Notes from Stifel's Energy Sector Team - Oct 3

[dan_s]

Texas Energy Bus Tour Takeaways - Capital discipline remains the industry mantra

Summary
Last week, we hosted a four-day Energy bus tour in Dallas, Midland, and Houston that included meetings with companies throughout the oil
and gas value chain. We focused our discussions on capital discipline, service pricing, and thoughts on the macro environment. Regarding
capital discipline, the companies consistently highlighted plans to maintain financial discipline and return capital to shareholders despite
elevated commodity prices. Regarding service pricing, there is a degree of uncertainty on oilfield service pricing for lower-spec completion
and drilling services as a result of unknowns on OPEC's 2024 policy and the degree privates will respond to higher commodity prices once
the OPEC overhang is removed. While offshore rigs, high-spec completion services (dual fuel, e-fleets), and compression services remain
tight under any reasonable price environment, the rest of the services are dependent on activity levels. Regarding macro, most were positive
on the price environment for crude and focused on levers to maximize returns for shareholders. As a result of our event, we expect M&A to
remain topical as investors shift their focus from return of capital to sustainability of return of capital. Following the event, we are increasingly
favorable on BKR, CRK, ET, PR, PXD, and WHD.

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