Despite Tough Macros, Only Ultra, Gastar And Chesapeake Face Potential Credit Issues Before 2018

There’s no question it has been a tough couple of years for oil & gas E&P stocks, but a new report by Sterne Agee CRT analyst Tim Rezvan suggests that things may not be as bad as the market fears for many companies.

Rezvan sees battered stocks Oasis Petroleum OAS and Whiting Petroleum Corp WLL as extremely oversold at this point. After taking a close look at the liquidity positions of the E&P names under coverage, he concludes that only Ultra Petroleum Corp. UPL, Gastar Exploration Inc GST and Chesapeake Energy Corporation CHK face potential credit issues prior to 2018.

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“Oasis and Whiting, on the other hand, maintain strong liquidity, despite sharp equity underperformance since ’15 that suggests otherwise, and can withstand the inevitable reduction in credit facilities we expect this spring from lending banks feeling stress in their energy loan portfolios,” Rezvan explained.

The firm has Buy ratings on Whiting and Oasis and Neutral ratings on Ultra, Chesapeake and Gastar.

Disclosure: the author owns shares of Whiting Petroleum.