Diverging Oil vs Gas Valuations: Energy Sector Shift in 2025

This analysis is based on the Forbes report [1] published on November 12, 2025, which highlights a significant divergence in valuations between oil-focused and natural gas-focused energy producers in the United States.

The U.S. energy sector is experiencing a fundamental valuation divergence that reflects changing investor priorities and market dynamics. Gas-focused producers in the Appalachian Basin are commanding premium valuations with median EV/EBITDAX multiples of 8.6x and positive stock performance of +15% year-over-year, while Permian-focused oil producers trade at significantly lower multiples of 3.7x with negative stock performance of -13% [1].

This valuation spread represents a rare market reversal where future demand visibility is being rewarded over near-term cash generation [1]. The divergence is supported by concrete market data showing EQT Corporation (gas-focused) with +38.97% one-year performance versus Diamondback Energy (oil-focused) at -18.75% [0].

The underlying drivers include infrastructure developments, with the Mountain Valley Pipeline entering service in mid-2024 adding 2 Bcf/d of transport capacity, and a “thawing regulatory environment” for new pipeline proposals [1]. Meanwhile, the Permian Basin faces natural gas takeaway constraints that pressure realized prices [1].

: Investors have effectively created a two-speed cycle within U.S. upstream energy, treating Permian producers like bond proxies valued for stability and yield, while Appalachian gas names are treated like growth stocks prized for strategic positioning and export leverage [1].

: The valuation premium is closely tied to infrastructure developments. Appalachian Basin’s improving pipeline outlook contrasts sharply with Permian’s takeaway constraints, directly impacting realized economics and investor sentiment [1].

: The U.S. Energy Information Administration projects LNG exports reaching 14.9 billion cubic feet per day in 2025 (25% more than 2024), with an additional 10% growth expected in 2026 [2]. Deloitte reinforces this trend, noting US LNG exports could rise 25% in 2025 and potentially double by 2030 [3].

: Oil producers are adopting defensive, yield-focused strategies emphasizing “discipline remains our competitive advantage” [1], while gas producers like EQT’s CEO Toby Rice state the company is “on the verge of a multi-decade growth story as the U.S. becomes the global swing supplier of natural gas” [1].

: The valuation spread could narrow significantly if global gas trade slows, interest rates remain elevated, LNG projects face delays, or demand growth disappoints [1]. Oil-focused companies also face emerging breakeven cost issues and shrinking Tier 1 acreage [1].

: Gas producers benefit from clear demand visibility through LNG export growth, improving infrastructure outlook, and growing recognition of natural gas as a strategic energy transition fuel [1]. The Dallas Fed Survey projects Henry Hub prices near $4.00 per mcf in 2026, supporting the bullish gas narrative [1].

: The valuation premium for gas companies depends on LNG projects coming online as scheduled and continued pipeline expansion being crucial for realizing full value [1]. About half of gas-weighted firms cite “LNG expansion and electrification” as demand catalysts, compared to fewer than 10% mentioning those themes just a year ago [1].

• Valuation Metrics
  : Appalachian gas producers trade at 8.6x EV/EBITDAX vs Permian oil producers at 3.7x [1]
• Stock Performance
  : Gas-focused companies +15% YTD vs oil-focused -13% YTD [1]
• LNG Growth
  : EIA projects 25% export growth in 2025, additional 10% in 2026 [2]
• Price Forecasts
  : Henry Hub expected to average $4.00/MMBtu in 2026 vs $3.50 in 2025 [2]
• Infrastructure
  : Mountain Valley Pipeline added 2 Bcf/d capacity in 2024 [1]
• Market Sentiment
  : Dallas Fed Energy Survey shows 2/3 of firms holding 2025 capital budgets flat [1]
• Demand Catalysts
  : 50% of gas firms cite LNG expansion vs 10% a year ago [1]