1. Energy Sector Report
Spring 2018
Amanda Bayer

2. Performance STOCK CURRENT PRICE PURCHASE PRICE PERCENT CHANGE
PITCH DATE
CVX
113.24
110.24
2.72%
10/16/12
ENB
31.88
41.24
29.36%
5/19/17
FSLR
67.72
61.67
9.91%
11/7/17

3. Chevron (CVX) – 118.22 American multinational energy corporation
Active in more than 180 countries
Subsidiaries: Texaco, Tengizchevroil, Chevron U.S.A.
Integrated energy, chemicals, and petroleum operations in two segments: upstream and downstream
No. 2 US oil producer
Upstream
Involved in the exploration, development, and production of crude oil and natural gas
Processing, liquefaction, transportation, and regasification associated with liquefied gas
Transportation of crude oil through pipelines, and transportation, storage, and marketing of natural gas, as well as operates a gas-to-liquids plant
Downstream
Refining crude oil into petroleum products
Marketing crude oil and refined products
Transporting crude oil and refined products through pipeline, marine vessel, motor equipment, and rail car
Manufacturing and marketing commodity petrochemicals, and fuel and lubricant additives as well as plastics for industrial uses
Also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses

4. Growth over last year (and since purchase) has been relatively minimal

5. CVX in the news Stock slid 10.9% in February
Disappointing fourth quarter: numbers looked good- earned $3.1bn ($1.64/share)
Results included a $2b benefit from recent changes in US tax code
The tax code change masked weakness in company’s international refining operations (pulled in only $84m vs. $357m a year ago)
Increased its dividend 3.7%, which pushed its yield close to 4% - gaining attractiveness for investors
CVX backs 2018 production rise, eyes share buybacks
it should be able to raise production as planned by between 4 and 7 percent in 2018 and buy back shares for the first time in at least three years even without a substantial rise in oil prices after cutting off the top-end of its capital spending plans
-plans to generate extra free cash by selling off assets, producing more oil at higher margins and cutting expenses as US oil firms ramp p production in response to recovery of crude prices
-buybacks will start as soon as they generate surplus cash
-production in its low-cost shale acreage in the Permian basin in NM and TX is expected to reach about 500,000 barrels/day by end of 2020 and 650k by 2022

6. Enbridge (ENB) – 32.39
Engages in the provision of gas and oil businesses in the US and Canada
Operates through the following segments:
Liquid pipelines
Gas distribution
Gas pipelines & processing
Green power & Transmission
Energy Services
Market cap = 54 bn
Enbridge Inc. operates as an energy infrastructure company in Canada and the United States. The company operates in five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Green Power and Transmission, and Energy Services. The Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The Gas Transmission and Midstream segment owns interests in natural gas pipelines, and gathering and processing facilities. The Gas Distribution segment is involved in natural gas utility operations serving residential, commercial, and industrial customers in Ontario, as well as in Quebec and New Brunswick. The Green Power and Transmission segment operates renewable energy assets, such as wind, solar, geothermal, and waste heat recovery facilities; and transmission facilities in the provinces of Alberta, Ontario, and Quebec, Canada; and in Colorado, Texas, Indiana, and West Virginia, the United States. The Energy Services segment provides energy supply and marketing services to refiners, producers, and other customers; crude oil and NGL marketing services; physical barrel marketing services; natural gas marketing services; and natural gas supply, transportation, balancing, and storage services for third parties. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.

7. Growth (or lack of) over past year

8. ENB in the news Dividend yield is 6.5% (market’s yield is close to 2%)
Has increased its dividend for 22 consecutive years
Announced they will pay a % redemption premium over the face value of its % senior unsecured notes due in 2032 and a % premium for its 7.50% senior unsecured notes due 2038 issued by its Spectra Energy Capital subsidiary
Diversified portfolio including power facilities like solar and wind farms
2016- issued new units to buy Spectra Energy – large , growth-oriented acquisition
Known as an investment that will generate current income… handily beats what you’d get from the broader market

9. Dividend growth
The long-term impact of the faster dividend growth rate offered by Enbridge is pretty clear from the chart above. Over the past decade, its dividend grew by a massive 202%; Enterprise's distribution increased by a far more modest 69%. If you are an income investor, even with dividend-growth slowdown at Enbridge over the next few years, it's still likely to reward you with more income than you'd get from Enterprise's planned hikes. That's a clear win for Enbridge.
-plans to increase dividend by 10% in 2019 and 2020
-ENB stock yields an impressive 6.8% - sustainable and still headed higher
-financials are on solid ground, 96% of its earnings come from stable sources like fee-based contracts
-investment-grade credit rating and only pays out about 65% of its cash flow to support the dividend
-financial flexibility to invest in high-return growth projects that will increase cash flow
-currently has 22 bn Canadian dollars ($17bn) worth of expansions under way which should fueld 10% annual growth in cash flow per share through 2020 (supporting dividend outlook)
-perfect stock for retirement/long-term investment

10. First Solar (FLSR) – 69.39
Provides photovoltaic solar energy solutions in the US and internationally
Market cap = 7.25bn
Operates through two segments:
Components
Systems
First Solar, Inc. provides photovoltaic solar energy solutions in the United States and internationally. It operates through two segments, Components and Systems.
The Components segment designs, manufactures, and sells cadmium telluride solar modules that convert sunlight into electricity. This segment offers its products to integrators and operators.
The Systems segment provides turn-key photovoltaic solar power systems or solar solutions, such as project development; engineering, procurement, and construction; and operating and maintenance services to utilities, independent power producers, commercial and industrial companies, and other system owners.
Solar stocks in general took a beating in the second half of 2015 and throughout 2016 but it has turned around in in fact, on exchange-traded fund (ETF) tracking the sector (the Guggenheim Solar ETF) generated impressive returns of over 54% last year
Solar stocks soared in the past due in part to federal tax credits for home solar installation and other incentives to stimulate the industry, but they were resilient in 2017 despite a presidential administration that does not prioritixe renewable energy to the same extent of its predecessor
Solar’s fortunes may remain strong over medium and long run- nearly 40% of all new energy installations in2016 were solar… solar workforce has tripled since 2010… doubling number employed in coal (270k)

11. Stock growth

12. FSLR in the news
Trump may pursue aggressive alternative energy processes… Jan 2018: Trump imposes tariffs on imported solar panels aiming to protect US companies against dumping by foreign manufacturers
Impressive 2017 after disappointing 2016 (revenue was down nearly 20% from )
After the company beat consensus estimates in the first two quarters of 2017, the results for the third quarter were even more impressive – First Solar reported third quarter revenue of $1.09 billion, representing year-over-year growth of 60% and crushing the consensus estimate of $824.2 million. While the company missed revenue estimates in the fourth quarter, the adjusted loss of 25 cents per share came in better than expectations of a 33-cent loss.
First Solar could actually benefit from Trump's tariff decision because it uses thin-film solar panels – a different technology than what is employed by the Chinese companies that the tariff is designed to protect against. Thus, although First Solar has manufacturing facilities overseas, its panels are exempt from the tariff.

13. Projected stock prices
COMPANY
CURRENT
PROJECTED
CVX
118.22
138
ENB
32.39
43.35
FSLR
69.39 75