EU Oil & Gas: Updating 2Q estimates for TS learnings

研报英文原文证据摘录

EU Oil & Gas: Updating 2Q estimates for TS learnings

Matthew Lofting, CFA AC Europe Equity Research

(44-20) 7134-6301 13 July 2026 J P M O R G A N

matthew.lofting@jpmorgan.com

Investment Thesis, Valuation and Risks

Shell PLC (Overweight; Price Target: 3,600p)

Investment Thesis

Shell is a structural OW and we highlight: 1) Premium gearing to O&G macro volatility

and price. Shell’s portfolio offers top-quartile headline leverage to oil prices amongst EU

oil with a superior global reach (a ~3x longer energy sales > production portfolio set-up) and

advantaged LNG (an advantaged #1 player); 2) An accelerating self-help sprint... through

1% CAGR in upstream production to 2030, portfolio optimisation/rationalisation in

Chemicals and a $5-7bn structural cost-reduction programme by 2028; 3)...translates into

global supermajors superior FCF profile. At $85bbl we model a 2026e FCF yield of

around 12%, while the FCF/EV metric favours Shell over BP more markedly in a UK

context owing to the latter’s higher financial gearing. 4) Cash return and competitive

breakeven. Around 10% forward cash yields with the company building a track record of

distributing more than $3bn buyback per quarter, underpinned by committed cash

breakeven post capex/divs at <$50.

Valuation

Our Jun-27 PT is GBp 3,600. Our price target is set as an equal-weighted blend of SOTP and

2027E PER. Our SOTP is based on LT $65/bbl Brent and we apply a 15% fair value discount.

On multiples, we target a 15% sector discount to an EU mkt 2027 forward median PER

14.0x; from this, we adjust for Shell's historical premium/discount to the sector which gives

a target 10.7x on 2027E EPS at $75/bbl Brent.

Risks to Rating and Price Target

Macro risks – The main generic risks, both to the upside and downside, come from crude