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3 Permian Explorers to Gain as Oil Price Remains Healthy
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Oil and gas explorers and producers have been ramping up activities in shale resources this year. This is reflected in the rising number of drilling rigs, and the count will possibly increase more since oil price is expected to remain favorable. The positive developments are aiding businesses for upstream energy players.
Handsome Oil Price
West Texas Intermediate crude price, trading at more than $75 per barrel, is still handsome and is favorable for the energy business. The positivity prevails even though global inflation worries are dragging down the commodity’s price.
According to the U.S. Energy Information Administration (“EIA”), the West Texas Intermediate spot average price will likely be $95.22 per barrel this year, significantly higher than $68.21 last year.
U.S. Shale Oil Production to Rise
In January 2023, total oil production from shale resources in the United States will likely increase by 94,000 barrels per day to 9,319 thousand barrels per day (MBbl/D), per EIA. The shale resources comprise Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian.
Of all the resources, the Permian will witness the highest increase in daily oil production next month, according to the EIA’s drilling productivity report. In the Permian, the EIA projects oil production to rise by 37,000 barrels per day to 5,579 MBbls/D in January.
Time to Bet on Permian Explorers
Clearly, a favorable crude pricing scenario is backing higher production volumes. Improving Permian production amid healthy oil prices has raised the incentive to keep an eye on stocks of companies operating in the most prolific basin.
3 Stocks to Gain
Since selecting the right companies with a footprint in the Permian from the stock universe is not an easy task, we are employing our proprietary Stock Screener to zero in on three stocks that are well-poised to gain. All the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Once the pending Lario acquisition closes,probably on Jan 31, 2023, Diamondback Energy, Inc. (FANG - Free Report) will boost its footprint in the Midland Basin. From the transaction, the company will add more than 150 gross locations in the core of the Northern Midland Basin. FANG expects the deal to be accretive on all relevant financial metrics.
Owing to its differentiated upstream operations, Diamondback Energy projects to generate at least $4.45 billion of free cash flow this year.
Pioneer Natural Resources Company (PXD - Free Report) has a strong presence in the low-cost oil-rich Midland basin — a sub-basin of the broader Permian. The upstream energy player has a massive inventory of premium wells that will likely generate significant returns for the company.
Pioneer Natural is focused on returning capital to shareholders. This includes a substantial variable dividend along with a strong base dividend. PXD is also employing opportunistic share repurchases to reward shareholders.
Pioneer Natural has considerably lower exposure to debt capital than the composite stocks belonging to the industry. This reflects PXD’s strong balance sheet on which the firm can rely to sail through the volatile energy businesses.
Solid oil prices are a boon for Matador Resources Company’s (MTDR - Free Report) upstream operations. This is because MTDR has a strong presence in oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Favorable oil price is likely to aid it in increasing production volumes. For 2022, the upstream energy player expects total production of 37.7-38.3 million barrels of oil equivalent (MMBoE), higher than 31.5 MMBoE in 2021.
On another positive note, Matador plans to turn to sales a net of 71 wells this year, including operated and non-operated wells. The prime priorities that MTDR has set for this year are lowering debt levels, delivering free cashflows and maintaining or increasing dividends.
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3 Permian Explorers to Gain as Oil Price Remains Healthy
Oil and gas explorers and producers have been ramping up activities in shale resources this year. This is reflected in the rising number of drilling rigs, and the count will possibly increase more since oil price is expected to remain favorable. The positive developments are aiding businesses for upstream energy players.
Handsome Oil Price
West Texas Intermediate crude price, trading at more than $75 per barrel, is still handsome and is favorable for the energy business. The positivity prevails even though global inflation worries are dragging down the commodity’s price.
According to the U.S. Energy Information Administration (“EIA”), the West Texas Intermediate spot average price will likely be $95.22 per barrel this year, significantly higher than $68.21 last year.
U.S. Shale Oil Production to Rise
In January 2023, total oil production from shale resources in the United States will likely increase by 94,000 barrels per day to 9,319 thousand barrels per day (MBbl/D), per EIA. The shale resources comprise Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian.
Of all the resources, the Permian will witness the highest increase in daily oil production next month, according to the EIA’s drilling productivity report. In the Permian, the EIA projects oil production to rise by 37,000 barrels per day to 5,579 MBbls/D in January.
Time to Bet on Permian Explorers
Clearly, a favorable crude pricing scenario is backing higher production volumes. Improving Permian production amid healthy oil prices has raised the incentive to keep an eye on stocks of companies operating in the most prolific basin.
3 Stocks to Gain
Since selecting the right companies with a footprint in the Permian from the stock universe is not an easy task, we are employing our proprietary Stock Screener to zero in on three stocks that are well-poised to gain. All the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Once the pending Lario acquisition closes,probably on Jan 31, 2023, Diamondback Energy, Inc. (FANG - Free Report) will boost its footprint in the Midland Basin. From the transaction, the company will add more than 150 gross locations in the core of the Northern Midland Basin. FANG expects the deal to be accretive on all relevant financial metrics.
Owing to its differentiated upstream operations, Diamondback Energy projects to generate at least $4.45 billion of free cash flow this year.
Pioneer Natural Resources Company (PXD - Free Report) has a strong presence in the low-cost oil-rich Midland basin — a sub-basin of the broader Permian. The upstream energy player has a massive inventory of premium wells that will likely generate significant returns for the company.
Pioneer Natural is focused on returning capital to shareholders. This includes a substantial variable dividend along with a strong base dividend. PXD is also employing opportunistic share repurchases to reward shareholders.
Pioneer Natural has considerably lower exposure to debt capital than the composite stocks belonging to the industry. This reflects PXD’s strong balance sheet on which the firm can rely to sail through the volatile energy businesses.
Solid oil prices are a boon for Matador Resources Company’s (MTDR - Free Report) upstream operations. This is because MTDR has a strong presence in oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Favorable oil price is likely to aid it in increasing production volumes. For 2022, the upstream energy player expects total production of 37.7-38.3 million barrels of oil equivalent (MMBoE), higher than 31.5 MMBoE in 2021.
On another positive note, Matador plans to turn to sales a net of 71 wells this year, including operated and non-operated wells. The prime priorities that MTDR has set for this year are lowering debt levels, delivering free cashflows and maintaining or increasing dividends.