RJ's Top Pick is Antero Resources (AR)

[dan_s]

From Raymond James 5-16-2022 Energy Stat on how the global LNG shortage thru at least 2025 will keep natural gas and NGL prices high.

"Antero Resources (AR) remains our top pick to play LNG (and nat gas overall), possessing the lightest 2022 hedge book of all RJ gassy E&Ps.
With only ~50% of gas hedged for 2022, falling to virtually 0% in 2023, AR has significant upside to strip relative to peers (peer average ~70%
hedged). Further, AR has LNG commitments in place for ~1.0 Bcf/d, with access to ~2.3Bcf/d in firm transport (to various LNG facilities). 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). Another way to play LNG is via
Southwestern Energy (SWN). The largest Haynesville operator (by volume, ~4.7 Bcfe/d), SWN’s geographical advantage to LNG terminals (~235
miles to Cameron) is unmatched. Notably, near-term Haynesville takeaway capacity remains a non-issue."

The last sentence is why Comstock Resources (CRK) is still one of my Top Picks for 2H 2022.

I hope to find time to look at Southwestern Energy (SWN) this week. It is a former Sweet 16, so it should not take long to update my forecast/valuation model for SWN.

[uberCOAT]

Dan:

Good on SWN - I would be interested in seeing that.

Re: CRK- do they have the ability to roll off some of their hedges in 2022 or are they locked in for the year?

Thanks

[dan_s]

CRK: I don't expect them to close out any of their 2022 hedges. 50% of their gas is hedged in 2022, but more is unhedged each quarter locking in steady revenue growth. Very little is hedged beyond 2022 and they are now using collars with very high ceilings.

[allen46]

Thanks Dan. Very interested in your evaluation of SWN.