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Placing Our U.S. E&P Coverage Under Review

We anticipate lowering our fair value estimates for our U.S. E&P coverage as a result of a strained price environment and lower U.S. production.

Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

We are placing all our U.S. E&P companies under review following the outcome of the March 6 OPEC+ meeting and subsequent WTI price declines. Russia’s refusal to participate in further production cuts and Saudi Arabia’s steep crude discounts have ignited a price war, as the market anticipates a demand shock related to impact of COVID-19 on the global economy. We anticipate lowering our fair value estimates for our U.S. E&P coverage as a result of a strained price environment and lower U.S. production. Our midcycle price estimate remains unchanged (currently $60/bbl Brent, $55/bbl WTI, and $2.80/mcf natural gas).

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About the Author

Dave Meats, CFA

Director
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David Meats, CFA, is director of research, energy and utilities, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Before joining Morningstar in 2014, Meats was an associate analyst for Raymond James. Previously, he worked as a geophysicist for Burren Energy, a London-based exploration and production firm, and Italian multinational oil and gas firm Eni SpA, which acquired Burren in 2008.

Meats holds an undergraduate degree in physics from the University of Nottingham, a master’s degree in petroleum geoscience from Royal Holloway, University of London, and a master’s degree in business administration from the University of Chicago Booth School of Business. He also holds the Chartered Financial Analyst® designation.

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