Global Oil & Gas Production Growth: Wall Street Transcript Interview with Oswald Clint, Senior Research Analyst for Oil & Gas Exploration and Production at Sanford C. Bernstein & Co.

Wall Street Transcript

67 WALL STREET, New York - January 9, 2013 - The Wall Street Transcript has just published its Oil & Gas: Refining, Independent and Major Integrated Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Capital Expenditures and Consolidation Activity - Refining Crude Price Differentials - Frontier Exploration and Development - Shale Drilling Capital Expenditures - Oil and Gas Price Divergence - Oil Price Expectations - LNG Global Pricing Differentials

Companies include: BP plc (BP), Total SA (TOT), Petroleo Brasileiro (PBR) and many others.

In the following excerpt from the Oil & Gas: Refining, Independent and Major Integrated Report, an expert analyst from Sanford C. Bernstein & Company discusses the outlook for the sector for investors:

TWST: What is your overall advice to oil and gas investors right now? What do you think is the best way to play the sector?

Mr. Clint: From our perspective, the marginal cost of supply in this industry is about $90. So there are a lot of players up there with very high-cost portfolios. And if oil does kind of decrease a bit, there are a lot of portfolios that don't actually make a lot of money, and I think that is the best way to play it and understand it. Try and pick your bet, and make your bet and find the portfolio at the low end of the cost curve, and sometimes that's like, let's say, more gassy operators, but gassy operators who can get their natural gas project and get a link to oil pricings via LNG in Asia. So one thing that's really working and very robust in global energy is the LNG market. So I'm about to say natural gas has a lower opex per barrel, so if you're stuck in the U.S., you are not going to make a lot of money; but if you have gas anywhere else and you can get it into an LNG plant and get it signed on a long-term contract with oil prices, you will be making some of the best margins in this industry.

So I guess, when I look down on this space and think globally, that is where I want to be positioned because the other thing LNG demand, look at how natural gas demand is growing, at 6% per year. We think we will continue to do that over the next seven years, and global natural gas demand is growing only 3.5% per year. But LNG is 6%, and think about oil demand; oil demand is about 1% per year. So I can get myself positioned in one of the highest-growth areas of optical energy sector happened to the LNG.

And the other thing I might add is LNG supply doesn't come every single day; it comes along in tranches. You had a lot of supply added in 2010, and you get another tranche of supply coming on in Australia in 2015, 2016 and then maybe in 2020 it might be the U.S. And once you have those projects in portfolios today, you have a lot value in the LNG assets, and so it's at low-cost molecules, and we are selling them at oil prices. That's a very attractive place to be positioned.

TWST: What three stocks would you recommend as best bets for investors right now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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