Crude oil prices pared earlier losses on Monday and Tuesday after Saudi Oil Minister Prince Abdulaziz bin Salman said the current bear market could force OPEC+ to tighten production because futures prices do not reflect the underlying fundamentals of supply and demand.
“Extreme volatility and lack of liquidity in the futures market is causing prices to move in a way that is out of line with normal supply and demand factors, which may prompt OPEC+ to act,” the Saudi oil chief warned. WTI crude rose 2.3% to trade at $92.46/bbl in Tuesday’s intraday session, while Brent gained 2.0% to change hands at $98.37/bbl .
Still, oil and gasoline prices are a far cry from their peak of mid-June, when Brent traded at $129 a barrel and gasoline hit an all-time high of $5.02 a gallon. Since those highs, stocks of companies that are less sensitive to underlying commodity prices have performed better than those more directly dependent on high prices. Barron’s has selected energy stocks in the S&P500 who have increased since June 14 and found that only four have achieved this feat. to witness it, Williams Enterprises (NYSE: WMB) gained 9.0% since June 14; Oneok Inc. (NYSE: OKE) climbed 6.5%, Kinder Morgan (NYSE: KMI) rose 5.8% while western oil (NYSE: OXY) is up 4.5%.
These are interesting findings not only because they are all large-cap, but also because a month ago, MKM’s Chief Market Technician, JC O’Hara, added Williams Companies, Oneok Inc. . and Kinder Morgan to a group of 32 energy stocks with the greatest downside risk.
“Year-to-date, energy is the only sector in the green … but the fact that the bears are going after the winners, so they could drag energy down. The energy sector has pared its 50 DMA upside and now looks lower than the 200 DMA upside, which is currently -9% below last Friday’s close. Crude Oil is sitting on its 50 DMA rise and has a stronger technical pattern,” MKM’s chief market technician, JC O’Hara, wrote in a note to customers.
For energy bulls, however, the good news is that there is no shortage of bargains in the space. Here are a few notable ones.
Market cap: $12.7 billion
P/E ratio (front): 4.92
Cumulative returns since the beginning of the year: 53.8%
Ovintiv Inc.(NYSE: OVV) is a Denver, Colorado-based energy company which, together with its subsidiaries, is engaged in the exploration, development, production and marketing of natural gas, oil and liquids. natural gas.
Look at Ovintin in the Permian Basin, as well as Anadarko in Oklahoma and Canada’s Montney Shale in British Columbia and Alberta. They also have upstream assets in Bakken in North Dakota and Uinta in Utah worth watching.
Mizuho upgraded the OVV to $78 from $54 (good for 44.3% upside from the current price), citing improved tailwinds.
Market cap: $5.5 billion
P/E ratio (front): 4.67
Cumulative returns since the beginning of the year: 36.9%
Another E&P company from Denver, Colorado, Civitas Resources, Inc.(NYSE: CIVI) is focused on the acquisition, development and production of oil and natural gas in the Rocky Mountain region, primarily in the Wattenberg field of the Denver-Julesburg Basin of Colorado.
As of December 31, 2021, it had proven reserves of 397.7 MMbbls comprising 143.6 MMbbls of crude oil, 106.0 MMbbls of natural gas liquids and 888.5 Bcf of natural gas.
Benjamin Halliburton, chief investment officer at Building Benjamins, recommended buying Civitas, saying the company’s strong balance sheet and increased free cash flow could propel the stock to $110 next year (up 60 .3%), and that its annual dividend could reach $6 more. $1.63 currently.
Market cap: $3.4 billion
P/E ratio (front): 4.78
Cumulative returns since the beginning of the year: 44.6%
Enerplus Corporation (NYSE:ERF)(TSX:ERF), together with its subsidiaries, engages in the exploration and development of crude oil and natural gas in the United States and Canada. The Company’s oil and gas properties are located primarily in North Dakota, Colorado and Pennsylvania; and Alberta, British Columbia and Saskatchewan.
Related: Canada Studying Direct LNG Exports to Europe
As of December 31, 2021, the company had proven and probable gross reserves of approximately 8.2 million barrels (MMbbls) of light and medium crude oil; 20.7 million barrels of heavy crude oil; 299.3 million barrels of tight oil; 56.2 million barrels of natural gas liquids; 19.7 billion cubic feet (Bcf) of conventional natural gas; and 1,367.9 billion cubic feet of shale gas.
Scotiabank analyst Jason Bouvier told the Financial Post chose Enerplus as one of Canada’s energy companies with the lowest break-even points (including hedging gains).
Market cap: $64.1 billion
P/E ratio (front): 6.45
Cumulative returns since the beginning of the year: 140.4%
Based in Houston, TX, Western Oil Company (NYSE: OXY) together with its subsidiaries, engages in the acquisition, exploration and development of oil and gas properties in the United States, the Middle East, Africa and Latin America. The Company also has a chemical segment that manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organic compounds, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates and calcium chloride; vinyls comprising vinyl chloride monomer, polyvinyl chloride and ethylene.
Back in May, Ecopetrol (NYSE: EC) announced an agreement to develop four blocks in deep water offshore Colombia with Occidental Petroleum. Ecopetrol has revealed that it will take a 40% stake in the blocks while Occidental subsidiary Anadarko Colombia will hold a 60% stake and serve as operator.
Canadian natural resources
Market cap: $61.3 billion
P/E ratio (front): 3.67
Cumulative returns since the beginning of the year: 34.7%
Canadian Natural Resources Limited (NYSE: CNQ) acquires, explores, develops, produces, markets and sells crude oil, natural gas and natural gas liquids (NGLs).
As of December 31, 2020, the company had total proven crude oil, bitumen and NGL reserves of 10,528 million barrels (MMbbl); total proven and probable crude oil, bitumen and NGL reserves were 13,271 million barrels; SCO’s proven reserves were 6,998 MMbbl; SCO’s total proven and probable reserves were 7,535 million barrels; proven natural gas reserves were 12,168 billion cubic feet (Bcf); and total proven and probable natural gas reserves were 20.249 billion cubic feet.
Canadian oil sands companies are among the cheapest, and CNQ seems to be making the difference.
By Alex Kimani for Oilprice.com
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