Top Picks by MKM Partners Research Team - April 12

[dan_s]

The sector reflects NYMEX ~$53 oil and ~$2.60 gas. Our NYMEX 2021 oil price is ~$61 and
2022+ equilibrium outlook is $62. Our NYMEX 2021 natural gas price is ~$2.80, and 2022+
equilibrium outlook is $2.80. Our commodity price deck implies a sector median intrinsic
upside of ~45%. Oil-oriented companies (> 50% oil) have ~44% upside, natural gas-oriented
companies (<20% oil) have ~34% upside and combo-composition companies (20%-50% oil)
have ~63% upside. Our equilibrium composite Mont Belvieu NGL price is ~45% of NYMEX
oil. Companies with superior combined full-cycle returns, equity value upside, and financial
leverage include Pioneer, Shell, Chevron, EOG, Range, PDC, Cabot, and Diamondback.

If their NGL price forecast is correct (45% of WTI) then AR, EQT are RRC are going to have a very good year.