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Keep an Eye on 3 Oil Explorers as Crude Prices Surge Again
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Oil prices continue to be advantageous for upstream enterprises despite the challenges posed by fluctuations and uncertainties in the energy market. After a period of underperformance for most of this year, the energy sector is experiencing a robust resurgence due to a hike in oil prices.
The West Texas Intermediate crude oil price is presently hovering at $89 per barrel, while the Asian benchmark, Brent crude, has surged above $90 per barrel. This marks the first time it has reached such levels since last November.
Reasons Behind Oil Price Surge
The recent surge in oil prices was primarily driven by a tightening oil market. This resulted from a combination of increased crude oil demand and significant supply cuts implemented by key OPEC+ members, namely Saudi Arabia and Russia.
Saudi Arabia expressed its willingness to extend its voluntary production reduction of 1 million barrels per day for an additional three months, continuing this measure until the end of the current year. Similarly, Russia is willing to curb its oil exports by 300,000 barrels a day until the end of December 2023.
Relatively sluggish economic growth in China over the past year had a negative impact on global oil prices. However, the unexpected increase in manufacturing activity in August, coming from the world's largest oil importer, also contributed to the rise in oil prices.
3 Stocks to Gain
Shares of oil companies are also gaining. Considering the current elevated oil prices, we have identified three upstream stocks with upward-trending earnings revisions.
EOG Resources, Inc. (EOG - Free Report) possesses substantial acreage in prominent oil shale regions, such as the Permian and Eagle Ford. EOG's extensive presence in these critical shale resources is expected to support its long-term production expansion. With a Zacks Rank #3 (Hold), the company maintains a portfolio of more than a decade's worth of high-quality inventory, boasting a 60% rate of economic return.
In 2023, EOG Resources expects to attain a total production of 965-991.5 thousand barrels of oil equivalent per day (MBoe/d), marking an increase from the 908.2 MBoe/d achieved in the prior year. We anticipate a year-over-year growth rate of 7.1% in this parameter. As a result, with heightened production in a highly favorable crude oil pricing environment, the company's profitability stands to gain.
Matador Resources Company (MTDR - Free Report) maintains a robust presence in the oil-rich core regions of the Wolfcamp and Bone Spring plays within the Delaware Basin. Since 2011, this Zacks Rank #3 company has significantly expanded its holdings in the Delaware Basin. Starting with 6,700 net acres in 2011, the company's operations now encompass 124,800 net acres in the Delaware Basin.
The favorable crude oil price environment is expected to assist Matador in boosting its production volumes. For 2023, Matador expects its oil equivalent production to be 45.8-47.5 million barrels. This forecast indicates an enhancement from the 38.5 million oil equivalent barrels recorded in 2022. Matador's primary objectives for the year include reducing debt levels, generating free cash flows, and either maintaining or increasing dividends.
Marathon Oil Corporation (MRO - Free Report) holds an impressive inventory of North American unconventional resources that can sustain its operations for approximately 10 years, with a breakeven cost of less than $40 per barrel. This inventory extends to nearly 20 years if the breakeven points fall within $40-$50. In essence, Marathon's well-drilling activities are characterized by exceptionally low breakeven costs, requiring oil prices as low as $35 per barrel to remain profitable.
The upstream energy company, currently carrying a Zacks Rank #3, anticipates significant production growth this year. Based on our assessment, our production outlook closely aligns with the company's guidance. We project a 16.5% increase in production for the year 2023.
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Keep an Eye on 3 Oil Explorers as Crude Prices Surge Again
Oil prices continue to be advantageous for upstream enterprises despite the challenges posed by fluctuations and uncertainties in the energy market. After a period of underperformance for most of this year, the energy sector is experiencing a robust resurgence due to a hike in oil prices.
The West Texas Intermediate crude oil price is presently hovering at $89 per barrel, while the Asian benchmark, Brent crude, has surged above $90 per barrel. This marks the first time it has reached such levels since last November.
Reasons Behind Oil Price Surge
The recent surge in oil prices was primarily driven by a tightening oil market. This resulted from a combination of increased crude oil demand and significant supply cuts implemented by key OPEC+ members, namely Saudi Arabia and Russia.
Saudi Arabia expressed its willingness to extend its voluntary production reduction of 1 million barrels per day for an additional three months, continuing this measure until the end of the current year. Similarly, Russia is willing to curb its oil exports by 300,000 barrels a day until the end of December 2023.
Relatively sluggish economic growth in China over the past year had a negative impact on global oil prices. However, the unexpected increase in manufacturing activity in August, coming from the world's largest oil importer, also contributed to the rise in oil prices.
3 Stocks to Gain
Shares of oil companies are also gaining. Considering the current elevated oil prices, we have identified three upstream stocks with upward-trending earnings revisions.
EOG Resources, Inc. (EOG - Free Report) possesses substantial acreage in prominent oil shale regions, such as the Permian and Eagle Ford. EOG's extensive presence in these critical shale resources is expected to support its long-term production expansion. With a Zacks Rank #3 (Hold), the company maintains a portfolio of more than a decade's worth of high-quality inventory, boasting a 60% rate of economic return.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In 2023, EOG Resources expects to attain a total production of 965-991.5 thousand barrels of oil equivalent per day (MBoe/d), marking an increase from the 908.2 MBoe/d achieved in the prior year. We anticipate a year-over-year growth rate of 7.1% in this parameter. As a result, with heightened production in a highly favorable crude oil pricing environment, the company's profitability stands to gain.
Matador Resources Company (MTDR - Free Report) maintains a robust presence in the oil-rich core regions of the Wolfcamp and Bone Spring plays within the Delaware Basin. Since 2011, this Zacks Rank #3 company has significantly expanded its holdings in the Delaware Basin. Starting with 6,700 net acres in 2011, the company's operations now encompass 124,800 net acres in the Delaware Basin.
The favorable crude oil price environment is expected to assist Matador in boosting its production volumes. For 2023, Matador expects its oil equivalent production to be 45.8-47.5 million barrels. This forecast indicates an enhancement from the 38.5 million oil equivalent barrels recorded in 2022. Matador's primary objectives for the year include reducing debt levels, generating free cash flows, and either maintaining or increasing dividends.
Marathon Oil Corporation (MRO - Free Report) holds an impressive inventory of North American unconventional resources that can sustain its operations for approximately 10 years, with a breakeven cost of less than $40 per barrel. This inventory extends to nearly 20 years if the breakeven points fall within $40-$50. In essence, Marathon's well-drilling activities are characterized by exceptionally low breakeven costs, requiring oil prices as low as $35 per barrel to remain profitable.
The upstream energy company, currently carrying a Zacks Rank #3, anticipates significant production growth this year. Based on our assessment, our production outlook closely aligns with the company's guidance. We project a 16.5% increase in production for the year 2023.