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1、24 January 2019 Americas/United States Equity ResearchOil & Gas Exploration & ProductionE&PResearch AnalystsBetty Jiang, CFA212 325 6259 HYPERLINK mailto:betty.jiang betty.jiangChris Baker, CFA212 325 6375 HYPERLINK mailto:chris.baker chris.bakerSECTOR REVIEW4Q18 SMID E&P Company PreviewErratum: Thi

2、s corrects the 4Q18 and 2018 EPS and CFPS estimates for Oasis Petroleum originally published on 23 January 2019 to reflect a revised hedging loss in 4Q. The figures have been corrected on pages 3, 17, and 28.Its all about 2019 outlook & drawing a line in the sand on cash flow neutrality. Given the t

3、remendous investor pressure on capital discipline, thetraditionally high-growth SMID-Cap E&Ps are increasingly being put under the same lens as their larger-cap peers, with a similar focus on growth within cash flow and cash return to shareholders. While growth + FCF may be plausible at $60/Bbl, its

4、 difficult at $50-$55/Bbl, and near impossible at$45/Bbl. Even based on our more moderated capex levels, we see over 50% of our coverage universe outspending at current strip prices. And for some companies that adhere to calls of CF neutrality, production profiles may disappoint. i.e. WPX with flatt

5、ish 4Q19/4Q18 production at $50/Bbl, or LPI which has declining oil volumes within cash flow. With this backdrop, we believe investors should focus on E&Ps that have already crossed the threshold of CF neutral growth, but identify those with visibility to reach neutrality in the next 12 months. With

6、in, we highlight our expectation for 4Q18 and 2019 outlooks for each company in our universe. Our HYPERLINK /s/_Xgva4AN-Ytr5 companion HYPERLINK /s/_Xgva4AN-Ytr5 preview covers sector themes and views for the entire Credit Suisse U.S. E&P universe.The Haves and Have Nots. We see increasing different

7、iation for E&Ps that can still grow while spending within cash flow or generating free cash flow. CLR can generate robust growth and FCF at $50/Bbl, while FANGand PDCE can deliver competitive growth while spending within cash flow at strip prices. Meanwhile, we believe WLL, GPOR, and EQT can show di

8、fferentiated FCF yield while keeping volumes largely flattish 4Q19/4Q18. Of the outspenders in 2019, we see PE, LPI, CPE capable of flipping to a neutral/positive position in 2020, while we project continued cash flow deficits for CDEV, JAG, OAS, SM, AR through at least 2020.Where we are most differ

9、entiated on 2019 outlook. We are generally below consensus on both 2019 capex/production, averaging 2.3% lower on oil volumes & 6% below on capex. We are most differentiated on,XEC: where our 2019 capex is 31% below Street with production 4% below (likely dampened by treatment of REN acquisition). W

10、e expect XEC to meaningfully cut Mid-Con capex and reach CF neutral at $50-55/Bbl, which enables a modest 3% pro forma 4Q19/4Q18 oil growth on our estimates. XOG: we see room for lower D&C capex ($550MM vs. prior guide of $650-700MM) with little impact on production, implying upstream FCF of $40MM o

11、r a 5% FCF yield. PDCE: We see most downside to PDCE oil, at 9% below Street reflecting Delaware slowdown and GOR shift in the DJ basin. Our capex is also 10.5% below consensus. Werealso making minor model adjustments for FANG, OAS, QEP, VNOM, WPX, and FLMN.DISCLOSURE APPENDIX AT THE BACK OF THIS RE

12、PORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: CreditSuisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict o

13、f interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Table of contents HYPERLINK l _bookmark0 Antero Resources (Neutral)6 HYPERLINK l _bookmark1 Callon Petroleum (Outperform)7 HYPERLINK l _bookm

14、ark2 Centennial Resources (Neutral)8 HYPERLINK l _bookmark3 Cimarex Energy (Neutral)9 HYPERLINK l _bookmark4 Continental Resources (Outperform)10 HYPERLINK l _bookmark5 EQT Corp. (Outperform)11 HYPERLINK l _bookmark6 Extraction Oil & Gas (Neutral)12 HYPERLINK l _bookmark7 Diamondback Energy (Restric

