FANG - BofA's shale picks look to 'less bad' second half recovery into 2022

BofA is looking for a "less bad" second half in energy stocks - following a very rough first half - and overall, it sees signs of nearing a cyclical bottom. The industry is past trough earnings as well, and while near-term headwinds are sticking around, it's forecasting a solid recovery going into 2022, "supported by global oil/product stockpile normalization throughout next year, as recovery demand exceeds supply." Volumes and EBITDA margins will stabilize or improve in the coming quarters, BofA says, and even energy transition is expected to have "minimal" impact on oil demand in the coming decade. And "painful" volatility in the first half has forced the exploration/production industry to "reset" with a renewed focus on three critical areas: minimize balance sheet degradation; define stay-flat capex scenarios; and provide dividend/free cash flow visibility. While the shale sector is off its March lows, BofA says sustained outperformance will depend on

For further details see:

BofA's shale picks look to 'less bad' second half, recovery into 2022