After ending the week as the worst performing sector amid growing recession fears, the energy sector pared losses with WTI crude up 1.7% at $79.79/bbl while Brent added 1.3% to trade at $87.42/barrel in Wednesday’s intraday session. Risk aversion sentiment has also hit U.S. natural gas futures, with the first-month October contract falling nearly 10% over the past week to trade at 6 $.54/MMBtu.
Oil prices are far from their mid-June peak, when Brent was trading at $129/bbl. Since those highs, stocks of companies sensitive to underlying commodity prices have performed poorly relative to those less sensitive to oil prices. A popular reference in the energy sector, the SPDR Energy Select Sector Fund (NYSEARCA: XLE) is down 25% from its peak in early June. Unsurprisingly, the majority of major oil companies have given up much of their earlier gains, demonstrating their sensitivity to oil prices. Here’s how the oil majors have fared since their June peak:
Exxon Mobil Inc. (NYSE: XOM) -18.0%, Chevron inc. (NYSE: CVX) -22.0%, Marathon Petroleum Corporation. (NYSE: MPC) -18.3%, Phillips 66 (NYSE:PSX) -29.6%, Valero Corp.. (NYSE: VLO) -29.6%, SA shell (NYSE: SHEL) -21.9%, BP S.A. (NYSE: BP) -19.4%, Total energies (NYSE: TTE) -25.6%, Eni SpA (NYSE: E) -34.1%.
Related: Oil Prices Are About To Reverse
On a more positive note, the liquidation has created some real bargains in the Oil Patch. The energy sector is currently trading at a PE ratio of 9.9x considerably cheaper than the multiple of 23.9x in April. Here are some even cheaper oil and gas stocks.
Market cap: $10.21 billion
P/E ratio (front): 4.23
Cumulative returns since the beginning of the year: 17.7%
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.
The Company’s principal assets include Permian in West Texas and Anadarko in West Central Oklahoma; and Montney in northeastern British Columbia and northwestern Alberta. Its other upstream assets include Bakken in North Dakota and Uinta in central Utah; and Horn River in northeastern British Columbia and Wheatland in southern Alberta.
In July, Mizuho upgraded the OVV to $78 from $54 (good for 88% upside from the current price), citing improved tailwinds.
Market cap: $4.49 billion
P/E ratio (front): 3.78
Cumulative returns since the beginning of the year: 12.3%
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, which represents a increase of almost 100%, and its annual dividend could reach $6. against $1.63 currently.
Market cap: $2.91 billion
P/E Ratio (Front): 4.10
Cumulative returns since the beginning of the year: 19.6%
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.
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 that they chose Enerplus as one of the Canadian energy companies with the lowest breakeven points (including hedging gains).
Market cap: $53.77 billion
P/E ratio (front): 5.45
Cumulative returns since the beginning of the year: 91.8%
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 deepwater blocks 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.
Market cap: $50.26 billion
P/E ratio (front): 4.96
Cumulative returns since the beginning of the year: 8.2%
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.
In August, Canadian Natural Resources reported better-than-expected second-quarter adjusted earnings as it posted record quarterly natural gas production. Q2 net income more than doubled to C$3.5B (US$2.72B), or C$3.00/share, from C$1.55B, or C$1.30/ stock, while cash flow from operating activities more than doubled from C$2.9 billion to nearly C$5.9 billion a year earlier.
Second quarter production increased to 1.2 M boe/day from 1.1 M boe/day last year, while natural gas production jumped 5% Q/Q and 30% Y/Y to reach a quarterly record of 2.1 M cfe/day. Meanwhile, Canadian Natural Resources raised its capital spending forecast to C$4.92 billion from its previous plan of C$4.345 billion, largely due to inflationary pressures.
By Alex Kimani for Oilprice.com
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Read this article on OilPrice.com
After ending the week as the worst performing sector amid growing recession fears, the energy sector pared losses with WTI crude up 1.7% at $79.79/bbl while Brent added 1.3% to trade at $87.42/barrel in Wednesday’s intraday session. Risk aversion sentiment has also hit U.S. natural gas futures, with the first-month October contract falling nearly 10% over the past week to trade at 6 $.54/MMBtu.
Oil prices are far from their mid-June peak, when Brent was trading at $129/bbl. Since those highs, stocks of companies sensitive to underlying commodity prices have performed poorly relative to those less sensitive to oil prices. A popular reference in the energy sector, the SPDR Energy Select Sector Fund (NYSEARCA: XLE) is down 25% from its peak in early June. Unsurprisingly, the majority of major oil companies have given up much of their earlier gains, demonstrating their sensitivity to oil prices. Here’s how the oil majors have fared since their June peak:
Exxon Mobil Inc. (NYSE: XOM) -18.0%, Chevron inc. (NYSE: CVX) -22.0%, Marathon Petroleum Corporation. (NYSE: MPC) -18.3%, Phillips 66 (NYSE:PSX) -29.6%, Valero Corp.. (NYSE: VLO) -29.6%, SA shell (NYSE: SHEL) -21.9%, BP S.A. (NYSE: BP) -19.4%, Total energies (NYSE: TTE) -25.6%, Eni SpA (NYSE: E) -34.1%.
Related: Oil Prices Are About To Reverse
On a more positive note, the liquidation has created some real bargains in the Oil Patch. The energy sector is currently trading at a PE ratio of 9.9x considerably cheaper than the multiple of 23.9x in April. Here are some even cheaper oil and gas stocks.
Market cap: $10.21 billion
P/E ratio (front): 4.23
Cumulative returns since the beginning of the year: 17.7%
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.
The Company’s principal assets include Permian in West Texas and Anadarko in West Central Oklahoma; and Montney in northeastern British Columbia and northwestern Alberta. Its other upstream assets include Bakken in North Dakota and Uinta in central Utah; and Horn River in northeastern British Columbia and Wheatland in southern Alberta.
In July, Mizuho upgraded the OVV to $78 from $54 (good for 88% upside from the current price), citing improved tailwinds.
Market cap: $4.49 billion
P/E ratio (front): 3.78
Cumulative returns since the beginning of the year: 12.3%
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, which represents a increase of almost 100%, and its annual dividend could reach $6. against $1.63 currently.
Market cap: $2.91 billion
P/E Ratio (Front): 4.10
Cumulative returns since the beginning of the year: 19.6%
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.
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 that they chose Enerplus as one of the Canadian energy companies with the lowest breakeven points (including hedging gains).
Market cap: $53.77 billion
P/E ratio (front): 5.45
Cumulative returns since the beginning of the year: 91.8%
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 deepwater blocks 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.
Market cap: $50.26 billion
P/E ratio (front): 4.96
Cumulative returns since the beginning of the year: 8.2%
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.
In August, Canadian Natural Resources reported better-than-expected second-quarter adjusted earnings as it posted record quarterly natural gas production. Q2 net income more than doubled to C$3.5B (US$2.72B), or C$3.00/share, from C$1.55B, or C$1.30/ stock, while cash flow from operating activities more than doubled from C$2.9 billion to nearly C$5.9 billion a year earlier.
Second quarter production increased to 1.2 M boe/day from 1.1 M boe/day last year, while natural gas production jumped 5% Q/Q and 30% Y/Y to reach a quarterly record of 2.1 M cfe/day. Meanwhile, Canadian Natural Resources raised its capital spending forecast to C$4.92 billion from its previous plan of C$4.345 billion, largely due to inflationary pressures.
By Alex Kimani for Oilprice.com
More reading on Oilprice.com:
Read this article on OilPrice.com