Mizuho has laid out a roster of oil and gas companies it views as well positioned for a market recovery in the latter half of 2026, even as near-term headwinds from oil oversupply and elevated natural gas storage weigh on the sector.
The bank expects oil markets to find a bottom in early 2026. Its thesis rests on limited supply growth outside of OPEC and continued production restraint from OPEC+, which together are projected to support a move back to mid-cycle pricing by the second half of the year.
On the gas side, Mizuho sees demand expansion linked to liquefied natural gas (LNG), power generation and infrastructure buildout outpacing supply increases. The bank characterizes the outlook as structurally undersupplied for natural gas, even though production levels are higher than in prior periods.
In contrast to oil and gas, Mizuho expects refining fundamentals to be less compelling beyond early 2026, as new refining capacity additions act to normalize crack spreads.
Preferred sector characteristics
Mizuho says its preference is for oil-weighted exploration and production companies that combine sizable inventories with flexible balance sheets. For names with significant gas exposure, the bank advises selectivity rather than broad endorsement.
Company-level highlights cited by Mizuho
- ConocoPhillips (COP) - Mizuho highlights ConocoPhillips among its top sector picks as the market positions for a recovery. The stock has seen recent analyst and market attention: it was added to Goldman Sachs' conviction list, downgraded to Neutral by Roth/MKM and is reportedly exploring divestiture of certain Permian Basin assets valued at about $2 billion.
- Coterra Energy (CTRA) - Coterra appears on Mizuho's preferred list. The company reported fourth-quarter revenue of $1.96 billion, which topped estimates, while its adjusted earnings per share missed expectations. The company also received a price target increase from Raymond James and a downgrade to Hold from Texas Capital Securities.
- Permian Resources (PR) - Another Permian-focused operator included among Mizuho's picks, Permian Resources posted fourth-quarter earnings per share of $0.37, which exceeded analyst forecasts, while revenue of $1.17 billion missed expectations.
- Chevron (CVX) - The integrated major is part of Mizuho's favored names. Chevron received an upgrade to Buy from Melius and announced an entry into Libya after being awarded a contract for an exploration block in the Sirte Basin.
- Chord Energy (CHRD) - Chord is also on Mizuho's list. In the fourth quarter, the company reported revenue of $1.17 billion, above analyst projections, but its earnings per share of $1.28 fell short of forecasts.
- Diamondback Energy (FANG) - Diamondback is included among the preferred names. Its fourth-quarter results missed analyst expectations on both earnings per share and revenue; Benchmark, however, reiterated a Buy rating on the company.
- Range Resources - Identified as one of Mizuho's selected gas-exposed stocks, Range Resources posted fourth-quarter results that beat analyst estimates for both earnings and revenue and announced an 11% increase in its quarterly dividend.
- Excelerate Energy - Also listed among Mizuho's gas-exposed preferences, Excelerate announced the departure of its CEO, with the board chairman named interim CEO, and plans to relocate its corporate headquarters to Houston in mid-2026.
- BKV - Named by Mizuho among gas-exposed choices; no additional details were provided in the bank's list.
- HF Sinclair - Cited as a favored refining name, HF Sinclair reported fourth-quarter earnings and revenue that both surpassed market expectations and saw its price target raised by Truist Securities.
- Delek US Holdings - Listed among the broker's preferred refining stocks; the bank included it on its top picks list without additional company-specific detail.
Analysis context
Mizuho's selections reflect a tactical tilt toward companies whose business models and balance sheets the bank judges better suited to weather near-term oversupply and to benefit from a recovery once oil prices stabilize and begin to rebound. The bank's view separates oil-weighted E&P firms as the primary beneficiaries, treats gas names with greater selectivity, and cautions on refining exposure past early 2026 due to expected capacity-driven normalization in crack spreads.
Key points
- Mizuho anticipates oil markets will bottom in early 2026, with recovery toward mid-cycle pricing in the second half of the year driven by limited non-OPEC supply growth and OPEC+ restraint.
- The bank expects structural undersupply in natural gas as LNG demand, power generation and infrastructure growth outpace supply increases, despite higher production.
- Mizuho prefers oil-weighted E&P companies with strong inventories and balance sheet flexibility, remains selective on gas names, and views refining fundamentals as less attractive beyond early 2026.
Risks and uncertainties
- Near-term oil oversupply and elevated natural gas storage levels could prolong weak commodity prices, affecting earnings and capital allocation across the E&P and refining sectors.
- New refining capacity additions are expected to normalize crack spreads beyond early 2026, which could pressure refining margins and profitability.
- Company-specific operational or financial developments cited in quarterly reports and corporate actions - such as asset sales, executive changes, or dividend adjustments - introduce execution risk for individual names mentioned by Mizuho.
Overall, Mizuho's list prioritizes balance-sheet strength and inventory quality in oil-focused producers while acknowledging differentiated upside and risks across gas and refining franchises as market dynamics evolve toward the second half of 2026.