15、ted)13 HYPERLINK l _bookmark8 Gulfport Energy (Neutral)14 HYPERLINK l _bookmark9 Jagged Peak Energy (Neutral)15 HYPERLINK l _bookmark10 Laredo Petroleum (Underperform)16 HYPERLINK l _bookmark11 Oasis Petroleum (Neutral)17 HYPERLINK l _bookmark12 Parsley Energy (Outperform)18 HYPERLINK l _bookmark13

16、PDC Energy (Neutral)19 HYPERLINK l _bookmark14 QEP Resources (Neutral)20 HYPERLINK l _bookmark15 SM Energy (Neutral)21 HYPERLINK l _bookmark16 SRC Energy (Neutral)22 HYPERLINK l _bookmark17 Whiting Petroleum (Outperform)23 HYPERLINK l _bookmark18 WPX Energy (Outperform)24CS Estimate SummaryBelow we

17、provide a summary of our estimates versus consensus for 4Q18 and FY2018-20. On the quarter, we are highlighting 2 beats, 5 misses, and the balance providing net neutral updates. Figure 3 includes estimates for 4Q18 and FY18-19 for our 3 RoyaltyCos.Figure 1: SMID Cap E&P Credit Suisse Estimates vs. C

18、onsensus 4Q 2018 ComparisonTickerOur View On TheQuarter4Q EPS4Q CFPS4Q EBITDX4Q Oil Prodn (MBoed)4Q Total Prodn (MBbld)4Q Capex ($MM)CSeCons.CSeCons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.AR*Neutral0.400.45$1.68$1.86$600$601-0.2%2,2262,2130.6%3,1083,0701.

19、2%$428$4162.7%CDEVNeutral60.62165178-7.1%%71.370.31.4%2782606.9%CLRNeutral0.590.692.152.35879944-6.9%180.4181.5-0.6%314.9316.2-0.4%653679-3.9%CPEMiss10.53120130-7.7%31.431.6-0.6%40.140.3-0.5%138151-8.5%EQT*Pre-Released0.680.822.583.02701819-14.4%4,0263,8893.5%4,2834,

20、1423.4%482610-21.1%FANGMiss1.371.723.334.16423500-15.3%117.7120.0-1.9%167.8172.3-2.6%383474-19.2%GPOR*Pre-Released0.520.491.311.26251251-0.1%1,2661,2640.2%1,3931,407-1.0%8097-18.4%JAGNeutral10.51116117-1.6%29.229.00.5%38.437.42.8%1531520.6%LPIMiss50.57151158-4.7%27.828.3-1.7%69

21、.670.1-0.7%122129-5.4%OASNeutral0.020.100.580.71227264-13.9%66.967.3-0.6%88.188.5-0.5%273304-10.0%PDCENeutral0.560.633.363.53242243-0.5%52.453.2-1.5%124.2118.94.4%195214-8.5%PEMiss0.340.370.961.08335370-9.3%%121.1120.90.1%403405-0.5%QEPMiss0.020.040.850.95234266-12.0%63.965.9-3.0%125.6134

22、.0-6.3%2011858.3%SMNeutral(0.10)(0.01)1.751.79237240-1.5%54.953.82.0%129.7127.81.5%2502480.8%SRCIBeat0.380.300.540.561441412.0%%57.657.30.6%174181-4.0%WLLNeutral0.690.573.143.013263260.2%90.390.10.2%135.7134.90.6%154162-5.4%WPXNeutral0.030.070.660.69309333-7.3%94.092.61.5%147.1147.3-0.1%3

23、613435.3%XECNeutral2.001.864.224.25419428-2.0%74.774.70.0%240.2242.7-1.0%4824702.6%XOGBeat0.030.090.900.871791743.0%43.942.72.7%83.780.44.1%2041954.8%Total / Average$6,058 $6,482 -4.7% 1,073 1,074 0.2% 3,419 3,396 0.2% $4,424 $4,552 -2.9% FY2018 Comparison2018 CFPS2018 EBITDX2018 Oil Prodn (MBoed)20

