$Antero Resources(AR)$ $Range资源(RRC)$ JPM View (not mine): In an environment where sector weightings for energy remain lackluster, getting the investing narrative correct is especially important in terms of E&P stock selection. We highlight 7 key 2H21 and early 2022 E&P narratives, including our underlying stock picks for each narrative. We also roll forward our price targets to Dec-22. We think the most important narrative for E&Ps is the potential return of significant levels of FCF to equity holders. Whereas excess FCF has been largely utilized for debt reduction in 2021, we think 2022 will be the year of cash return to equity holders. Another key narrative is the stark improvement in gas and NGL fundamentals driven by U.S. shale spending restraint, robust export trends, and rising demand as economies continue to recover from the pandemic induced demand collapse last year. Since mid-year, the 2022-23 natural gas strip has moved to $4.25/$3.34 from $3.14/$2.79 (up 35% and 20%), while cal 22 C3+ prices at Mont Belvieu have moved by 11%. Our favorite way to play this theme is OW rated AR, which trades at a 23% 2022 FCF/EV yield at strip and is poised to return significant cash to shareholders next year. Avoiding companies with underwater hedges is another important narrative. While the typical alpha instruction would be to add more Appalachia exposure to portfolios to take advantage of natural gas and NGL pricing strength, the lion’s share of Appalachia focused producers including EQT and SWN added hedges ahead of the surge in prices, which are significantly underwater (and CNX has limited near-term benefit given a very large hedge book). As such, we think a better way to play this theme is through combo producers that provide leverage to all three commodities such as OW rated OVV (18% 2022 FCF/EV), PDCE (27% 2022 FCF/EV) and we upgrade SM to OW from N given the robust FCF metrics (18% 2022 FCF/EV), attractive valuation, and optionality to the Austin Chalk play. Within Appalachia, we upgrade GPOR and RRC to N from UW and downgrade SWN to UW from N based on our updated forced ranker methodology. For SWN, we believe the magnitude of hedging losses at higher gas prices ($2.3 billion between 3Q21 and 4Q22 relative to EV of $6.3 billion) plus the PE overhang associated with the Indigo deal will lead to relative underperformance. Finally, we upgrade MTDR to OW from N based on continued operational outperformance, an attractive mix of growth and FCF generation, increasing shareholder returns, and its attractive position in our updated forced ranker.