The overall sentiment within the Exploration & Production sector has changed for the better as a 50-percent spike in oil prices since last June has been matched with flat performance for the E&P group, according to Seaport Global.
Seaport Global's Mike Kelly and team made the following upgrades:
- Newfield Exploration Co. (NYSE: NFX) from Neutral to Buy.
- Parsley Energy Inc (NYSE: PE) from Neutral to Buy.
- WPX Energy Inc (NYSE: WPX) from Neutral to Buy.
- The company's reputation of under-promising and over-delivering in the STACK should continue.
- Anadarko oil volumes should grow by up to 30 percent per year over the next three years, which is a higher growth rate compared to its gas business.
- The company's strip net asset value is estimated at $38 per share.
- Parsley Energy should benefit from from its ongoing operational turnaround and strong exposure to Permian crude and gas.
- The company holds a major advantage over its peers as it can move 95 Mbopd out of the Permian.
- The company's strip net asset value is estimated at $39 per share.
- WPX's management team alone justifies a premium after transitioning from an over-levered gas company into a Delaware and Bakken powerhouse.
- Cash flows should triple through 2020.
- The first-quarter earnings report foreshadows improving results over time and a strong operational trajectory.
- The company's net asset value is estimated at $25 per share.
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