Despite the energy sector having been one of the worst-hit sectors during the COVID-19 pandemic due to the cessation of economic activity globally and travel restrictions, voluntary production cuts by OPEC+ eventually drove an increase in oil prices. While production cuts may not continue for much longer, rising demand due to…
reopening economic activities and increasing mobility should drive oil prices higher in the coming quarters. And despite decent progress on U.S.-Iran talks regarding the lifting of the sanctions, Goldman Sachs expects crude oil to rise to $80 per barrel by the end of the year.
Investors’ interest in oil energy stocks is evident in SPDR S&P Oil & Gas Exploration & Production ETF’s (XOP) 15.5% gains over the past month compared to the SPDR S&P 500 ETF Trust’s (SPY) 0.6% returns. According to ResearchAndMarkets, the global oil and gas pipeline market is expected to grow at a CAGR of more than 6% between 2021 – 2026.
Given this backdrop, we think it could be wise to bet on shares of oil energy companies Continental Resources, Inc. (CLR – Get Rating), Bonanza Creek Energy, Inc. (BCEI – Get Rating), Vista Oil & Gas, S.A.B. de C.V. (VIST – Get Rating), and SandRidge Energy, Inc. (SD – Get Rating). They are expected to continue benefiting from rising oil prices.
Continental Resources, Inc. (CLR – Get Rating)
CLR explores for, develops, and produces crude oil and natural gas in the United States. The company sells its crude oil and natural gas production to energy marketing, crude oil refining, and natural gas gathering and processing companies. It’s proved reserves are 1,104 million barrels of crude oil equivalent (MMBoe) with proved developed reserves of 627 MMBoe.
The company has doubled its quarterly dividend to $0.11 per share, which was paid on May 24, 2021. This reflects its commitment to delivering strong shareholder capital returns. The company’s CEO, Bill Berry said, “Continental’s outstanding first quarter results and accelerated shareholder returns, which includes our reinstated dividend and exceptional progress on debt reduction, underscore Continental’s commitment to delivering strong cash flow generation, consistent asset performance and operational excellence.”
CLR’s revenue climbed 38% year-over-year to $1.21 billion for its fiscal first quarter ended March 31, 2021. Its operating income came in at $405.70 million compared to $193.59 million operating loss in the prior-year period. Its net income came in at $260.27 million compared to a $186.78 million net loss in the year-ago period. Also, the company’s EPS was $0.72 compared to a $0.51 loss per share in the prior-year period.
Analysts expect CLR’s EPS to increase 387.5% year-over-year to $0.46 for the quarter ending September 30, 2021. Its revenue is expected to increase 497.8% year-over-year to $1.05 billion for the current quarter ending June 30, 2021. The stock soared 127.5% over the past year to close yesterday’s trading session at $31.94.
CLR’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Momentum, and a B grade for Growth, Sentiment and Quality. Within the Energy – Oil & Gas industry, CLR is ranked #16 of 93 stocks. To see CLR’s ratings for Stability and Value, click here.
Bonanza Creek Energy, Inc. (BCEI – Get Rating)
Oil and natural gas company BCEI is engaged in the acquisition, exploration, development, and production of oil and related liquid-rich natural gas. Its primary oil and liquids-weighted assets are in the Wattenberg Field in Colorado and it has proved reserves of 118.2 million barrels of oil equivalent.
On May 10, BCEI and Extraction Oil & Gas, Inc. (XOG) announced an agreement to combine in an all-stock merger of equals. The combined company will be named Civitas Resources, Inc. BCEI also completed its merger with HighPoint Resources Corporation (HPR) on April 1, 2021. These mergers could help improve the company’s operations in the near- to mid-term.
The company’s oil and gas sales increased 22.8% year-over-year to $74.16 million for the first quarter, ended March 31, 2021. Its other income came in at $188,000 compared to a $1.67 million loss in the prior-year period.
For the quarter ending September 30, 2021, analysts expect…
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