Berenberg sees lower Q2 earnings, FCF decline for oil & gas firms
** Berenberg sees weaker downstream and gas trading likely to weigh on oil & gas companies' Q2 earnings and the recovering capex to adversely affect free cash flow (FCF)
** It sees lower production due to seasonal maintenance, smaller liquefied natural gas (LNG) and European gas trading profits, and lower refining profitability to likely to result in lower Q2 results
** However, the brokerage expects shareholder returns to remain quite steady through Q2, with the larger integrated companies maintaining the same buybacks as for Q1
** The broker notes the wide performance dispersion in the sector, adding that stock-picking remains more important than sector allocation
** Shell SHEL.L and TotalEnergies TTEF.PA (both "buy"-rated) remain Berenberg's preferred stocks in the sector
** It expects another strong cash generation quarter for Shell and sees TotalEnergies positioned ahead of peers in energy transition
** It also maintains "buy" rating on Neste NESTE.HE
** Berenberg keeps "hold" on BP BP.L, Eni ENI.MI, OMV OMVV.VI and Repsol REP.MC, as well as "sell" on Equinor EQNR.OL
Reporting by Marta Frackowiak
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