European Integrated Oils:2018Outlook,Cash jaws set to open

Project driven cash flow growth

    We enter 2018feeling considerable enthusiasm on the potential for theEuropean oils sector both absolute and relative. No doubt our confidence ishelped by the much better feel to commodity markets and a price deck that, inour opinion, affords risk to the upside. Most significantly, however, our positivetone reflects our view that after three very challenging years the majorEuropean companies have repositioned their businesses to work in a $50/bblworld and that as the benefit of the cash flows from project starts accelerate,free cash is set for material expansion. In a world that shows very littlevaluation differentiation preferred names remain BP and Shell.

    Macro themes