Barclays on N America Oil & Gas: E&P (Large Cap): Modifying Production Estimates to Reflect Mid-East Turmoil & Updated Price Deck

Barclays on N America Oil & Gas: E&P (Large Cap): Modifying production estimates to reflect Mid-East turmoil & updated price deck

Barclays analyst says, "Rising oil prices, Mid-East turmoil and a sharp increase in U.K. taxes led us to revisit estimates and company views. We are raising our 2011-2012 oil price assumptions to $105/bbl. Also, we are eliminating production volumes from Libya (OXY) and lowering volumes from Yemen (Nexen (NYSE: NXY) and Occidential (NYSE: OXY)). We recently upgraded Pioneer (NYSE: PXD) to OW while we have chosen to maintain OW on NXY."

'Updating price deck, earnings and cash flow estimates - oil-levered producers
benefit. Raising 2011/2012 W&T (NYSE: WTI) assumption $12/$10, respectively, to $105 in both '11 and '12. Gas price assumptions largely unchanged at $4.15/mmBtu in 2011 and $4.50 in 2012 and beyond. The largest increases in earnings and cash-flow estimates are for COS, MEG, Canadian Natural (NYSE: CNQ), EOG Resources (NYSE: EOG), and PXD.

Favorite and least favorite stocks. We believe investors should consider the shares of Apache (NYSE: APA), EOG Resources (NYSE: EOG), Newfield (NYSE: NFX), and QEP Resources (NYSE: QEP). We remain cautious on gas-levered names such as Encana (NYSE: ECA), Southerwestern (NYSE: SWN), Range Resources (NYSE: RRC), and Ultra (NYSE: UPL). Multiples of debt-adjusted cash-flow estimates (enterprise value to pre-interest cash flow) range from EV/2012E PICF of 5.0-6.3x for our four recommended names to 8.0-11.7x for the four gas-levered names."

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