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The Zacks Analyst Blog Highlights: ConocoPhillips, HollyFrontier, Northern Oil and Gas, Talos Energy and Occidental Petroleum

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For Immediate Release

Chicago, IL – June 28, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include ConocoPhillips (COP - Free Report) , HollyFrontier Corp. , Northern Oil and Gas, Inc. (NOG - Free Report) , Talos Energy Inc. (TALO - Free Report) and Occidental Petroleum Corp. (OXY - Free Report) .

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Here are highlights from Wednesday’s Analyst Blog:

U.S. Crude Crosses $70: 5 Top-Ranked Picks

On Jun 26, U.S. crude price moved above $70 for the first time in more than a month. Several factors contributed to this increase, though all of them emanated from supply concerns. Reports emerged that the United States is urging countries to stop importing oil from Iran by November. Meanwhile, uncertainty hovered over the fate of Libyan crude supplies.

Further, concerns have emerged over Saudi Arabia’s ability to step up production at a pace quick enough to combat supply shortages. The temporary closure of a production facility in Canada also served to boost U.S. prices. With no end to the sector’s supply concerns in sight, investing in oil stocks looks like a profitable option.

Iran, Libya Crude Supplies Under Cloud

On Tuesday, WTI crude increased 3.6% to close at $70.53 a barrel, the highest finish recorded since May 24. Brent crude also gained 2.1% to close at $76.31 a barrel, a near two-week high. Such gains came on the back of multiple factors boosting supply concerns.

According to a report by The Wall Street Journal, the United States wants all countries to stop importing oil from Iran by Nov 4. This is part of the United States’ efforts to isolate the country economically and politically, per a senior U.S. State Department official.

Major purchasers of Iranian crude were expecting the United States to allow them to reduce such oil imports over an extended period. But the Trump administration has no plans of issuing any waivers for countries that are making efforts to cut Iranian oil imports.

Meanwhile, a cloud is hovering over Libyan crude supplies. According to a report from Reuters, forces led by Eastern Libya’s military commander Khalifa Haftar have handed over control of the country’s eastern oil ports to a National Oil Corp. (NOC) based in the east. The internationally recognized NOC has dismissed the move, terming it as illegal.

Saudi Concerns, Syncrude Breakdown Boost Prices

According to Bloomberg, Saudi Arabia is preparing to boost crude production to a record level in July. The oil-rich country plans to produce 10.8 million barrels a day starting next month, which exceeds the earlier all-time high of 10.72 million barrels a day recorded in November 2016. The move would be in accordance with the recent agreement concluded between OPEC and its allies.

But analysts feel that this report implies that oil prices can only move higher. If Saudi Arabia does pump oil at an all-time high level, it will cross its production quota and place the excess in storage.

However, such a move comes at a time when global spare production capacity is languishing near all-time lows. This means that the country may not be confident enough about boosting production at a pace that is enough to make up for a likely shortfall.

Also boosting oil prices on Tuesday was the temporary closure of Canada-based oil-sands facility Syncrude. Loss of power led to a shutdown on Jun 20 and even though power has been restored since then, no shipments have been forthcoming as of now. Since the facility produces 360,000 barrels of crude a day, the disruption has also contributed to the spike in oil prices.

Our Choices

Multiple supply concerns are serving to boost crude prices at this moment. While temporary disruptions like Syncrude are unlikely to leave a long-term impact, the United States’ tough stance on Iranian imports could lead to prolonged supply concerns.

The situation in Libya is also likely to remain unpredictable. Meanwhile, questions surround Saudi Arabia’s ability to boost production quickly.  Investing in stocks of oil companies looks like a smart option at this point. However, picking winning stocks may be difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score. 

We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) and a good VGM Score. You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips is a major global exploration and production (E&P) company with operations and activities in 17 countries.

ConocoPhillips has a VGM Score of A. The company’s projected growth rate for the current year is more than 100%.The Zacks Consensus Estimate for the current year has improved 7.1% over the last 30 days.

HollyFrontier Corp. is one of the largest independent refiners and marketers of petroleum products in the United States.

HollyFrontier has a VGM Score of A. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 15.3% over the last 30 days.

Northern Oil and Gas, Inc. is an exploration and production company of oil and natural gas properties in the United States.

Northern Oil and Gas has a VGM Score of A. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 1.6% over the last 30 days.

Talos Energy Inc. engages in exploration, development and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and in the shallow waters off the coast of Mexico.

Talos Energy has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 60.4% over the last 60 days.

Occidental Petroleum Corp. is an integrated oil and gas company, with significant exploration and production exposure.

Occidental Petroleum has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 9.4% over the last 30 days.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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