TPH Energy Research said Monday that it expects its gas coverage to end 2024 "on solid footing", with its average US name in coverage up near 38% year to date.
According to TPH, gas equities have been a top subsector pick this year, and it expects the trend to continue into 2025 as storage normalizes to the 5-year average and the market flips into undersupply heading into 2026 putting upward pressure on strip.
So far, TPH said, investors have mostly focused on gaining exposure through gassy pure play equities in the space but, as commodity prices move higher [TPH estimates $4/mmbtu in the second half of 2025 and beyond], it suspects clients may broaden the net looking for oily names that have cashflow leverage to an improving gas strip. In TPH's large cap coverage, Devon Energy (DVN) takes the crown as it sees a near 2.5% improvement in cash flow for a 50c change in 2025 gas price on the company's near 1.35bcf/d (TPHe 2025 volumes) gas production base.
Among the mid-cap companies, especially following the recent Montney transaction, TPH said Ovintiv (OVV.TO) should see the biggest move, with a 50c improvement in gas on the near 1.65bcf/d gas base improving cash flow by about 7%.
Ovintiv's share price was up 1.9% at last look to $56.85 on the TSX.
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