We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why SM Energy (SM) is an Attractive Investment Bet Now
Read MoreHide Full Article
SM Energy Company’s (SM - Free Report) stock price has jumped 384.8% year to date compared with 105.1% growth of the composite stocks belonging to the industry.
The publicly-traded exploration and production player, currently carrying a Zacks Rank #2 (Buy), has also witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days.
Image Source: Zacks Investment Research
Factors Favoring the Stock
The West Texas Intermediate crude price, which is currently hovering around $70 per barrel, has significantly improved from its slump into negative territory in April 2020. Global growth prospects have improved significantly as vaccination rollouts led to increased fuel demand in a few large economies.
Rising oil prices are undoubtedly a boon for SM Energy’s upstream operations. This is because SM has a strong presence in Permian, the most prolific basin in the United States. Given the upstream firm’s increasing focus on crude, specifically in the Permian Basin and Eagle Ford areas, it will boost oil-weighted activity in the coming days.
SM’s Midland Basin wells are considered among the best-performing wells, and continue to add value through lower operating and drilling costs. The company has presented encouraging results from the Austin Chalk due to additional wells drilled in the region. The wells in the Austin Chalk region produce around 74-78% liquids, which will boost investor value.
SM Energy seeks to use the favorable market scenario to improve its financial situation. It intends to maximize the free cash flow by 2025, which can fund the debt reduction program. On the environmental, social and governance front, SM Energy has been undertaking initiatives to reduce emissions. In 2020, SM accomplished a 37% improvement in greenhouse gas emission intensity compared with the 2019 levels, which is noteworthy.
Thus, SM Energy, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Houston, TX-based Occidental Petroleum (OXY - Free Report) is an integrated oil and gas company, with significant exploration and production exposure. OXY is also a producer of a variety of basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020-end, Occidental’s preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.
Occidental Petroleum’s earnings for 2021 are expected to surge 153% year over year. OXY has also witnessed five upward revisions in the past 60 days. In the third quarter, OXY achieved the planned divestiture target of $10 billion by entering a deal to sell its interest in two offshore Ghana assets for $750 million.
ConocoPhillips (COP - Free Report) primarily engages in the exploration and production of oil and natural gas. Considering proved reserves and production, COP is the largest explorer and producer in the world. ConocoPhillips ended 2020 with proved reserves of 4.5 billion barrels of oil equivalent (BOE) and a reserve replacement ratio of 86%. Through 2020, the upstream energy player produced 1,127 thousand BOE per day, comprising more than 50.4% oil.
ConocoPhillips is projected to see a year-over-year earnings surge of 717.5% in 2021. COP witnessed seven upward revisions in the past 60 days. ConocoPhillips recently acquired stakes in the Permian Basin from Shell for $9.5 billion. The acquisition involves 225,000 net Permian acres, with current production of nearly 175,000 barrels of oil equivalent per day. This made ConocoPhillips one of the leading producers in Permian.
Devon Energy Corporation (DVN - Free Report) is an independent energy company engaged in the exploration, development and production of oil and natural gas. Devon’s strong U.S. operations are spread across the key oil assets of the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. At 2020-end, Devon Energy had proved reserves of approximately 752 million barrels of oil equivalent.
Devon is projected to see a year-over-year earnings surge of 3889% in 2021. The company has witnessed eight upward revisions in the past 60 days. DVN’s free cash flow at the end of third-quarter 2021 was $1.1 billion, up eight-fold from the fourth-quarter 2020 levels. The company will continue to prioritize free cash flow generation in 2022 and deploy a major portion of the same to dividends and share buybacks.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why SM Energy (SM) is an Attractive Investment Bet Now
SM Energy Company’s (SM - Free Report) stock price has jumped 384.8% year to date compared with 105.1% growth of the composite stocks belonging to the industry.
The publicly-traded exploration and production player, currently carrying a Zacks Rank #2 (Buy), has also witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days.
Factors Favoring the Stock
The West Texas Intermediate crude price, which is currently hovering around $70 per barrel, has significantly improved from its slump into negative territory in April 2020. Global growth prospects have improved significantly as vaccination rollouts led to increased fuel demand in a few large economies.
Rising oil prices are undoubtedly a boon for SM Energy’s upstream operations. This is because SM has a strong presence in Permian, the most prolific basin in the United States. Given the upstream firm’s increasing focus on crude, specifically in the Permian Basin and Eagle Ford areas, it will boost oil-weighted activity in the coming days.
SM’s Midland Basin wells are considered among the best-performing wells, and continue to add value through lower operating and drilling costs. The company has presented encouraging results from the Austin Chalk due to additional wells drilled in the region. The wells in the Austin Chalk region produce around 74-78% liquids, which will boost investor value.
SM Energy seeks to use the favorable market scenario to improve its financial situation. It intends to maximize the free cash flow by 2025, which can fund the debt reduction program. On the environmental, social and governance front, SM Energy has been undertaking initiatives to reduce emissions. In 2020, SM accomplished a 37% improvement in greenhouse gas emission intensity compared with the 2019 levels, which is noteworthy.
Thus, SM Energy, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Other Stocks to Consider
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based Occidental Petroleum (OXY - Free Report) is an integrated oil and gas company, with significant exploration and production exposure. OXY is also a producer of a variety of basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020-end, Occidental’s preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.
Occidental Petroleum’s earnings for 2021 are expected to surge 153% year over year. OXY has also witnessed five upward revisions in the past 60 days. In the third quarter, OXY achieved the planned divestiture target of $10 billion by entering a deal to sell its interest in two offshore Ghana assets for $750 million.
ConocoPhillips (COP - Free Report) primarily engages in the exploration and production of oil and natural gas. Considering proved reserves and production, COP is the largest explorer and producer in the world. ConocoPhillips ended 2020 with proved reserves of 4.5 billion barrels of oil equivalent (BOE) and a reserve replacement ratio of 86%. Through 2020, the upstream energy player produced 1,127 thousand BOE per day, comprising more than 50.4% oil.
ConocoPhillips is projected to see a year-over-year earnings surge of 717.5% in 2021. COP witnessed seven upward revisions in the past 60 days. ConocoPhillips recently acquired stakes in the Permian Basin from Shell for $9.5 billion. The acquisition involves 225,000 net Permian acres, with current production of nearly 175,000 barrels of oil equivalent per day. This made ConocoPhillips one of the leading producers in Permian.
Devon Energy Corporation (DVN - Free Report) is an independent energy company engaged in the exploration, development and production of oil and natural gas. Devon’s strong U.S. operations are spread across the key oil assets of the Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. At 2020-end, Devon Energy had proved reserves of approximately 752 million barrels of oil equivalent.
Devon is projected to see a year-over-year earnings surge of 3889% in 2021. The company has witnessed eight upward revisions in the past 60 days. DVN’s free cash flow at the end of third-quarter 2021 was $1.1 billion, up eight-fold from the fourth-quarter 2020 levels. The company will continue to prioritize free cash flow generation in 2022 and deploy a major portion of the same to dividends and share buybacks.