EFTA01461560.pdf

For non advisory clients only In a "sector rotating" market in favour of value large cap names , Oil could be a relative bet to take, as the sector is: 1) not expensive in terms of valuations 2) favoured by the upper trending of WTI and Brent prices 3) impacted by better capital discipline (capex) expectations Lucas Herrmann, DB research on ROE trend is starting to be more optimistic as well: "central to the deterioration in return on capital at the integrated oils has been the balance sheet build of non-productive capital. At the super-majors alone, the addition over a decade of c.S2S0bn of work in progress and exploration assets has proven a material drag on sector profitability clipping an estimated 3-4% from reported RoCE. vet, with 2013 registering the first decline in non-productive capital for a decade are there now signs that yet another source of returns drag across the oil sector may be at a tipping point? we think so with our analysis suggesting scope for a 10% uplift to reported returns over the next five years". Interestingly, today also the Lex Column in "Oil change, please" is mentioning the need to improve capital returns to fill the valuation gap (ENI the company mentioned in the article, also for the new management) short term it could make sense to play the momentum via relative spread and with outperformance calls SXEP vs cyclical sector like chemical SX4P WTI: (Embedded image moved to file: pic16044.gif) SXEP vs SX4P (Chemicals) (Embedded image moved to file: pic01854.gif) Kind regards, Pierluigi Amicarella (Embedded image moved to file: pic00153.gif) Pierluigi Amicarella Deutsche Bank (Suisse) SA Key client Partner Prime Tower Hardstrasse 201, 8005 Zurich, Switzerland Tel. Fax Mobile Email The proposed ideas are being delivered to you by the OBS Key Client Partners ("KCP") EMEA Switzerland desk on your request for discussion purposes only and strictly on a non advisory basis. The proposed ideas do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DB"). These ideas are for the consideration of the intended recipients of this mail only. NOTE: The KCP EMEA Switzerland desk does not provide investment advice. All intended recipients are sophisticated, qualified investors within the meaning of the Swiss Collective Investment schemes Act of June 23, 2006 (LISA) and CONFIDENTIAL — PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0 123687 CONFIDENTIAL SDNY_GM_00269871 EFTA01461560