Barclays Warns Of Big Tumble For U.S. Oil Producers

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North American oil and gas producers could see further stock price declines because investors harbor unrealistically high expectations for energy prices, an analyst said Wednesday. Barclays' Robert R. Driscoll downgraded a raft of companies and warned that equity values among North American oil producers could fall a further 30 percent. "The abundance of relatively cheap oil from the U.S. production could delay a price recovery," according to Driscoll, who expects $50 a barrel for West Texas Crude will prevail in 2015, down from a current price of $57. Production costs for oil have declined 25 percent in the past two years, while companies are currently cutting capital spending. The lower spending will result in even lower costs to producers, and Driscoll expects North American oil production growth will therefore remain strong in 2015. Driscoll downgraded four companies to Under Weight from Equal Weight: Chesapeake Energy Corp.
CHK
, Halcon Resources Corp.
HK
, Resolute Energy Corp.
REN
and SandRidge Energy Inc.
SD
. A half-dozen companies got cut to Equal Weight, including Continental Resources, Inc.
CLR
, Devon Energy Corp.
DVN
, Marathon Oil Corp.
MRO
, RSP Permian Inc.
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RSPP
and Whiting Petroleum Corp.
WLL
. Driscoll also downgraded Kosmos Energy Ltd.
KOS
to Equal Weight http://www.benzinga.com/news/15/01/5145393/barclays-downgrades-kosmos-energy-to-equal-weight-lowers-pt-to-8-00 and reinstated an Equal Weight rating and $15 target on Rice Energy Inc.
RICE
. http://www.benzinga.com/analyst-ratings/initiation/15/01/5145677/barclays-initiates-rice-energy-with-equal-weight
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Posted In: DowngradesAnalyst Ratings
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