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Bloomberg: Oil Companies `Undervalued,’ Dubai International’s CEO Says

By Will McSheehy and Claudia Maedler

May 18 (Bloomberg) — Dubai International Capital LLC, which has spent $6 billion since 2004 buying companies including stakes in DaimlerChrysler AG, said oil companies are “undervalued” as investors underestimate the positive impact of sustained high energy prices on earnings.

“In the oil and gas sector there are some pretty good opportunities,” Dubai International’s Chief Executive Officer Sameer al-Ansari said in an interview in Jordan’s Dead Sea resort today. “These companies are being valued as if oil prices are going to come down to $30 tomorrow, and we don’t believe that is the case,” he said.

Oil prices have more than doubled in the past four years. Crude oil for June delivery rose 34 cents to $65.20 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3:56 p.m. in Dubai. Exxon Mobil Corp., the world’s biggest oil company, saw its net income for 2006 reach $39.5 billion, a record for full year profit by a U.S. company.

“Oil majors are undervalued,” al-Ansari said. “They trade at price-to-earnings of 7, 8, 9,” he added without naming specific companies.

ConocoPhillips, the third-largest U.S. oil company, is valued at 8.8 times forward looking earnings, while Royal Dutch Shell PLC, Europe’s biggest oil company, trades at a multiple of 9.4 times, according to data compiled by Bloomberg. Exxon Mobil trades at 12.8 time forward looking earnings.

To contact the reporter on this story: Will McSheehy in Jordan at [email protected] Claudia Maedler in Dubai at [email protected]

Last Updated: May 18, 2007 09:36 EDT

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