RJ's Top Pick for Natural Gas + NGLs is Antero (AR) - May 9

[dan_s]

Note from Raymond James team this morning.
"Highlighting our list of top E&P gas plays is Antero Resources (AR), which, unsurprisingly, possesses the lightest 2022 hedge book of all RJ
gassy E&Ps. With only ~50% of gas hedged for 2022, falling to virtually 0% in 3023, AR has significant upside to strip relative to peers (peer average
~70% hedged). Additionally, roughly 30% of AR’s production consists of NGLs, with no NGL hedges in place for 2022 (and beyond). With C3+
realizations currently above $65/bbl, we expect AR to generate a healthy ~23% FCF/EV yield in 2022E, increasing to ~27% in 2023 (at current strip).
While technically not an E&P, Black Stone Minerals (BSM) also remains a top name to play our bullish gas price deck. With a 1Q22 product mix
of ~72% gas, including over ~40% of 1Q22 production from the Haynesville/Shelby Trough, BSM provides owners significant exposure to one of
the U.S.'s top gas resource plays. Speaking of the Haynesville/Shelby Trough, BSM currently possesses two separate operating agreements in the
region (with XTOand Aethon,respectively)to further boost acreage activity by means of organic growth,ratherthan through acquisitions. Likewise,
the recent uptick in commodity prices has had a similar eCect on BSM's Austin Chalk position, with numerous operators signing agreements with
Black Stone to testthe recently revitalized formation. Currently, we’re modeling a ~10% 2022E cash distribution. Sticking to the mineral and royalty
theme, Kimbell Royalty Partners (KRP) is another attractive name, albeit with slightly less gas exposure (~61% of 2Q21 production) compared
to BSM. Kimbell, however, possesses an industry-leading yearly decline rate (~12%) along with meaningful Appalachia exposure (~15% of 2Q21
production). Additionally, Kimbell has increased exposure (~33% hedged in 2022 falling to ~18% in 2023) to our commodity forecast versus BSM
(~60% hedged in 2022) — we estimate a 2022E distribution of ~11%.