24、18 Total Prodn (MBbld)2018 Capex ($MM)TickerCSeCons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.AR*$5.61$5.64$2,052$2,0231.4%1,9431,9320.5%2,6822,6700.5%$2,232$2,1563.5%CDEV2.252.40669683-1.9%35.034.90.3%61.561.10.6%1,0079812.6%CLR8.949.123,6433,699-1.5%166.51

25、66.7-0.1%295.9296.2-0.1%2,7542,776-0.8%CPE1.921.96427439-2.8%25.425.30.1%32.732.7-0.1%557623-10.6%EQT*11.8511.763,3563,3350.6%3,7923,7580.9%4,0764,0381.0%4,1303,67612.4%FANG13.5915.331,4561,612-9.7%91.091.5-0.6%126.7134.4-5.7%1,5221,622-6.2%GPOR*4.744.69951956-0.5%1,2161,2130.3%1,3601,370-0.7%814827

26、-1.6%JAG1.941.96438441-0.7%26.426.30.5%%686703-2.4%LPI2.242.306075873.5%27.827.80.2%67.967.80.1%623646-3.7%OAS2.633.019721,008-3.6%%82.482.30.1%1,2211,2011.7%PDCE11.9312.20859867-0.8%46.247.7-3.0%109.1105.33.6%885945-6.4%PE4.314.241,3421,366-1.7%69.769.40.4%109.7110.7-0.9%1,748

27、1,761-0.8%QEP3.743.751,0051,034-2.8%65.966.2-0.5%141.9139.22.0%1,1891,1800.7%SM6.776.759379310.7%51.351.00.6%122.0122.3-0.2%1,3181,3090.7%SRCI1.711.934894821.5%22.522.30.9%50.051.1-2.2%5835682.8%WLL12.5011.851,3101,335-1.9%86.786.70.0%129.4129.00.3%733756-3.1%WPX2.252.421,0841,112-2.6%%12

28、4.8126.4-1.3%1,3741,377-0.2%XEC15.4415.831,5421,5300.8%66.466.30.1%219.2223.2-1.8%1,7081,6662.6%XOG3.193.186436154.5%39.539.11.0%75.575.8-0.4%927958-3.3%Total / Average$23,784 $24,054-1.0%9659650.1%3,1363,138-0.3% $26,012 $25,732-0.6%Source: Company data, Credit Suisse estimates, the BLOOMBERG PROFE

29、SSIONAL service*AR, EQT, and GPOR displaying Gas instead of Oil production and Total production in MMcfed instead of MBbld.Notes: Wed also urge caution when looking at FY18 consensus figures, some of which appear not to jive with the average of the individual 2018 quarters.Figure 2: SMID Cap E&P Cre

30、dit Suisse Estimates vs. Consensus (continued) FY2019 Comparison2019 CFPS2019 EBITDX2019 Oil Prodn (MBoed)2019 Total Prodn (MBbld)2019 Capex ($MM)TickerCSeCons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.AR*$4.60$5.19$1,647$2,007-17.9%2,1942,270-3.4%3,1223,207

31、-2.7%$2,232$1,95913.9%CDEV2.002.51606725-16.3%44.946.6-3.6%76.681.5-6.0%942977-3.6%CLR8.859.243,5893,769-4.8%195.6200.7-2.5%335.3344.8-2.8%2,7282,937-7.1%CPE2.202.34515566-9.1%33.633.9-0.8%43.544.2-1.7%6256043.6%EQT*8.709.152,3252,484-6.4%3,8483,878-0.8%4,0954,121-0.6%1,9502,236-12.8%FANG17.8519.073

32、,0323,222-5.9%192.1194.4-1.2%279.7286.6-2.4%2,8672,886-0.7%GPOR4.504.57834899-7.2%1,2481,292-3.4%1,3881,456-4.7%587741-20.9%JAG2.202.21504519-2.8%32.632.21.4%41.941.21.8%7196855.0%LPI1.651.68471514-8.5%27.627.8-1.0%70.770.70.0%440453-2.8%OAS2.953.001,1191,129-0.9%69.570.5-1.5%95.794.90.9%1,1031,136-

