Barclays Downgrades Oil And Gas E&P Sector, Sees Abundance Of 'Cheap Oil'

Loading...
Loading...

Barclays downgraded the Oil and Gas E&P sector to Negative for both Large Cap and Mid-Cap stocks Wednesday.

Analysts led by Thomas R. Driscoll revised estimates and price targets based on new forecasts for “$/bbl WTI assumptions of $50 and $65 and $/mmbtu Henry Hub natural gas assumptions of $3.25 and $3.50 in 2015E and 2016E, respectively.”

Driscoll saw the “average downside to our price targets of ~4 percent for the large-caps and 15 percent for the SMID-caps.”

“We continue to envision strong oil production growth in the U.S. in 2015. Our recent analysis of U.S. tight oil supply suggests that supply costs on a per barrel basis have fallen 25+ percent over the last two years. We anticipate that supply cost reductions could accelerate as U.S. producers cut back on CAPEX and high-grade their activities. Further cost reductions will likely lead to volume gains that exceed expectations and the abundance of relatively cheap oil supply from the U.S. producers could delay a price recovery,” according to the analyst note.

Downgrades to Equal Weight included Continental Resources, Inc. CLR, Devon Energy Corp DVN, Kosmos Energy Ltd KOS, Marathon Oil Corporation MRO, RSP Permian Inc RSPP and Whiting Petroleum Corp WLL.

Downgrades to Underweight included Chesapeake Energy Corporation CHK, Halcon Resources Corp HK, Resolute Energy Corp REN and SandRidge Energy Inc. SD

Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorDowngradesAnalyst RatingsTrading Ideas
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...