UBS Equity Preference List European Energy 2026 08 18

18 August 2026, 09:01 UTC Chief Investment Office GWM Investment Research

European Energy Equity preferences

The European Energy Equity Preference list (EPL) is a list of our highest conviction European Energy stocks. Rudolf Leemann UBS Switzerland AG European sector preference: Neutral Please see important disclaimers and Sector positioning: We expect oil and liquefied natural gas (LNG) flows to disclosures at the end of this normalize within months. However, if interruptions persist for a longer period, document. the energy sector could benefit further. As a result, the sector can help protect portfolios amid ongoing geopolitical uncertainty, given its tendency to benefit from higher oil and gas prices and its companies’ strong balance sheets. Additionally, the sector stands to gain if capital shifts toward businesses with tangible assets. We believe oil prices are unlikely to fall below USD 60 per barrel (Brent), and shareholder returns should remain intact. Companies are also prioritizing further strengthening their balance sheets. We favor integrated oil and gas companies for their defensiveness, robust balance sheets, and attractive returns. Service providers should benefit from a recovery in investment activity.

Top picks: BP, TotalEnergies, Vår Energi

Latest Changes: We have added Vår Energi and removed Shell from our portfolio. We have also updated our top picks for the portfolio.

Most Preferred Company Changes* Currency Weight

BP GBP 14.3% Repsol EUR 14.3% Shell Removed GBP 14.3% Technip Energies EUR 14.3% Tenaris SA EUR 14.3% TotalEnergies EUR 14.3% Vår Energi Added NOK 14.3% Viridien EUR 14.3%

Source: UBS, Consider potential trading restrictions, all figures are rounded *Changes since the last publication

Positioning and key trends The energy sector remains relatively defensive, as energy demand tends to be resilient, tariff impacts are limited, and company balance sheets are generally strong. The sector also serves as a hedge against geopolitical tensions. Even if tensions ease, energy flows are likely to take time to normalize, and elevated oil prices may persist.

Integrated oil and gas companies are benefiting from strong profitability, robust marketing and refining margins, and favorable natural gas prices. Their solid balance sheets help cushion volatility. BP is relatively sensitive to oil price

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movements; its main Middle East exposure is in Iraq, which provides volume but limited profits, and in Oman, which is outside the Strait of Hormuz. BP is also benefiting from accelerated debt reduction, given its higher debt level compared to peers.

Refiners are expected to continue enjoying elevated margins, as the refining system faces capacity constraints and there is limited appetite to build additional capacity. Repsol has minimal exposure to the Middle East, and its refinery margins benefit from interruptions at competing refineries. Service companies should benefit from increased spending and activity levels globally. While activity was previously concentrated in US onshore operations (“fracking”) and LNG capacity expansion, it is now broadening to higher activity across more services and regions.

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