Stifel's notes from Enercom Conference - Aug 19
Posted: Mon Aug 19, 2019 10:45 am
Investor Sentiment Decisively Negative
Many in attendance at this year's EnerCom Conference noted that investor sentiment toward energy was the worst they had experienced during their careers. In our view, energy stock prices reflect a high probability of a global recession and impute a NYMEX oil price of ~$45.
In addition to recession fears, value investors appear to be avoiding the space due to renewed shale asset quality concerns, some notably disappointing 2Q releases (CXO, WLL, OAS, COG, ENLC, MMLP, FLMN), and capital discipline risk. In the near-term we prefer defensive names including: EOG, FANG, PXD, KMI, and MMP.
If oil prices pull back to the mid $40s or lower, we suggest investors rotate into more aggressive stocks including: CXO, PE, XEC, NBL, WPX, CEQP, and ET.
If you'd like to read the full report from Stifel's energy sector analysts that attended last week's EnerCom Conference, send me an email: dmsteffens@comcast.net
Many in attendance at this year's EnerCom Conference noted that investor sentiment toward energy was the worst they had experienced during their careers. In our view, energy stock prices reflect a high probability of a global recession and impute a NYMEX oil price of ~$45.
In addition to recession fears, value investors appear to be avoiding the space due to renewed shale asset quality concerns, some notably disappointing 2Q releases (CXO, WLL, OAS, COG, ENLC, MMLP, FLMN), and capital discipline risk. In the near-term we prefer defensive names including: EOG, FANG, PXD, KMI, and MMP.
If oil prices pull back to the mid $40s or lower, we suggest investors rotate into more aggressive stocks including: CXO, PE, XEC, NBL, WPX, CEQP, and ET.
If you'd like to read the full report from Stifel's energy sector analysts that attended last week's EnerCom Conference, send me an email: dmsteffens@comcast.net