Oil investment strategy, petroleum supply/demand: Jan–Mar

Research evidence excerpt

Oil investment strategy, petroleum supply/demand: Jan–Mar

e is still some risk that ongoing labor negotiations in

the Ichthys LNG project will result in a labor strike, so we will need to

watch the status of those labor negotiations through their scheduled 15 May

conclusion. Decisions on additional shareholder returns prompted by stronger-

than-expected earnings will likely be put off until the release of 2Q results in

August, so we do not expect major changes at 1Q results announcements.

With respect to the oil refining and distribution sector, we look for solid 4Q

(Jan–Mar) results underpinned by higher market prices and other factors,

but in view of crude oil procurement constraints due to the Strait of Hormuz

closure as well as the fact that stable supplies of petroleum products continue

given the drawdown of government oil reserves, we believe it will be difficult

for companies to formulate FY3/27 earnings guidance and do not expect

any major changes with respect to shareholder returns. Idemitsu Kosan is

expected to announce its medium-term business plan when it reports 4Q

results, but we do not expect that plan to include significant changes to its

shareholder returns policy and ROE target. Hence, we do not expect the MTP

announcement to prompt a short-term share price reassessment.

Earnings, domestic/overseas product spreads, refinery utilization

Figures 1–5 show our earnings estimates for the petroleum development

sector at different oil price points, primarily those for Inpex, as well as the

operational status of the Ichthys LNG project in Australia.

Figures 6–8 show earnings trends for the three companies in the oil refining

and distribution sector, while Figures 9–17 summarize market conditions in the