J.P. Morgan expects demand trends to favor US natgas over oil

SM Energy

05/12/2024 16:04

** J.P. Morgan expects natural gas producers to benefit from
three distinct demand trends; build-out of LNG export capacity,
rising power demand from electrification and coal-to-gas
switching
    ** Says expectations of record U.S. oil supply, OPEC+
barrels return in 2025, Non-OPEC 2025 supply growth and
potential policy de-regulations due to Republicans gaining
control of the presidency and both chambers of Congress, has
softened near-term enthusiasm for the oil macro outlook
    ** Brokerage will "continue to favor natgas levered
producers given the supply response to low gas prices, the
imminent start-up of meaningful LNG feedgas flows, and a number
of positive data center/AI data points"
    ** Upgrades ConocoPhillips  COP.N  to "overweight";
downgrades Devon Energy  DVN.N , SM Energy  SM.N  to "neutral"
from "overweight" and CNX Resources  CNX.N  to "underweight"
from "neutral"
    Brokerage changes PT on the following firms:
 Company            New PT      Old PT      Upside/dow
                                            nside to
                                            stock's
                                            last close
 Civitas Resources  $68         $66         40%
  CIVI.N                                    
 CNX Resources      $37         $31         3%
  CNX.N                                     downside
 ConocoPhillips     $123        $120        19%
  COP.N                                     
 Coterra Energy     $31         $29         21%
 Inc  CTRA.N                                
 Crescent Energy    $16         $14         10%
  CRGY.N                                    
 EOG Resources      $141        $132        9%
  EOG.N                                     
 EQT Corp  EQT.N    $50         $44         12%
 SM Energy  SM.N    $53         $51         26%
 
 (Reporting by Pooja Menon in Bengaluru)
 ((Pooja.Menon@thomsonreuters.com;))