Global energy crisis: Should you hold onto energy stocks without letting go?

Inflation continues to rise, interest rates remain elevated, and stock markets are falling—we are entering a more volatile period. Dubravko Lakos-Bujas, Global Head of Equity Macro Research at JPMorgan, stated that, from a macro perspective, the current energy crisis—Europe’s natural gas shortage, globally high oil prices, and declining global production—has created an ideal entry point for energy stocks. Lakos-Bujas believes the energy crisis remains unresolved, meaning the energy sector is still at its investment ‘sweet spot’: valuations are extremely attractive, fundamentals are solid, and company quality has improved markedly. The sector should deliver strong relative growth, rising capital gains under very cheap valuations, and continued strengthening of balance sheets. Energy companies’ revenues will keep growing while sustaining high profit margins. Based on this assessment, JPMorgan’s equity analysts have drawn a logical conclusion: the time to buy energy stocks has arrived. For instance, consider the following two energy stocks. SM Energy Co (NYSE: SM) Headquartered in Denver, SM Energy is an oil and gas exploration and production company focused on two core regions: the Midland Basin in West Texas (with three drilling rigs) and the Maverick Basin in South Texas (with two drilling rigs). In Q2 2022, the company’s total production amounted to 13.3 million barrels of oil equivalent (BOE), or 146,600 BOE per day—46% of which was crude oil, with the remainder consisting of natural gas and natural gas liquids. Quarterly revenue surged 76% year-on-year to $992 million; net income totaled $323.5 million, or $2.19 per diluted share—up sharply from just $0.01 per share in the same period last year. Operating cash flow stood at $542.6 million, and free cash flow at $276.6 million. JPMorgan analyst Zach Parham noted that SM Energy’s best days are just beginning, with operations thriving—and added that the company’s 2023 capital efficiency is currently underestimated.

SM Energy and Northern Oil and Gas agree to acquire Uinta Basin assets for approximately $2.6 billion.

SM Energy announced on Thursday that it will pay a net $2.04 billion to acquire an 80% stake in the assets, currently owned by XCL Resources. Northern Oil and Gas will pay $510 million for a 20% interest. This shale oil acquisition comes as well-capitalized U.S. oil and gas companies continue consolidating the industry while also seeking to refresh their drilling inventories. The latest deal also marks another major exit by private equity investors from an energy company. XCL Resources is backed by EnCap Investments LP and Rice Investment Group. Earlier this month, another EnCap portfolio company agreed to sell its Permian Basin assets to Matador Resources for $1.9 billion. Sources said this week that Warburg Pincus—the acquiring firm—is seeking a buyer for oil and gas explorer Citizen Energy, with the deal potentially valued near $2.5 billion. Sources also indicated this week that private equity firm Quantum Capital Group has agreed to acquire Caerus Oil and Gas from a group of investors—a relatively rare example of a so-called ‘secondary acquisition’ in the U.S. oil and gas sector.

SM Energy may shift drilling in early 2027 amid Uinta Basin constraints

19 hours ago

SM Energy may shift drilling from Utah's Uinta Basin in early 2027 due to persistent takeaway capacity constraints. The company lowered its full-year oil-production forecast and narrowed capital spending after production dipped due to logistics issues.

reuters

2026-11-04

SM Energy may shift drilling in early 2027 amid Uinta Basin constraints

SM Energy may shift drilling in early 2027 amid Uinta Basin constraints

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