Gas producers Antero, EQT, Range, Expand Energy cut at Roth as gas oversupply returns

Several natural gas companies, including Antero Resources and EQT, saw significant stock declines after Roth Capital downgraded their ratings to Neutral due to concerns about a returning oversupply in the market projected to last until 2026.

Analyst Leo Mariani indicated that Henry Hub natural gas prices are expected to struggle due to excessive supply, which has been exacerbated by increased production levels and rising domestic storage exceeding the five-year average.

Mariani has set lower price targets for the downgraded stocks and anticipates an average Henry Hub gas price of around $3.25 per MMBtu for 2026, reflecting a bearish outlook on the sector's recovery potential.

He advises investors to explore more defensive options, suggesting companies like ConocoPhillips and Matador Resources as better fits to navigate the current oversupply conditions in the natural gas market.

Natural Gas Stocks Rating Update: Downgrades Reflect Oversupply Concerns

In recent trading, several natural gas companies experienced notable declines: Antero Resources (NYSE:AR) fell by 5.8%, EQT (NYSE:EQT) by 5.1%, Range Resources (NYSE:RRC) by 4%, and Expand Energy (NASDAQ:EXE) by 2.1%. These drops follow Roth Capital's decision to downgrade their ratings from Buy to Neutral, citing a return of gas oversupply that is anticipated to persist until 2026.

Roth analyst Leo Mariani highlighted that Henry Hub natural gas prices are likely to face ongoing challenges through 2026 due to excessive supply in the market. He stressed that despite a relatively favorable growth environment for domestic demand, the natural gas sector appears not to have absorbed critical lessons from past oversupply situations. "Supply ruins the party," Mariani stated. He expressed skepticism about any significant recovery in gas prices until production growth is effectively curtailed, predicting that CME futures prices for 2026—estimated at around $3.85 per MMBtu—are overly optimistic.

The re-emergence of oversupply has negatively impacted U.S. natural gas markets. In the past month, producers have significantly increased output from spring levels of 106B-108B cubic feet per day (cf/day) to 109B-110B cf/day. This surge in production has shifted the market from a state of reasonable tightness to one of oversupply. Compounding this issue, domestic gas storage now exceeds the five-year average by 196B cf, a surplus that is expected to widen as the industry heads into the shoulder season.

As a result of these factors, Mariani has downgraded the ratings of Antero Resources, EQT, Range Resources, and Expand Energy to Neutral. Additionally, he lowered Comstock (CRK) to a Sell rating, with corresponding price targets set at $32, $57, $35, $98, and $12 for each stock, respectively. He projects an average Henry Hub gas price of approximately $3.25 per MMBtu for 2026, indicating weaker conditions than previously expected.

Mariani recommends investors consider more defensive exploration and production stocks, including ConocoPhillips (COP), California Resources (CRC), Conterra Energy (CTRA), Magnolia Oil and Gas (MGY), Matador Resources (MTDR), and Permian Resources (PR) to navigate the current market scenario more effectively.