33、2.9%PDCE13.6014.829811,073-8.6%55.461.1-9.3%133.0136.3-2.4%870973-10.5%PE4.004.351,3961,430-2.4%83.882.91.0%132.2132.5-0.2%1,4511,464-0.9%QEP2.252.35615744-17.4%47.849.8-4.0%67.772.5-6.5%668750-10.9%SM7.707.991,0251,076-4.7%61.262.8-2.5%138.6140.1-1.0%1,1181,0853.0%SRCI1.902.21521570-8.6%28.328.6-1.

34、0%63.064.8-2.7%502539-7.0%WLL10.8010.941,1431,258-9.1%88.790.7-2.2%136.2136.3-0.1%801816-1.9%WPX2.753.011,2731,521-16.3%94.8100.4-5.6%151.0159.6-5.4%1,1771,344-12.4%XEC14.4516.931,5211,672-9.0%89.893.5-3.9%265.2280.6-5.5%1,3421,949-31.1%XOG3.453.57706737-4.2%44.944.51.1%89.088.21.0%574692-17.0%Total

35、 / Average$23,825 $25,917-8.4%1,1911,220-2.3%3,5543,639-2.2% $22,696 $24,226-6.2% FY2020 Comparison2020 CFPS2020 EBITDX2020 Oil Prodn (MBoed)2020 Total Prodn (MBbld)2020 Capex ($MM)TickerCSeCons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.CSeCons.CSe vs. Cons.AR*$6.10$5.83$2,094$2

36、,131-1.7%2,3812,541-6.3%3,4513,597-4.1%$2,221$2,0697.4%CDEV3.053.559091,024-11.2%53.557.2-6.5%90.499.4-9.1%1,0171,175-13.5%CLR10.5511.164,2264,460-5.2%225.0229.3-1.9%375.2390.4-3.9%3,0303,317-8.7%CPE2.952.93683720-5.1%39.840.0-0.6%50.451.9-2.9%6706581.9%EQT*7.857.742,1592,161-0.1%4,0214,050-0.7%4,26

37、54,277-0.3%1,8122,159-16.1%FANG26.0025.674,3314,337-0.1%233.5231.50.9%338.0334.90.9%3,2483,2410.2%GPOR4.804.97824912-9.7%1,2851,345-4.5%1,4251,502-5.1%579762-24.1%JAG3.002.816786730.8%39.737.84.9%49.948.62.8%7577353.0%LPI1.902.20530665-20.4%26.028.2-7.5%69.873.1-4.6%394520-24.3%OAS3.503.711,2941,307

38、-1.0%73.080.5-9.3%102.8108.8-5.5%1,2031,279-5.9%PDCE17.4519.321,2321,311-6.1%62.169.4-10.6%155.5157.1-1.1%9491,086-12.6%PE5.455.731,8591,8003.3%93.195.8-2.9%149.0153.2-2.7%1,4811,604-7.7%QEP2.753.27723818-11.6%46.352.9-12.6%61.071.5-14.6%759878-13.6%SM10.7011.031,3561,3153.1%70.773.6-4.0%154.3152.11

39、.4%1,2551,12611.4%SRCI2.452.80655697-6.0%32.734.2-4.3%77.376.41.1%6156071.3%WLL13.2012.941,3561,3063.8%93.695.1-1.6%143.3142.90.2%798947-15.8%WPX3.403.831,5471,808-14.5%103.5113.4-8.8%166.1184.6-10.0%1,3611,491-8.7%XEC17.7521.931,8762,226-15.7%98.7110.4-10.6%279.5318.2-12.1%1,6492,160-23.7%XOG4.054.

