Marathon Oil, Pioneer Natural raised to Buy at Citi as capital efficiency improves
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Marathon Oil (NYSE:MRO) and Pioneer Natural Resources (NYSE:PXD) are upgraded to Buy from Neutral with respective $27 and $210 price targets at Citi, which said investors should "focus on catalysts and quality" in the E&P group.
The commodity price outlook remains uncertain given the macro backdrop, but well costs appear ready to moderate, and a few select E&P names are targeting well productivity improvements, according to Citi analyst Scott Gruber.
Marathon Oil (MRO) offers catalysts given the re-frac opportunity in the Eagle Ford and improving international gas exposure, where Gruber expects upside to the forward curve, while Pioneer Natural (PXD) should also experience rising well productivity in H2 2023. 
Conversely, Gruber downgraded Ovintiv (NYSE:OVV) to Neutral from Buy with a $38 price target, saying the company remains modestly levered, has greater domestic gas exposure and a higher cost structure.
Citi said its top E&P picks include Diamondback Energy (FANG) and EOG Resources (EOG) in addition to Marathon Oil (MRO) and Pioneer Natural (PXD).
Marathon Oil (MRO) remains focused on returning capital to shareholders, and 2023 will see at least $1.8B returned to shareholders if WTI prices average $80, Michael Wiggins de Oliveira writes in an analysis published recently on Seeking Alpha.