石油精练一体化：嗨六月，希望不要太糟-DeutscheBank

gIntegrated Oil & RefiningIndustrialsIntegrated OilRecommendationChangeLatin AmericaNorth AmericaIndustryIntegrated Oil &RefiningDate5 June 2017Deutsche BankMarkets ResearchHey June, Don't Make It BadRefining numbers coming down; Upgrading Tesoro to BUY ($106 PTUnchanged)Companies in our integrated/large-capspace are valued on either a EV/DACFmultiple (CVX, XOM, COP, and OXY) oron a blended NAV, EV/DACF multiplemethodology. NAVs assume $65/bbl, $62/bbl, and $3.30/mcf for Brent, WTI andHenry Hub pricing resp. Primary downsiderisks include a decline in global oildemand and a decrease in the underlyingcommodity. Upside risks include increaseddemand and increased operator efficiency.Companies in our refining coverage aremostly valued under a 2017 multiple-based(EV/EBITDA) SOTP valuation. Upside risksinclude widening crude diffs, and gasolineinventory draws while key downside risksinclude tepid gasoline and distillate demand.Although refining utilization rates have been outstanding QTD, lackluster marginsand robust product inventories continue to weigh on profitability. Now twomonths into the second quarter, we mark-to-market our expectations for USrefiner earnings, and see 17%/25% downside relative to 2Q17 DBe/consensusestimates. Despite the continued headwinds for the group, we see TSO asrelatively well positioned, with one of the largest SOTP discounts of the peer group(28% upside to SOTP vs. 13% for peers), and multiple catalysts that should providean opportunity to narrow the discount, including TLLP/WNRL combination, IDRrestructuring, and portfolio optimization post-WNR closure, while robust buybackand minimal RINs exposure mitigate risk. Upgrade from Hold to Buy ($106 PT,see page 3 for valuation and risk).Marking to Market - bringing refiner 2Q17 EPS estimates down 17%We updated our price markers for 2 full months of the quarter, and adjusted ourcrack spread expectations accordingly, and we see 17%/25% downside to 2Q17EPS estimates vs. prior DBe/consensus expectations. Despite an improvement inmargins vs. 1Q17 (+6% on average), narrowing differentials (sweet-sour, medium-light, WCS-syncrude), and DAPL start-up have been headwinds in the quarter,although export optionality and robust demand in PADD's III and V have left thoseexposed (MPC, TSO) a bit better off. We expect continued weakness in the Mid-Con until a full re-start of the Syncrude pipeline brings back oil sands production,and the outlook improves as we look into 2H17 with an estimated ~200 mb/d ofCanadian production increases expected.Market shrugging off OPEC, bullish DOEsWhile last week's OPEC decision was widely expected, both refiners and theenergy complex overall have sold off 1%/7% since then, despite two bullish DOEreports in as many weeks, as investor concerns over the 2018 outlook continueto trump tightening 2H17 balances. Bullish data points for domestic demand(outpacing 2016 levels, finally) and exports have provided some relief, though withthe market largely shrugging off Thursday's update,