Upstream Preview: E&Ps mostly unharmed, prefer EOG and DVN    Although a steady stream of post-hurricane operations updates and preannouncements(8of the 17E&Ps under coverage have pre-announced) hascertainly removed some of the drama entering 3Q results, we still see plenty ofopportunities for the group to show that operations are on (or back on?) trackfollowing a noisy 2Q, that implied 4Q acceleration (6.2% sequential growth vs.4.6% in 3Q) is achievable, that current spacing assumptions are supportable, andto address ways to demonstrate "capital disciplined" growth in 2018. We preferDVN and EOG.    Focus on capital discipline (implicit growth reduction?) comes into focus    Although we expect few to provide explicit guidance, the early outlook for 2018islikely to be a significant area of focus, particularly given: a) the growing investordebate/pressure on capital discipline/returns vs. growth, and b) the rally in crudeprice, which is +20% since late June. Across the large-cap space, we expecta broad commitment to spend within cash flow (with various exceptions), andwould expect budgets at present to largely anticipate a $50-$55/bbl world. Wesee annualized 4Q17capital budgets as running ~4% in excess of CFO at thestrip in 2018(ex-EOG), with PXD/HES/QEP, as most exposed. We also look forclarity on potential response to a higher than expected crude price, includingadditional drilling activity (EOG), buyback (COP), de-levering (CLR) and dividendgrowth (MRO).    4Q17trajectory and the implication for 2018    With company production having slightly underwhelmed through the firsthalf of the year (a significant factor in improved crude price sentiment) andhurricane-driven outages in 3Q, the implications for 4Q17production are materialacceleration to hit FY estimates. At the midpoint of FY guidance, we see impliedsequential L48growth of 6.2% in 4Q17, vs. 4.6% in 3Q17and 2.2% in 2Q17,raising the risk of disappointment at the corporate level (or possibly re-heightenedfears around crude). OXY, MUR, QEP and NBL show the most aggressiveacceleration vs. prior run rates. We expect the trajectory to continue the debateon 2018US crude growth, with recent market sentiment moving sub-800Mb/d,and DBe at ~900Mb/d.

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