Energy: Refreshing Estimates & Revisiting Sensitivities

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Energy: Refreshing Estimates & Revisiting Sensitivities

Idea

May 21, 2026 10:25 AM GMT

Morgan Stanley & Co. LLCMEnergy | North America Devin McDermott

Equity Analyst and Commodities Strategist

Refreshing Estimates & Devin.McDermott@morganstanley.comJoe Laetsch, CFA +1 212 761-1125

Equity Analyst

Joe.Laetsch@morganstanley.com +1 212 761-8804

Revisiting Sensitivities Svetlana Do

Research Associate

Svetlana.DO@morganstanley.com +1 212 761-2409

We refresh ests for 1Q, latest '26 guides and oil price strip as of Helen Lin

5/20. Our '26 oil prod'n for oil E&Ps +0.6% on avg with most ResearchHelen.Lin@morganstanley.comAssociate +1 212 761-0766

spending plans unchanged. We see post-conflict value and Justin W Latran, CFA

would opportunistically add exposure to Majors & high-quality ResearchJustin.Latran@morganstanley.comAssociate +1 212 761-2869

E&Ps on de-escalation pullbacks. Jacqueline M Kenny

Jacqueline.Kenny@morganstanley.com +1 212 761-2253

Key Takeaways

Exploration & Production

With 1Q results, most left '26 activity & spending unchanged (except for FANG, North America

Industry View In-Line

COP, PR), some slightly raised volume guides at similar capex due to efficiencies.

Integrated Oil

FY26 oil prod'n for oil E&Ps rises by 0.6% on average (near consensus). Guidance North America

Industry View Attractive

implies ~40 kb/d exit-exit US shale growth for E&Ps (~180 kb/d incl. majors).

See our price target changes in Exhibit 12

We estimate a median 2026 FCF yield of 15% for our oil E&P coverage at latest

strip (full-year average ~$88 WTI) and 9% for gas E&Ps (~$3.67 HH).

Oil producers are pricing in long-run WTI of ~$70, ~16% below the 12-month

strip. Gas E&Ps reflect ~$3.50 Henry Hub, near the forward curve.