Susquehanna Cuts Oil Production Forecast, Raises Price Targets For 4 E&Ps

In a new report, Susquehanna analyst Biju Perincheril discusses the impact that $30 oil has had on oil & gas E&P stocks and U.S. crude oil production in 2016 and beyond. Perincheril cut Susquehanna’s oil production forecast, but the firm remains positive on several beaten-down E&P stocks.

“The important takeaway from this earnings season was that initial 2016 outlooks from E+Ps suggest U.S. oil production decline could gather steam later this year as operators adjust to $30 oil,” Perincheril explained.

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For public independents, Perincheril believes this adjusted outlook will translate to 10 percent oil production declines this year. Assuming companies stick to their capex projections, the firm believes that private companies will dial back production even further this year, resulting in an overall decline of 0.8-1.0 MMbls/d in total U.S. oil production.

Susquehanna has raised its price targets for Chesapeake Energy Corporation CHK, Oasis Petroleum Inc. OAS, SM Energy Co SM and Range Resources Corp.RRC.

Susquehanna now has a Positive rating on Range Resources, Continental Resources, Inc. CLR, EOG Resources Inc EOG, Newfield Exploration Co. NFX and WPX Energy Inc WPX.

Based on the updated price targets, the firm sees the most potential upside for Newfield Exploration.

Disclosure: the author holds no position in the stocks mentioned.