EMEA Natural Gas: There’s gain in the methane (Gazprom, MOL, OMV, OMV Petrom, PGNiG and Romgaz)
In this report, we lay out our view of the natural gas markets. We believe that the natural gas business in Europe has entered an era of growth, buoyed by economic growth, as well as environmental and energy security concerns. We see continued growth in demand, with a renewables investment slowdown and higher carbon costs cramping coal’s ability to compete. Europe is becoming ever more an integrated market, in our view, and this removes overreliance on home markets, while boosting competition. New pipeline and LNG investments have multiplied the potential sources of gas, but we see Russia maintaining its number one supplier position and Nord Stream II reinforcing that. We are cautious on gas prices but bullish on demand. We have upgraded OMV to BUY from Hold (12M price target (PT) EUR 61.3, 26.2% upside), and maintain our BUY ratings on Gazprom (12M PT USD 6.7, 56% upside), MOL (12M PT HUF 3,247, 19.3% upside), OMV Petrom (12M PT RON 0.37, 21.6% upside), Romgaz (12M PT RON 44.9, 22.6% upside) and PGNiG (12M PT PLN 6.54, 14.5% upside).
OMV is an international energy company with activities in Exploration and Production (E&P), Refining and Marketing including petrochemicals (R&M), and Gas and Power (G&P). Co. explores and develops oil and gas resources and supply energy to over 100 million people. OMV has three operating segments: Exploration and Production (E&P), Refining and Marketing, including petrochemicals (R&M), and Gas and Power (G&P), as well as the segment Corporate and Other (Co&O).
Polskie Gornictwo Naftowe I Gazownictwo SA Polish Oil & Gas Co (PGNiG) is an integrated natural gas company based in Poland. Co.'s core activity covers exploration and production of natural gas and crude oil as well as import, storage, trade and distribution of gas and liquid fuels. Co.'s scope of activity includes gas trading and commercial support, as well as operation, maintenance and expansion of its distribution system. Co.'s distribution networks comprises over 100 thousand kilometers of gas pipelines (high, upper-medium, medium and low pressure), which cover primarily industrialized and urbanized areas of the country.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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