JP Morgan sees better prospects for US oil exploration and production in 2024

Callon Petroleum Co

06/12/2023 14:43

** Brokerage JP Morgan expects better risk-and-reward for
oil exploration and production (E&P) companies on drilling
efficiencies and deflationary tailwinds in 2024 offsetting
modest declines in  well productivity, leading to greater
overall capital efficiency 
    ** JP Morgan sees 217,000 and 87,000 barrels of oil per day
of growth year-over-year in 2024 and 2025, respectively, on
impact of industry consolidation and y-o-y decline in U.S.
drilling and fracking activity
    ** Brokerage flags "robust level of M&A" to continue, with
potential consolidation candidates including Permian Resources
 PR.N , SM Energy  SM.N , Callon Petroleum  CPE.N  and
Southwestern Energy  SWN.N 
    ** While 2024 natgas market seems to be in balance,
significant oversupply expected during the 2Q24-3Q24 period,
with market also oversupplied in 2023
    
         Company             Rating     Prev Rating      PT
     Ovintiv  OVV.N        Overweight     Neutral     $58 from
                                                         $61
  Devon Energy  DVN.N      Overweight     Neutral     $58 from
                                                         $57
   Southwestern Energy      Neutral     Underweight  $8.50 from
          SWN.N                                          $7
  EOG Resources  EOG.N       Neutral    Underweight   $150 from
                                                        $156
 Range Resources  RRC.N    Underweight    Neutral     $32 from
                                                         $33
    Permian Resources      Overweight       NA         $16 (no
                                                       change)
     Callon Petroleum        Neutral        NA        $45 from
                                                         $48
        SM Energy          Overweight       NA        $43 from
                                                         $45
 
    
    


 (Reporting by Kabir Dweit)
 ((Kabir.Dweit@thomsonreuters.com))