12 January 2009
Cuts in crude oil price
Target price and estimate
changes
Pavel Kushnir
Research Analyst
(7) 495 9339240
pavel.kushnir@db.com
Tatiana Kapustina
Research Analyst
(7) 495 933 9236
tatiana.kapustina@db.com
1Q09E and full-year 2009E Brent crude oil price cut to USD45.0/bbl
We have downgraded our Brent crude oil price assumptions for 2009E by 5% to
USD45.0/bbl. This has had a negative impact on our earnings forecasts and target
prices for the Russian oil and gas companies and KazMunaiGas EP. For a detailed
listing of changes in price targets and new estimates for the companies under our
coverage, see pages 4 and 15-28.
Deutsche Bank AG/London
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Forecast change
Companies featured
Gazprom (GAZP.RTS),USD3.65 Buy
2007A 2008E 2009E
DB EPS (USD) 1.13 1.50 0.61
P/E (x) 9.7 2.4 6.0
EV/EBITDA (x) 8.5 2.4 4.8
Novatek (NVTKq.L),USD23.20 Buy
2007A 2008E 2009E
DB EPS (USD) 2.42 3.10 1.92
P/E (x) 23.1 7.5 12.1
EV/EBITDA (x) 14.9 5.3 8.0
Rosneft (ROSN.RTS),USD3.75 Buy
2007A 2008E 2009E
DB EPS (USD) 1.35 1.15 0.02
P/E (x) 6.3 3.3 181.0
EV/EBITDA (x) 7.5 2.7 9.4
LUKOIL (LKOH.RTS),USD32.00 Buy
2007A 2008E 2009E
DB EPS (USD) 11.52 14.24 1.24
P/E (x) 7.1 2.2 25.8
EV/EBITDA (x) 4.6 1.6 5.9
TNK-BP (TNBPI.RTS),USD0.65 Buy
2007A 2008E 2009E
DB EPS (USD) 0.37 0.43 0.03
P/E (x) 5.7 1.5 19.2
EV/EBITDA (x) 4.0 1.1 3.6
Surgutneftegaz (SNGS.RTS),USD0.55 Buy
2007A 2008E 2009E
DB EPS (USD) 0.14 0.14 0.05
P/E (x) 8.8 3.9 11.3
EV/EBITDA (x) 4.6 1.1 2.7
Gazprom Neft (SIBN.RTS),USD2.10 Buy
2007A 2008E 2009E
DB EPS (USD) 0.87 1.19 0.07
P/E (x) 4.8 1.8 28.8
EV/EBITDA (x) 2.5 0.7 3.0
Sibir Energy (SBE.L),GBP157.00 Buy
2007A 2008E 2009E
P/E (x) 13.3 1.4 5.0
EV/EBITDA (x) 23.20 2.02 5.28
DB EPS (USD) 0.72 1.65 0.48
Tatneft (TATN.RTS),USD1.80 Buy
2007A 2008E 2009E
DB EPS (USD) 0.76 0.48 0.02
P/E (x) 6.5 3.7 87.1
EV/EBITDA (x) 3.2 1.6 5.8
Bashneft (BANE.RTS),USD4.00 Buy
2007A 2008E 2009E
DB EPS (USD) 2.50 3.08 -0.51
P/E (x) 5.7 1.3 –
EV/EBITDA (x) 2.4 -0.2 -0.1
KazMunaiGas E&P (KMGq.L),USD13.55 Buy
2007A 2008E 2009E
DB EPS (USD) 3.11 4.63 1.14
P/E (x) 7.3 2.9 11.8
EV/EBITDA (x) 2.7 0.6 3.5
Transneft (TRNF_p.RTS),USD230.00 Buy
2007A 2008E 2009E
DB EPS (USD) 378.16 469.44 420.12
P/E (x) 5.0 0.5 0.5
EV/EBITDA (x) 3.7 1.4 1.6
Global Markets Research Company
Taking a defensive stance to crude oil price forecasts
Steady oil prices are unlikely in a complex and rapidly changing environment. Oil
prices collapsed with the reversal of the main drivers that drove oil up to nearly
USD150/bbl in mid-2008. We expect demand growth to be significantly worse in
2009 than consensus forecasts. Partially offsetting this, we estimate non-OPEC
supplies to fall in 2009 again as they did in 2008. We believe that growth in spare
refining capacity and unused OPEC upstream capacity will counteract OPEC’s
efforts to cut production. High crude and product inventories and a stronger dollar
are likely to support downward pressure on oil prices in 2009.
Revision of key assumptions
We downgrade our crude oil price forecasts for 1Q09 by 18% to USD45.0/bbl. As
a result our full-year 2009E forecast is cut by 5% to USD45.0/bbl. As the global
economy recovers, we expect that a resumption of demand growth will set the
stage for a sharp recovery in oil prices, but this may not come about until the
second half of 2010. We maintain our crude oil price forecast of USD55.0/bbl in
2010E and USD80.0/bbl in 2011E, growing by USD5/bbl every year thereafter.
Other changes in our key assumptions include a revision of January 2009 export
duty and the incorporation of new growth rates for domestic natural gas prices.
Stocks with Buy recommendations
We assign Buy ratings to Gazprom (TP USD10.9/share), Novatek (TP
USD91.5/GDR), Rosneft (TP USD8.50/share), LUKoil (TP USD78.5/share), TNK-BP
Holding (TP USD1.20/share), Surgut ords (TP USD0.85/share), Surgut prefs (TP
USD0.60/share), Gazprom Neft (TP USD3.70/share), Sibir Energy (TP
GBP360/share), Tatneft (TP USD3.50/share) Bashneft (TP USD6.80/share),
KazMunaiGas EP (TP USD27.0/share) and Transneft (TP USD800/share). Downside
risks to our Buy recommendations include lower-than-expected oil prices, capex
overruns and potential inability to control costs.

Table of Contents
Executive summary ........................................................................... 3
Crude oil market outlook...........................................................................................................3
Valuation ..................................................................................................................................3
Risks ........................................................................................................................................3
Valuation ............................................................................................ 4
Crude oil ........................................................................................... 10
Equilibrium prices and 2009....................................................................................................10
Conclusion ..............................................................................................................................13
Model revisions ............................................................................... 16
Summary of forecast changes ................................................................................................16