Antero Resources vs. ConocoPhillips: Time to Bet on Gas Over Oil?

In the energy sector, the fate of almost all the companies is mostly tied to the prices of crude oil and natural gas. However, a billion-dollar question remains: among oil producers and natural gas explorers, which stock is better positioned in today’s business environment? To have a detailed insight, let’s have a comparative analysis of Antero Resources AR, a leading natural gas producer, and ConocoPhillips COP, whose production is primarily weighted toward oil.Global Focus on Clean-Burning Fossil FuelsBurning natural gas produces lower emissions than crude oil and coal while generating an equivalent amount of energy. According to data from the U.S. Energy Information Administration, each million British thermal units (MMBtu) of natural gas results in 117 pounds of carbon dioxide, which is significantly lower than the more than 160 pounds per MMBtu emitted by distillate fuel oil.While companies worldwide are focusing on moving toward renewable energy, natural gas is being used as a transition fuel.Importance of Appalachian Producer Over Lower 48Given the importance of natural gas as a cleaner-burning fuel, companies exploring the gas-rich Appalachian basin will be better placed than those operating in the oil-rich Lower 48, comprising the Eagle Ford in Texas, the Bakken in North Dakota and the Permian Basin.In the prolific Appalachian, the upstream energy players like Antero Resources have premium drilling locations that can survive their current level of production for decades. The companies are also backing the United States’ mounting LNG export volumes.AR’s Appalachian Playbook & COP’s Lower 48 LegacyAntero Resources, a pure-play Appalachian producer, is among the top five natural gas and NGL producers in the United States. With a significantly lower exposure to debt capital, reflected in its total debt-to-capitalization ratio of 17.1%, AR is an investment-grade stock. It is well-positioned to gain from the expanding LNG export market, as roughly 75% of its produced natural gas is being delivered to the export market.Notably, AR has sufficient high-quality drilling locations in the Appalachian Basin to sustain its current production levels for more than two decades, brightening its production outlook. Hence, AR will continue to capitalize on the mounting clean energy demand.ConocoPhillips, on the other hand, is mostly focused on crude oil production, with more than 50% of its production from the Lower 48 comprising oil. In 2024, out of the total production of 1,152 thousand barrels of oil equivalent per day (MBoE/D) in the Lower 48, COP’s crude oil production in that region accounted for 52.3%.COP, with a higher debt-to-capitalization ratio of 27.3%, acquired Marathon Oil in November 2024. The acquisition has broadened COP’s position in the oil-rich Lower 48 and, hence, is responsible for more emissions than AR. Image Source: Zacks Investment ResearchAre Investors Willing to Pay a Premium for AR Over COP?Over the past year, AR has gained 13.3%, outperforming the 29.2% decline of COP.One-Year Price Chart Image Source: Zacks Investment ResearchExamining the valuation story, Antero Resources’ premium valuation suggests that investors are willing to pay a premium for AR over COP. Specifically, AR is trading at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) ratio of 17.40, significantly higher than COP’s 5.31. Image Source: Zacks Investment ResearchHow Do Earnings Forecasts for AR and COP Compare?Antero Resources appears better positioned in terms of earnings momentum. The Zacks Consensus Estimate implies a massive 1,514.3% surge for its 2025 earnings per share (EPS) and a solid 21.5% increase for 2026. Image Source: Zacks Investment ResearchIn contrast, ConocoPhillips is expected to post an earnings decline of nearly 7% in 2025, with only a modest 6.4% rebound in 2026. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Image Source: Zacks Investment ResearchBetween AR & COP, Which Stock Has the Edge?Considering all the factors, it has been a clear fact that AR, being a pure-play investment-grade Appalachian producer, stands out as a stronger investment choice compared to COP. Antero Resources, which has a Zacks Rank #2 (Buy), stands on firmer ground than ConocoPhillips, carrying a Zacks Rank #3 (Hold). 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Click to get this free report ConocoPhillips (COP): Free Stock Analysis Report Antero Resources Corporation (AR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks