You've seen it here first! I received a research note in my inbox today saying that for oil and gas prices, and thus for energy equities, the worst may be over. So says Ben Dell, analyst with Bernstein. This is the first major analyst report I have come across that may be calling the bottom. "We believe the worst may now be behind us in energy," says Dell. "Oil and gas prices are now trading at the cash cost and while near term fundamentals may deteriorate further, it appears there is limited additional downside risk to the equities.

  • We are upgrading the group and now recommend adding beta as the year progresses to take advantage of any rebound in pricing. Specifically we are upgrading TLM, CHK, RIG, ESV, NE and RDC. At the same time, we are downgrading XOM and OXY due to valuation.
  • Our top picks in the E&P/Driller & Service space are now XTO, APC, NFX, EOG, ECA, HAL, NBR, RIG, CHK, TLM, PTEN, DVN and APA (all rated outperform). In the Majors, we continue to recommend an outperform stance on MRO, TOT and ENI."
--Leslie Haines, Editor in Chief, Oil and Gas Investor, lhaines@hartenergy.com