- The biggest threat to the rally in oil stocks might be more production from E&P companies drilling in the U.S. shale, Credit Suisse analysts say.
- A clear benefit of the price cycle has been the vastly improved efficiency and productivity of shale, but shale "may ultimately be too productive as WTI approaches $70/bbl," the firm says as it lowers its long-term WTI forecast to $62.50/bbl from $67.50.
- Credit Suisse says names that continue to demonstrate resource improvement at the low-end of the cost curve, namely in the Permian and STACK plays, remain attractive, such as Concho Resources (NYSE:CXO), Devon Energy (NYSE:DVN), Newfield Exploration (NYSE:NFX) and Pioneer Natural Resources (NYSE:PXD).
- The firm downgrades Carrizo Oil & Gas (NASDAQ:CRZO) and Sanchez Energy (NYSE:SN) to Neutral from Outperform, and Laredo Petroleum (NYSE:LPI) to Underperform from Neutral, following relative outperformance vs. peers.