Note from Stifel's top energy sector analyst - Nov 1

[dan_s]

Stifel's Crude But Refined Thoughts: Tactical Ideas for Round 2 of 3Q21 Energy Earnings - Derrick Whitfield -
Leading into earnings, we held the view that investor sentiment was improving towards Energy based on the global energy crisis and the investor realization that the world could experience a sustained period of higher energy prices. Based on the number of preview calls we conducted and our discussions, we continue to believe interest will remain high as commodities remain an ideal hedge on inflation and price is only materially impacting one-half of the supply/demand equation (demand) as a result of investor/ESG pressures and limited options to address near-term imbalances. We also left our preview calls with the view that companies that could offer a more favorable return of capital messaging are best positioned to outperform as that currently appears to be the single most important output for the sector from an investor perspective. To date, these views have mostly played out based on the best-received prints across the sector. We believe this will remain the case for the balance of earnings, albeit with more muted stock responses. As such, we favor DVN and ET as high conviction picks and GTLS and LBRT as pullback opportunities.