2023-03-23 15:34:58 ET
Marathon Oil ( NYSE: MRO ) and Pioneer Natural Resources ( NYSE: PXD ) are upgraded to Buy from Neutral with respective $27 and $210 price targets at Citi, which said investors should "focus on catalysts and quality" in the E&P group.
The commodity price outlook remains uncertain given the macro backdrop, but well costs appear ready to moderate, and a few select E&P names are targeting well productivity improvements, according to Citi analyst Scott Gruber.
Marathon Oil ( MRO ) offers catalysts given the re-frac opportunity in the Eagle Ford and improving international gas exposure, where Gruber expects upside to the forward curve, while Pioneer Natural ( PXD ) should also experience rising well productivity in H2 2023.
Conversely, Gruber downgraded Ovintiv ( NYSE: OVV ) to Neutral from Buy with a $38 price target, saying the company remains modestly levered, has greater domestic gas exposure and a higher cost structure.
Citi said its top E&P picks include Diamondback Energy ( FANG ) and EOG Resources ( EOG ) in addition to Marathon Oil ( MRO ) and Pioneer Natural ( PXD ).
Marathon Oil ( MRO ) remains focused on returning capital to shareholders, and 2023 will see at least $1.8B returned to shareholders if WTI prices average $80, Michael Wiggins de Oliveira writes in an analysis published recently on Seeking Alpha .
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Marathon Oil, Pioneer Natural raised to Buy at Citi as capital efficiency improves