Small-, mid-cap E&Ps have potential to outperform -Goldman

PDC Energy

21/08/2020 12:00

** Goldman Sachs equity research sees potential for
small-and mid-cap (SMID) E&Ps to outperform by building scale
through acquisitions or exploration, and by returning more cash
to shareholders
    ** Says SMID E&Ps remain out of favor due to concerns around
earnings, asset base sustainability and tepid M&A sentiment
    ** Adds investor sentiment around E&Ps remains cautious
    ** Goldman sees potential for Magnolia Oil & Gas  MGY.N 
shares to re-rate higher with success in early stage development
of eastern portion of co's Eagle Ford Shale assets which can
allow for double-digit oil growth
    ** Regarding PDC Energy  PDCE.O , Goldman says investors are
looking for greater clarity on the use of FCF after reducing
debt to management's target of $1.5 bln or lower
    ** Views co's cost execution favorably, and sees potential
for capex to be toward the low-end of preliminary 2021 outlook
of $500-$600 mln
    ** Says investors agree with its view that Comstock
Resources'  CRK.N  Haynesville position has an advantage dow to
better access to demand markets, resulting in high EBITDA
margins
    ** Investors are mixed on potential upside and downside risk
to CRK's valuation from further M&A - GS
    ** On a YTD basis, MGY down 50.7%, PDCE down 42.5%, while
CRK has lost ~30%, as of last close

 (Reporting by Arundhati Sarkar in Bengaluru)
 ((Arundhati.Sarkar@thomsonreuters.com;
twitter.com/Arundhati_05))