Oil exploration and production, or E&P, stocks are under pressure on Monday after OPEC failed to reach a deal with its allies regarding production on Friday, causing Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, increasing fears of an all-out price war. Following the news, several Wall Street analysts downgraded E&P stocks, with SunTrust analyst Neal Dingmann citing a potential upcoming “Energy Armageddon” and saying oil prices are set to collapse to potentially the $20s.

POTENTIAL UPCOMING 'ENERGY ARMAGEDDON': In a research note to investors. SunTrust analyst Neal Dingmann said he believes oil prices are set to collapse to potentially the $20s and stay in the range for a moderate period given a price war that started Saturday "when Saudi responded to Russia who Friday balked not only on increasing OPEC+ supply cuts but even extending existing OPEC+ cuts that end in three weeks" along with continued oil demand destruction due to COVID-19. Given the current market conditions, the analyst has taken the "unprecedented steps" of bringing his full coverage group to Hold or Sell even after the recent selloff that puts many of the names already at multi-year lows. Dingmann downgraded:

• Apache (APA) to Hold from Buy;
• Chesapeake (CHK) to Sell from Hold;
• Devon Energy (DVN) to Hold from Buy;
• Ovintiv (OVV) to Sell from Hold;
• EOG Resources (EOG) to Hold from Buy;
• Marathon Oil (MRO) to Hold from Buy;
• Occidental Petroleum (OXY) to Sell from Hold;
• Centennial Resource (CDEV) to Sell from Hold;
• Callon Petroleum (CPE) to Hold from Buy;
• Earthstone Energy (ESTE) to Hold from Buy;
• Diamondback Energy (FANG) to Hold from Buy;
• Matador (MTDR) to Hold from Buy;
• Parsley Energy (PE) to Hold from Buy;
• Pioneer Natural (PXD) to Sell from Hold;
• Ring Energy (REI) to Hold from Buy;
• Rosehill Resources (ROSE) to Hold from Buy;
• WPX Energy (WPX) to Hold from Buy;
• Cimarex Energy (XEC) to Hold from Buy;
• Continental Resources (CLR) to Hold from Buy;
• Enerplus (ERF) to Hold from Buy;
• Northern Oil & Gas (NOG) to Hold from Buy;
• Whiting Petroleum (WLL) to Hold from Buy;
• Magnolia Oil & Gas (MGY) to Hold from Buy.

STIFEL CUTS E&P STOCKS RATINGS: Stifel analyst Michael Scialla also downgraded several E&P stocks, citing an impending oil price war after Russia’s refusal to join the most recent OPEC+ production proposal prompted Saudi Arabia to slash prices. The analyst downgraded:

• Cimarex Energy to Hold from Buy;
• W&T Offshore (WTI) to Hold from Buy;
• SM Energy (SM) to Hold from Buy;
• Rosehill Resources to Hold from Buy;
• PDC Energy (PDCE) to Hold from Buy;
• Noble Energy (NBL) to Hold from Buy;
• Matador to Hold from Buy;
• EOG Resources to Hold from Buy;
• Bonanza Creek (BCEI) to Hold from Buy;
• Abraxas Petroleum (AXAS) to Hold from Buy;
• Apache to Hold from Buy.

BOFA DOWNGRADES SEVERAL OIL NAMES, UPS TC ENERGY: With the oil path now expected to be worse than previously anticipated given the blow-up between Sandi Arabia and Russia, BofA analyst Asit Sen downgraded:

• Ovintiv to Neutral from Buy;
• Callon Petroleum to Neutral from Buy;
• PDC Energy to Neutral from Buy;
• Vermilion Energy (VET) to Neutral from Buy.

Meanwhile, he has added TC Energy (TRP) to his list of defensive names based on its low 2020 earnings risk and upgraded the units to Buy from Neutral with an increased price target of C$80, up from C$76.

Meanwhile, BofA analyst Chase Mulvehill downgraded:

• Halliburton (HAL) to Neutral from Buy; 
• Schlumberger (SLB) to Neutral from Buy;
• Helmerich & Payne (HP) to Underperform from Neutral;
• Helix Energy (HLX) to Neutral from Buy;
• Core Laboratories (CLB) to Underperform from Buy;
• Forum Energy (FET) to Underperform from Neutral;
• Cactus (WHD) to Underperform from Neutral.

BAIRD DOWNGRADES ENERGY STOCKS: In a surprise move, the Saudis over the weekend moved to punish Russia and U.S. oil producers, exacerbating faltering demand from the coronavirus outbreak, Baird analyst Ethan Bellamy tells investors. Rather than defending oil prices, Saudi Arabia plans to ramp production to 10 MMbpd to win back market share, the analyst points out, adding that as a result, he raised hurdle rates and cut applied valuation multiples. The analyst sees 16%-26% downside from current levels of the Alerian Midstream Energy Index (AMNA). Bellamy downgraded:

• Antero Midstream (AM) to Neutral from Outperform;
• EnLink Midstream (ENLC) to Neutral from Outperform;
• Energy Transfer LP (ET) to Neutral from Outperform;
• Oneok (OKE) to Neutral from Outperform;
• Plains All American (PAA) to Neutral from Outperform;
• Plains GP Holdings (PAGP) to Neutral from Outperform;
• Tellurian (TELL) to Neutral from Outperform;
• Targa Resources (TRGP) to Neutral from Outperform.

PIPER DOWNGRADES ON OIL PRICE UNCERTAINTY: Piper Sandler analyst Kashy Harrison also downgraded several E&P names due to the uncertainty surrounding oil prices. At some point, there will be buying opportunities for E&Ps, but investors are likely to "shoot first and ask questions later when oil ultimately finds a bottom," Harrison told investors in a research note. The analyst downgraded:

• Berry Petroleum (BRY) to Neutral from Overweight;
• Centennial Resource to Underweight from Neutral;
• Chesapeake to Underweight from Neutral;
• Callon Petroleum to Neutral from Overweight;
• Gulfport Energy (GPOR) to Underweight from Neutral;
• Magnolia Oil & Gas to Neutral from Overweight;
• Parsley Energy to Neutral from Overweight;
• QEP Resources (QEP) to Neutral from Overweight;
• Whiting Petroleum to Underweight from Neutral;
• WPX Energy to Neutral from Overweight.

PRICE ACTION: Most E&P stocks are lower in morning trading, with Apache, Marathon Oil, WPX Energy and Earthstone Energy plunging over 41%; Ovintiv sliding almost 50%; Centennial Resource, Matador and Callon Petroleum dropping over 60%; and Diamondback Energy plunging about 45%.