BP replaces TotalEnergies on Kepler’s preferred list after downgrade

Investing.com -- Kepler Cheuvreux downgraded TotalEnergies stock to Reduce and removed it from its Sector Most Preferred list, citing what it sees as rising vulnerability to a prolonged LNG oversupply cycle, with BP replacing the French major among its preferred names.

Analyst Bertrand Hodée said TotalEnergies is expected to hold a net long LNG position of around 14 million tonnes per annum (mtpa) in 2026, widening to about 23 mtpa by 2030, which, in Hodée’s view, leaves the company with the greatest exposure to a potential LNG oversupply, especially if prices slide toward $5 per mbtu.

"In an oversupplied LNG market, a structurally long LNG portfolio cannot escape losses at the molecule level; it can only redistribute, defer, or partially offset them through integration (power) and optionality," Hodée added.

The analyst tactically adjusted the sum of parts (SOP) valuation based on a Brent oil price assumption of $55 per barrel for 2026, which resulted in a fair value estimate of 52 euros and led the firm to set its target price at the same level.

"With c. 10% downside to our TP, we downgrade the stock from Hold to Reduce," Hodée wrote.

In contrast, BP was moved onto the Sector Most Preferred list as Hodée highlighted the resilience of its LNG positioning into a downturn. The analyst said BP’s “portfolio is well-positioned for an LNG downturn, with no long positions by 2027,” while its U.S. LNG offtakes are more than offset by upstream gas production, reducing exposure to falling spot prices.

BP’s theoretical long LNG position is expected to decline to zero by 2027, which Hodée sees as “perfect timing,” and the group also benefits from long-term offtake contracts with particularly low oil-linked pricing slopes, supporting cash flow resilience in weaker gas markets.

The changes sit within a broader cautious sector stance, as Kepler continues to warn of an emerging LNG glut and soft energy pricing over the coming years. In its latest sector outlook, the brokerage said LNG supply is expected to surge toward 600 mtpa by 2030, potentially creating a multi-year oversupply from 2028 to 2031.

Meanwhile, Hodée said Asian LNG demand growth faces clear structural limits, including constraints around coal-to-gas switching and infrastructure, which could curb the market’s ability to absorb the wave of new supply.

The analyst said that lower spot prices would likely be required to rebalance global gas markets, prompting him to cut long-term European gas price assumptions and maintain a cautious view on the oil and gas sector.

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