Natural gas has been in focus with energy prices poised to climb on summer demand.

The 2024 estimate for natural gas production has been lowered by around 1.3 billion cubic feet per day (Bcf/d) to 102.7 Bcf/d, with production volumes expected to decline to exit the year at 101.8 Bcf/d, according to JPMorgan.

The Natural Gas Rating Changes: Analyst Arun Jayaram upgraded the rating for Antero Resources Corp (NYSE:AR) from Neutral to Overweight, while raising the price target from $27 to $30. The rating for EQT Corp (NYSE:EQT) was cut from Overweight to Neutral while the price target was lowered from $39 to $37.

The Antero Resources Thesis: The company was positioned as the "go-to name" in an elevated pricing environment for natural gas and natural gas liquids (NGLs), "given its low gas price breakeven and ultra-light hedgebook, as the company remains nearly unhedged in 2024+ on natural gas and liquids," Jayaram said in the note.

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He added that Antero Resources has leverage to the expected improvement in natural gas fundamentals in 2025.

The EQT Thesis: The company recently announced a $5.4 billion merger with Equitrans Midstream Corp (NYSE:ETRN), which includes the assumption of around $7.5 billion of debt, Jayaram stated.

The acquisition reflected management's desire to lower EQT's "permanent cost structure in a macro setting that could experience higher levels of volatility," the analyst wrote. He added, however, that the deal could "push any cash return to shareholders (such as buybacks) to the right until the company reaches its ~$7.5 B long-term debt target."

Jayaram also believed the timing of this deal could exert pressure on the stock, "given the typical volatility and noise that accompanies large-scale M&A."

AR, EQT Price Action: At market close Wednesday, shares of Antero Resources were up 2.42% at $26.69, EQT up 0.77% at $33.82 and Equitrans Midstream up 1.71% at $11.31.

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