North American E&Ps Boost Exploration, Power Deals as 2027 Plans Take Shape, UBS Says
North American exploration and production companies are stepping up exploration and power investments while reducing debt and preparing for higher shareholder returns, UBS said in a Wednesday note.Liberty Energy (LBRT) expects to sign more than 500 megawatts of power agreements by year-end 2026, with discussions underway with multiple data centers, hyperscalers and industrial users.The company said partnerships with PowerBridge and SLB (SLB) could provide one-stop solutions for potential customers, while project financing could take three to six months after an energy services agreement.Frac pricing continues to improve at Liberty Energy, although oil price volatility leaves the outlook for activity growth uncertain, according to UBS.APA (APA) plans to increase its exploration budget to $250 million to $300 million next year from less than $100 million this year, with a focus on Alaska, Suriname and Uruguay, the note said.Permian efficiency gains continue to emerge at APA, while gas development in Egypt is growing, and shareholder returns are set to increase in the second half of 2026 after the company reduced debt by about $750 million in the first half.Antero Resources (AR) remains on track to reach 4.5 billion cubic feet equivalent per day by year-end 2026 and expects average production of 4.6 Bcfe/d in 2027, UBS said.Antero's margin improvement is underway, with further upside beyond the $300 million outlined through year-end 2028 and confidence in securing additional gas supply agreements, the note added.SM Energy (SM) is nearing a leverage level in the low-1x range that would allow it to ramp up shareholder returns, executives said, as debt reduction and operational gains continue across its four core assets.SM Energy also aims to reduce debt to below about $5 billion and remains confident in its H2 2026 oil outlook. Management sees further savings in lease operating expenses and general and administrative expenses once cost benefits from the Civitas Resources (CIVI) merger are fully realized.Private E&Ps also highlighted growth opportunities across the Anadarko, Bakken, and Powder River Basin, with Anadarko M&A interest remaining strong, and operators citing strong well performance, low decline rates, and excess gas pipeline capacity.The private Bakken producer has expanded into three- and four-mile lateral development, while the private Rockies E&P sees growth potential in the Powder River Basin despite limited development from public E&Ps, UBS said.Price: $19.42, Change: $-0.73, Percent Change: -3.60%
