Australia Oil & Gas Exploration and Production: Upstream equity risk appetites remain supportive suggesting value upside

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Australia Oil & Gas Exploration and Production: Upstream equity risk appetites remain supportive suggesting value upside

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07 Jul 2026 11:43:29 ET │ 40 pages

Australia Oil & Gas Exploration and

Production

Upstream equity risk appetites remain supportive suggesting value

upside Tom Wallington AC +61-282-254-326

tom.wallington@citi.com

CITI'S TAKE

Sumeet Ozarde

With oil prices retracing and softer market fundamentals reasserting sumeet.ozarde@citi.com

themselves, we assess risk appetite across our upstream coverage and

preview the upcoming JunQ updates across the sector. While Citi’s Global

Commodities team continues to expect commodity prices below current

strip, we believe that high-value growth opportunities, energy security

tailwinds, a more supportive permitting environment, an improving LNG

contracting environment, and a lower cost of equity offset near-term

earnings headwinds. This is supported by our priority risk appetite model

which shows XEJ entering positive territory (Figure 8). In this note, we

preview the upstream coverage quarterlies (details within) and review key

watch points ahead of upcoming HY/FY results. We revise TPs across the

sector and maintain recommendations.

Commodity prices supportive but full extent of ME price uplift unlikely to be fully

realised in JunQ — June quarter updates should benefit from stronger realised

prices v MarQ; however, the full impact of the recent Middle East-driven oil price

spike is unlikely to be fully reflected due to contract lags. As Dated Brent and Dubai

benchmarks continue to soften into contango territory, bearish market sentiment

has once again become dominant. Citi maintains its Brent price forecast of

$75/70/bbl for 3Q/4Q. In gas markets, we see JKM prices falling sub $10/mmbtu by