Mizuho sees value in oil and gas E&Ps despite recent sell-off

Gulfport Energy

24/05/2023 16:51

** Sell-off in oil and gas companies during Q1 results
(April 4-May 11) was triggered by recession fears, bumpy
recovery in Chinese demand and financial market volatility,
brokerage Mizuho says
    ** Oil-focused explorers and producers (E&Ps) down ~9.6%,
integrated oil companies (IOCs) down 7.7%, refiners down 7% and
gas-focused E&Ps down 4.8% through the period
    ** Sell-off was at odds with positive messaging from
individual companies - brokerage
    ** "We are more constructive on oil- and gas-focused E&Ps,
but turn cautious on U.S. refiners and IOCs" - Mizuho
    ** Brokerage sees global oil markets undersupplied by
~300,000 barrels per day (bpd) in H2 2023 and ~200,000 bpd in
2024
    ** But sees near-term weakness in refining margins due to
improved utilization; lowers outlook for blended U.S. refining
margins by ~28% in Q2 2023 and ~16% for FY2023
    ** Higher utilization leads to sequentially lower spreads as
product supply increases - Mizuho
    ** Brokerage expects pace of M&A to accelerate over the
summer if commodity prices remain range-bound
    ** Mizuho adds Devon Energy Corp  DVN.N  to its top picks,
alongside Coterra Energy Inc  CTRA.N  and Diamondback Energy Inc
 FANG.O , while removes Exxon Mobil Corp  XOM.N 
    
 Company                         New Rating  Old Rating
 EOG Resources Inc  EOG.N        Buy         Neutral
 Range Resources Corp  RRC.N     Buy         Neutral
 Gulfport Energy Corp  GPOR.N    Buy         Neutral
 PBF Energy Inc  PBF.N           Neutral     Buy
 
 (Reporting by Arshreet Singh)
 ((Twitter: https://twitter.com/Arshreets))