40、01837915-8.6%49.348.90.9%99.3100.0-0.7%640770-16.9%Total / Average$29,167 $30,586-5.6%1,3401,398-4.5%3,8854,026-3.7% $24,437 $26,584-8.7%Source: Company data, Credit Suisse estimates, the BLOOMBERG PROFESSIONAL service*AR, EQT, and GPOR displaying Gas instead of Oil production and Total production i

41、n MMcfed instead of MBbld.Figure 3: Oil & Gas RoyaltyCo Estimates 4Q 2018 ComparisonTicker 4Q EPSCSeCons. 4Q CFPSCSeCons. 4Q EBITDXCSeCons.CSe vs. Cons. 4Q Oil Prodn (MBoed)CSe vs.CSeCons.Cons. 4Q Total Prodn (MBbld) CSe vs.CSeCons.Cons.FLMN$0.18N/M$0.22N/M$22.5N/MN/M3.43N/MN/M5.98N/MN/MKRP0.09N/M0.

42、42N/M16.0N/MN/M2.13N/MN/M8.77N/MN/MVNOM(0.00)0.270.510.6263.174.0-14.7%13.7013.352.7%19.4619.091.9% FY2018 ComparisonTicker 2018 EPSCSeCons. 2018 CFPSCSeCons. 2018 EBITDXCSe vs.CSeCons.Cons. 2018 Oil Prodn (MBoed) CSe vs.CSeCons.Cons. 2018 Total Prodn (MBbld) CSe vs.CSeCons.Cons.FLMN$0.92N/M$0.32N/M

43、$72.7N/MN/M3.12N/MN/M5.66N/MN/MKRP0.33N/M1.72N/M45.6N/MN/M1.65N/MN/M6.17N/MN/MVNOM1.941.992.182.38261.5270.0-3.1%12.0212.28-2.2%17.0916.980.7% FY2019 ComparisonTicker 2019 EPSCSeCons. 2019 CFPSCSeCons. 2019 EBITDXCSe vs.CSeCons.Cons. 2019 Oil Prodn (MBoed) CSe vs.CSeCons.Cons. 2019 Total Prodn (MBbl

44、d) CSe vs.CSeCons.Cons.FLMN$0.68N/M$0.84N/M$89.7N/MN/M3.76N/MN/M6.73N/MN/MKRP0.37N/M1.54N/M67.4N/MN/M2.60N/MN/M10.13N/MN/MVNOM42.71262.6323.1-18.7%14.8115.42-4.0%21.1221.35-1.1%Source: Company data, Credit Suisse estimates, the BLOOMBERG PROFESSIONAL serviceAntero Resources (Neutral)CSeBb

45、g Cons.CSe vs. Cons.GuidanceKey Considerations4Q18Prodn (MMcfed)3,1083,070+1.2%Gas (MMcfd)2,2262,213+0.6%EBITDX ($MM)$600$601-0.2%EPS$0.40$0.45-11.1%CFPS$1.68$1.86-9.6%Capex ($MM)$428$416+2.7%Gross Completions27We expect no change to recently disclosed outlook, but look for more context around impli

46、cation of a slower long term growthtrajectory. As disclosed in early Jan, AR is now projecting 2019 YoY production growth of 17-20%, and 2020-2023 CAGR of 10-15%. The low- end of the new growth range (reflecting $50/$2.85) is 5%/10%/15%, below prior base case guide for 2019/2020/2021-2022. Growth sl

47、owdown also has wider implications for the Antero complex, given the flow through effect on1) midstream distribution growth; 2) AM midstream entity value as part of 1Q19Prodn (MMcfed)3,0333,130-3.1%Gas (MMcfd)2,1412,233-4.1%EBITDX ($MM)$440$543 -19.0%EPS($0.04)$0.31NMCFPS$1.22$1.47 -17.1%AR upstream

48、 valuation; and 3) excess firm transport cost, which is higher and longer due to lower absolute production, increasing ARs fixed cost structure. To that extent, were listening for AMs messaging on LT distribution growth (have not yet updated its 20% CAGR target) given implications to ARs upstream ca

49、sh flow, and comments on long term marketing expense given lowered growth trajectory.Capex ($MM)Gross Completions$54329$504+7.7% NGL pricing trajectory drives cash flow; Mariner East 2 shouldprovide some uplift. NGL pricing makes-or-breaks the cash flow Full Year 2018generation story. Every $5/Bbl c

