Certification (“Reg AC”): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

For important disclosure information regarding the companies in this summary report, please contact: The Director of Research at (800) 678-9147 or write to: ROTH Capital Partners, LLC, Attention: Director of Research, 888 San Clemente Drive, Newport Beach, CA 92660
Disclosures:

ROTH makes a market in shares of Callon Petroleum Company, Evolution Petroleum Corporation, Earthstone Energy, Inc., Diamondback Energy, Inc., Goodrich Petroleum Corp., Halcón Resources Corporation, Lonestar Resources, Ltd., Contango Oil & Gas Company, PetroQuest Energy, Inc., Ring Energy, Inc., RSP Permian, Inc. and SRC Energy, Inc. and as such, buys and sells from customers on a principal basis.

A Research Analyst and/or a member of the Analyst’s household own(s) debt or equity securities of Goodrich Petroleum Corp. stock.

Shares of Halcón Resources Corporation, Lonestar Resources, Ltd. and PetroQuest Energy, Inc. may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

Within the last twelve months, ROTH has received compensation for investment banking services from Lonestar Resources, Ltd. and Ring Energy, Inc..

Within the last twelve months, ROTH has managed or co-managed a public offering for Lonestar Resources, Ltd. and Ring Energy, Inc..
Each box on the Rating and Price Target History chart above represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the first note written during the past three years. Distribution Ratings/IB Services shows the number of companies in each rating category from which Roth or an affiliate received compensation for investment banking services in the past 12 month.

Distribution of IB Services Firmwide IB Serv./Past 12 Mos. as of 09/18/17
Rating Count Percent Count Percent
Buy [B] 223 71.25 118 52.91
Neutral [N] 45 14.38 20 44.44
Sell [S] 5 1.60 3 60.00
Under Review [UR] 36 11.50 21 58.33

 

Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at any given point in time, our investment rating on a stock and its implied price movement may not correspond to the stated 12-month price target.

 

Ratings System Definitions – ROTH employs a rating system based on the following:
Buy: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return of at least 10% over the next 12 months.
Neutral: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return between negative 10% and 10% over the next 12 months.
Sell: A rating, which at the time it is instituted and or reiterated, that indicates an expectation that the price will depreciate by more than 10% over the next 12 months.
Under Review [UR]: A rating, which at the time it is instituted and or reiterated, indicates the temporary removal of the prior rating, price target and estimates for the security. Prior rating, price target and estimates should no longer be relied upon for UR-rated securities.
Not Covered [NC]: ROTH does not publish research or have an opinion about this security.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2017. Member: FINRA/SIPC.

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