With the price of gas likely to remain in a narrow range next year, the firm says investors should buy high quality, large resource based stocks such as COG and RRC.
The net asset value race is over, and the coming year is about execution, Merrill Lynch says, seeing PXD and WLL as winners here.
Following 2013's wave of activism, the firm sees gains in HES and OXY.
Favorable outlooks for E&P budgets could lift oilfield services stocks focused on North America, such as HAL and SLB.
The Merrill Lynch team sees crude production rising to the highest level since 1989, and pinpoints TSO and VLO as the refiners to benefit the most in 2014 because they're "crude advantaged" and have stock specific catalysts for next year.
Finally, the firm suggests Investors with significant gains in CVX may want to take those and buy XOM for 2014.
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