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Here's Why Lonestar (LONE) Stock is a Worth a Bet Now

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We are upbeat about Lonestar Resources US Inc.’s prospects and believe it is a promising pick at the moment.

The company currently carries a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.

Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.

Strong Eagle Ford Foothold

The upstream operations of Lonestar Resourcesare solely focused onEagle Ford. In the prolific shale play, the company has access to more than 57,000 net acres. Since first-quarter 2017 to the December quarter of 2018, the company witnessed surging oil and natural gas production in Eagle Ford.

In 2018, Lonestar Resources recorded production of 11,155 barrels of oil equivalent per day (BoE/D), up 72% year over year. The company is likely to continue to grow its production in 2019 and 2020 backed by its growing proved reserves.

As of 2018-end, the company recorded proved reserves of 177 million barrels of oil equivalent (MMBoE), significantly higher than 170 MMBoE in 2017 and 75 MMBoE in 2016. The increase in proved reserves will thus help the company reach its production growth target in 2019 and 2020.

Lonestar to Gain on Solid Oil Demand

According to the International Energy Agency, global demand for oil will increase at an average annualized rate of roughly 1.2% till 2024. Since almost 60% of the company’s production volumes comprise oil, the upstream energy firm is likely to gain on strong global demand for the commodity.

Other Stocks to Consider

Other prospective players in the energy space include Antero Resources Corporation (AR - Free Report) , Jones Energy Inc. (JONE - Free Report) and SemGroup Corporation . While Antero Resources sports a Zacks Rank #1 , Jones Energy and SemGroup carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is likely to see earnings growth of 20% in the next five years.

Jones Energy expects 2019 earnings growth of 19% year over year.

SemGroup has average positive surprise of 85.4% for the preceding four quarters.

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