After a prolonged disagreement among OPEC+ members regarding oil supply restrictions, Saudi Arabia and the United Arab Emirates reached an accord over the weekend to boost production by 400,000 barrels per day beginning in August. Following news of the agreement, the front-month West Texas Intermediate and Brent crude contracts witnessed their largest single-session percentage decline since March. Oil prices are currently hovering near $70 per barrel.
However, the baseline restrictions on oil production are expected to be lifted in May next year, as announced by OPEC+. Oanda senior market analyst Edward Moya said, “WTI crude’s fundamentals still support another massive move higher.”
Thus, oil prices are poised to make a strong rebound as demand rises in tandem with the economic recovery in developing regions. Thus, investors could capitalize on the dip in prominent oil stocks EOG Resources, Inc. (EOG), Energy Transfer LP (ET), Continental Resources, Inc. (CLR), and Apache Corporation (APA), whose stock prices are expected to soar in the near term.
EOG Resources, Inc. (EOG)
EOG in Houston, Tex., explores for and markets crude oil, natural gas, and natural gas liquids. The company operates in New Mexico and Texas in the United States; the Republic of Trinidad and Tobago; the People's Republic of China; and the Sultanate of Oman.
The company estimates it will administer $3.70 billion - $4.10 billion in capital expenditures in 2021 to maintain production at its fourth-quarter 2020 rate and fund a growing exploration program and emission reduction projects. The company also aims to achieve zero routine flaring by 2025 and hit net zero scope 1 and scope 2 GHG emissions by 2040. EOG’s commitment to sustainability should make it a popular stock among ESG investors.
EOG’s operating profit grew 1,506.9% from its year-ago value to $932 million in its fiscal first quarter, ended March 31, while its net income improved 6,670% year-over-year to $677 million over the period. The company’s net income per share increased 5,700% year-over-year to $1.16. Its cash and cash equivalents balance rose 16.5% from the prior-year quarter to $3.39 billion over this period.
A $15.94 billion consensus revenue estimate for the current year indicates a 44.5% improvement from the last year. Analysts expect the company’s EPS to come in at $6.55 in the current year, representing a 348.6% rise year-over-year. Furthermore, EOG surpassed the Street’s EPS estimates in three of the trailing four quarters.
Shares of EOG have gained 54.6% over the past year, and 48.2% year-to-date.
It is no surprise that EOG has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Momentum, and a grade B for Growth, Sentiment, and Quality. Among the 94 stocks in the Energy - Oil & Gas industry, EOG is ranked #20.
To see additional EOG ratings for Value and Stability, click here.
Energy Transfer LP (ET)
ET transports and stores natural gas, crude oil, and refined products. ET’s segments include intra-state transportation and storage, interstate transportation and storage, midstream, NGL, refined products transportation and services, crude oil transportation and services, investment in Sunoco LP, investment in USAC, and all others. ET is based in Dallas, Tex.
On July 13, The Republic of Panama and Energy Transfer LP signed a memorandum of understanding (MOU) to study the feasibility of joint participation in the development of liquified petroleum gas assets in Panama. This initiative should enable ET to expand its international operations into new markets.
On June 1, ET priced 900,000 series H preferred stocks at $1,000 per unit. The company raised $900 million in proceeds through the offering, which it plans to use to reduce its debt burden and for funding general partnership expenses.
ET’s revenues increased 46.2% year-over-year to $17 billion in its fiscal first quarter, ended March 31. Its income from continuing operations grew 6,570.5% from its year-ago value to $4.07 billion. Its net income came in at $3.64 billion, indicating a 477.7% rise year-over-year. The company’s net income per limited partner unit increased 478.1% year-over-year to $1.21.
The Street expects ET’s revenues to increase 71.1% year-over-year to $66.66 billion in the current year. The company’s EPS is expected to increase 891.7% year-over-year to $1.9 in the current year.
ET has gained 38.1% over the past six months to close yesterday’s trading session at $9.68. The stock has gained 56.6% year-to-date.
ET has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. It has an A grade for Value, and a B grade for Growth. It is ranked #15 in the Energy - Oil & Gas industry.
To see additional POWR Ratings for Quality, Momentum, Sentiment, and Stability, click here.
Continental Resources, Inc. (CLR)
CLR explores for, develops, and produces crude oil and natural gas. The Oklahoma City, Okla. company sells its crude oil and natural gas production primarily to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies.
CLR’s revenues increased 38% year-over-year to $1.22 billion in its fiscal first quarter, ended March 31. Its income from operations stood at $405.70 million, up 309.6% from the same period last year. Its net income grew 239.3% from its year-ago value to $260.28 million. The company’s EPS increased 241.2% year-over-year to $0.72.
A $4.62 billion consensus revenue estimate for the current year indicates a 78.5% increase year-over-year. The Street expects the company’s EPS to rise 313.7% from the prior-year quarter to $2.50 in the current quarter.
CLR gained 89.1% over the past year. The stock has gained 106.9% year-to-date.
CLR has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. CLR has an A grade for Momentum, and a B for Growth, Sentiment, and Quality. It is ranked #18 in the Energy - Oil & Gas industry.
Click here to view additional CLR ratings for Value and Stability.
Apache Corporation (APA)
APA explores for and produces oil and gas. The company operates through its subsidiaries: Apache Corporation and APA Corporation Suriname. APA is based in Houston, Tex.
On May 4, APA inked an agreement with Egypt’s Ministry of Petroleum and Mineral Resources and the Egyptian General Petroleum Corporation to modernize the country’s petroleum sector. This should facilitate higher investment levels by Apache Egypt, resulting in more production, while also delivering cost efficiencies through the introduction of new technology.
APA’s total revenues increased 39.2% year-over-year to $1.87 billion in its fiscal first quarter, ended March 31. Its net income attributable to common stock improved 108.7% year-over-year to $388 million. The company’s EPS increased 108.6% year-over-year to $1.02.
Analysts expect APA’s revenues to increase 64.6% year-over-year to $7.09 billion in the current year. A $2.76 consensus EPS estimate for the current year represents a 355.6% rise from the prior year. APA has an impressive earnings surprise history as well; it beat the consensus EPS estimates in each of the trailing four quarters.
Shares of APA have gained 29.6% over the past year and 26.7% year-to-date.
It is no surprise that APA has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The stock has an A grade for Momentum and Quality, and B for Growth and Sentiment. APA is ranked #8 in the Energy - Oil & Gas industry.
To see additional APA ratings for Value and Stability, click here.
EOG shares were trading at $70.17 per share on Monday afternoon, down $3.74 (-5.06%). Year-to-date, EOG has gained 44.95%, versus a 14.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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