50、hange in C3+ NGL pricing is $170MM inProdn (MMcfed)2,6822,670+0.5%2,700revenue for AR, and benchmark Mt. Belvieu has fallen to $24/Bbl currentlyGas (MMcfd)1,9431,932+0.5%1,920from a peak of $50/Bbl just in early Oct. AR guided to C3+ NGL differentialEBITDX ($MM)$2,052$2,023+1.4%of 60-65% WTI, reflec

51、ting the benefit of Mariner East 2 start-up (finally) inEPS$1.11$1.04+7.2%late Dec which enables AR to export 50% of NGL production at a $2-4/BblCFPS$5.61$5.64-0.5%premium to domestic pricing. Despite the recent oil/liquids price bounce, weCapex ($MM)$2,232$2,156+3.5%$2,100estimate the guidance is s

52、till reflecting a $3-5/Bbl improvement fromGross Completions161140-150current strip prices, and for that reason, we still see $180MM of cash flow Full Year 2019deficit in 2019 at strip based on the new outlook.Prodn (MMcfed)3,1223,207-2.7%3,300 Expect AR to remain committed to completion of $600MM b

53、uybackGas (MMcfd)2,1942,270-3.4%EBITDX ($MM)$1,647$2,007-17.9%price of $14.10/share, leaving $470MM remaining on the buybackEPS($0.75)$0.55NMCFPS$4.60$5.19-11.4%next leg of share repurchase will be driven by $300MM of AM proceeds (asCapex ($MM)$2,232$1,959+13.9%$2,125-2,350* part of midstream simpli

54、fication) in 1Q19. The remainder will be completedvia AM proceeds. In 4Q, AR repurchased $129MM of stock at an average announced in October. The 4Q buyback is funded by organic FCF, and the Gross Completions123115-125Source: Company data, Credit Suisse estimates, Bloomberg*Standalone Capex.upon rece

55、ipt of $125MM of water earn-out from AM in early 2020.4Q18 In-line; CSe EPS/CFPS $0.40/$1.68 vs. cons. of $0.45/$1.864Q18 should see meaningful QoQ growth given back-end weighted well schedule, though production will be flattish in 1Q19. Given ARturned in line 73 wells late in 3Q and saw relief from

56、 removal of oil trucking constraints, we forecast 4Q volumes to grow 390 MMcfed QoQ. However, we note that 2019 growth will be back-end weighted similar to 2018 with more muted activity level and flattish volumes in 1Q19. Expect 4Q FCF at the low-end of $150-$200MM forecast range. Strong 4Q gas real

57、izations were able to partly offset weaker liquids pricing. With Rover start-up in Nov, AR increased its exposure to favorably priced Midwest market, which improved its 4Q premium to $0.25-$0.30/MMBtu (as of Dec update) vs. $0.07/MMBtu YTD. This helped to offset lower liquids pricing, and we forecas

58、t AR to generate $157MM of FCF in 4Q. Capex should tick down sequentially as AR drop from 6 to 3 crews, and will be tying in 27 Marcellus wells, vs. 73 in 3Q. 4Q18 E&D capex is expected to be$200-$250MM (vs CSe of $240MM), well below $373MM in 3Q18.Callon Petroleum (Outperform)4Q18CSeBbg Cons.CSe vs

59、. Cons.GuidanceKey ConsiderationsOil (MBbld)31.431.6-0.6%rigs. We expect CPE to release 2019 guidance ahead of the quarter, likelyEBITDX ($MM)$120$130-7.7%at the beginning of Feb. Given the XEC Ward acquisition and a moreEPS$0.21$0.23-12.2%elevated leverage profile, we believe CPE is unlikely to dev

60、iate much fromCFPS$0.51$0.53-3.4%base case program of running 5 rigs in 2019. This means CPE would likelyAnother year of outspend in 2019 before reaching cash flowProdn (MBoed)40.140.3-0.5%40neutrality in 2020; we expect little change from base case plan of 5Capex ($MM)$138$151-8.5%Mid. Net Completi