Export Window To Open Soon? EnBW Deal Could Give NOVATEK Access to EU Markets, Novatek
Release Date: 2011-08-30
Access to EU markets possible soon. Germany’s press reported this week that the country’s third-largest electricity generator EnBW is in talks with NOVATEK (NVTK LI – Hold) over a strategic alliance that could allow NOVATEK to sell natural gas to the EU.
It was initially reported that the two companies were discussing a cooperation deal worth EUR800 mln ($1.1 bln), with NOVATEK buying a stake in EnBW or one of its subsidiaries.
The latest reports suggest that EnBW will offer NOVATEK a 25% or larger stake in Leipzig-based distributor Verbundnetz Gas (VNG).
EnBW is not a VNG shareholder, but has an option to buy a 48% stake, part of which could be ceded to NOVATEK. In exchange, NOVATEK would guarantee gas deliveries to EnBW and VNG.
Target price to be raised 18% under best-case scenario.We believe that NOVATEK could sell at a 15% discount to our projected average Gazprom EU price.
We take a conservative view of Gazprom’s prices, modeling them at just 10-15% above spot prices. NOVATEK would therefore be selling at or slightly below spot prices.
Assuming it exports just 5 bcm pa, we estimate that EBITDA would exceed our projections by 18% in 2012, 12% in 2013, and 7-9% in 2014-16. Looking further, the impact should fade as domestic prices reach netback parity.
This would increase our target price by $13/GDR, or 9%, from $140 to $153/GDR, still implying a Hold recommendation (we also assume that NOVATEK buys into VNG at its fair value).
Doubling the export volume from 2013 to 10 bcm per annum would add 36% to NOVATEK’s EBITDA that year and increase its target price 18% to $165/GDR, suggesting 17% upside.
| Type: | NORMAL |
| Company: | Novatek |
| Country: | 俄罗斯 |
| Url: | http://www.oilandgaseurasia.com/articles/p/142/article/1558/ |