Exxon, ConocoPhillips are top energy picks at Wells Fargo

|About: ConocoPhillips (COP)|By:, SA News Editor

Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) make the grade as the Top Picks among E&P stocks at Wells Fargo, while Occidental Petroleum (NYSE:OXY) remains Buy rated but is pulled as a Top Pick.

Wells raises its valuation range for XOM to $89-$98, citing the company's large size and capitalization as assets that will help at a time of capital constraints in the sector.

COP is “not out of the woods,” as Wells estimates it will outspend cash flows this year and likely will be hit by credit downgrades, but the firm sees a “clear path” to generate free cash flow in 2017.

OXY is up more than 20% in the past month, so it is off the Top Pick list due to valuation.

Wells also sees an equity capital raise as an increasingly likely outcome for Marathon Oil (NYSE:MRO) and possibly for Murphy Oil (NYSE:MUR) after last week’s credit rating downgrade by Moody’s.