Dec 5, 2022

McFranki/iStock via Getty Images Murphy Oil (NYSE: MUR ) is upgraded to Overweight from Neutral and Callon Petroleum is raised to Neutral from Underweight at J.P. Morgan, but both trade lower Monday as crude oil futures fall after stronger than expected U.S. service sector data sparks renewed fears that the Federal Reserve will maintain its policy of aggressive interest rates hikes. JPM analysts led by Arun Jayaram believe oil companies with conventional assets could benefit in a macro environment with execution and inventory related concerns for U.S. shale operators, a strength for Murphy Oil ( MUR ), which should benefit from a stable production profile from its recently completed King's Quay facility in the Gulf of Mexico. For 2023, JPM models Murphy's ( MUR ) oil production growth of 14%, which would result in EBITDA growth of 3% and adjusted free cash flow growth of 15% Y/Y. Callon Petroleum (NYSE: CPE ) shares have sharply underperformed the broader oil and gas E&P sector, likely driven by the lack of a cash return program, which should be abated in 2023, and a cycle of negative estimate revisions, which JPM says has mostly played out. JPM also downgraded Laredo Petroleum ( LPI ) to Underweight from Neutral and removed Overweight-rated EQT ( EQT ) from its Analyst Focus List after the stock's strong recent gains. Murphy Oil ( MUR ) management "has some attractive offshore exploration targets planned," and its balance sheet is already strong with more debt being repaid, Long Player writes in an analysis posted recently on Seeking Alpha . Recommended For You