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

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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. (NYSE: CLR), Devon Energy Corp (NYSE: DVN), Kosmos Energy Ltd (NYSE: KOS), Marathon Oil Corporation (NYSE: MRO), RSP Permian Inc (NYSE: RSPP) and Whiting Petroleum Corp (NYSE: WLL).

Downgrades to Underweight included:

Chesapeake Energy Corporation (NYSE: CHK), Halcon Resources Corp (NYSE: HK), Resolute Energy Corp (NYSE: REN) and SandRidge Energy Inc. (NYSE: SD).

Latest Ratings for CLR

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsUnderweight
Nov 2020TD SecuritiesMaintainsHold
Sep 2020Northland Capital MarketsInitiates Coverage OnMarket Perform

View More Analyst Ratings for CLR
View the Latest Analyst Ratings

 

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