At the Scotia Howard Weil investor symposium in March 2018, held a year and a half ago as investor support faltered, E&P CEOs in succession pounded the podium defiantly defending their shareholder value and new promises of free cash flow over growth. Today, those same E&Ps are meticulously, painfully and humbly metamorphosing from ravenous, capital-consuming caterpillars to value-oriented, cash-flowing butterflies. The lingering question: Will that be enough to catch the eyes of those investors once again?
More needs to be done, claim sell-side analysts.
Simmons Energy analyst Ryan Todd laments that a large and growing number of investors have lost faith that the E&P sector can outperform in a $50 to $55 WTI world, despite the firm’s prediction of a 3% free-cash-flow yield for its covered companies at $55. It “just isn’t compelling enough to get generalists off the sidelines,” he said in an Oct. 11 report. “Things are heading in the right direction, but it is a LONG and brutal slog with a ways to go.”