Middle East conflict affects energy supply: Benchmark revises valuation logic, upgrades Antero (AR.US) rating to "buy"

Investment bank Benchmark has upgraded its rating on Antero Resources (AR.US) from "hold" to "buy", with a target price set at $44. The bank stated that due to strong supply leading to a fall in natural gas prices from multi-year highs, the stock has significantly underperformed compared to other oil and gas producers. Benchmark analyst Subhash Chandras did not assert that the natural gas prices have bottomed out, but his outlook on natural gas exporters is increasingly optimistic. He pointed out that the United States is the third largest propane exporter in the world after Qatar and the United Arab Emirates, and with those two countries currently in war zones, US exporters should benefit from the Iran conflict as a stable supply source. Chandras noted that while the proportion of liquefied petroleum gas (NGL) in Antero's business has decreased after the acquisition of HG Energy II, the company remains the largest publicly traded NGL exporter. He added that with Antero having a path to the liquefied natural gas (LNG) corridor, its dry gas business should be able to achieve a lower breakeven cost without sacrificing the basis differential. Furthermore, Chandras downgraded the rating on Talos Energy (TALO.US) from "buy" to "hold". Despite a strong performance in 2025, its guidance for the 2026 fiscal year was weaker than expected. He pointed out that while the drilling plan for 2026 is "energetic and significant", there are still cyclical challenges facing the underlying production. For valuation reasons, the analyst also downgraded the ratings of Diamondback Energy (FANG.US) and Permian Resources (PR.US) from "buy" to "hold".