Black Gold Boom: 3 Oil Stocks Primed to Pump as Prices Peak

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Middle East tensions have pushed crude oil to a six-month high, boosting oil stocks as analysts predict sustained price growth and profit opportunities. Baytex Energy (BTE): It is positioned to ...

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Global Income A (icdiv) SGD-H","XOM":"埃克森美孚","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","TTTN":"老虎中美互联网巨头ETF","LU0070302665.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) ACC","FCF":"第一联邦金融","LU0368265418.SGD":"Blackrock World Energy Fund A2 SGD-H","BK4588":"碎股","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU0912757837.SGD":"JPMorgan Investment Funds - Global Income A (mth) SGD-H","LU0792757196.USD":"TEMPLETON SHARIAH GLOBAL EQUITY FUND \"A\" (USD) ACC","LU0985489474.SGD":"First Eagle Amundi International AHS-C SGD-H","BK4504":"桥水持仓","LU1718418525.SGD":"JPMorgan Investment Funds - Global Select Equity A (acc) SGD","LU0878866978.SGD":"First Eagle Amundi International AHS-QD SGD-H","SG9999014542.SGD":"United Income Focus Trust Acc SGD","LU2133065610.SGD":"JPMorgan Investment Funds - Global Dividend A (mth) SGD","BK4581":"高盛持仓","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist"},"translate_title":"黑金热潮：价格见顶，3只石油股准备上涨","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XOM":1,"ROCC":1,"FCF":1,"FANG":1,"BTE":1,"BAC":1,"SKIS":1,"TTTN":0.76},"content_text":"Middle East tensions have pushed crude oil to a six-month high, boosting oil stocks as analysts predict sustained price growth and profit opportunities.\nBaytex Energy (BTE): It is positioned to benefit from higher crude prices with a focus on debt reduction, shareholder returns, and expected free cash flow growth.\nDiamondback Energy (FANG): It is expected to gain advantages in the Permian Basin by acquiring Endeavor Energy and generate value for shareholders with a strong dividend yield and optimized asset development.\nExxon Mobil (XOM): It has a strategic advantage in the Stabroek block and a significant presence in the Permian Basin, poised to capitalize on higher oil prices with growth expectations and a positive price target forecast by analysts.\n\n\n\n\n\n \n\nSource: stockwars / Shutterstock.com\n\n\n\nGeopolitical tensions in the Middle East pushed the price of crude oil to a six-month high last week. Naturally, investor interest in oil stocks has increased significantly recently, boosting the sector to the second-best market performer.\nThe oil and gas sector has appreciated 17% in 2024, and this positive trend appears set to continue. While the situation remains unstable, certain oil stocks will likely continue benefiting from higher profits if prices remain elevated.\nAnalysts expect the crude oil prices to trade close to recent heights over the coming months, giving oil stocks more room to appreciate. Persistent underinvestment in developing new oil production due to expectations of a transition to renewable energies has contributed to forecasts of a supply shortage this year. As prices have remained higher, some analysts have even revised their price forecasts upwards—for example, Bank of America (NYSE:BAC) now forecasts both WTI and Brent crude oil in the $95 range a barrel this summer.\nAdditional reasons supporting higher oil prices include stronger-than-expected economic growth in the United States and China, OPEC+ restricting output, and falling global inventories. Summer also typically coincides with increased demand for crude oil, fuelled in part by the start of the driving season in the U.S.\nAs prices appear headed to a new peak, three oil stocks are well-positioned to outperform as demand increases.\nBaytex (BTE)\nSource: Golden Dayz / Shutterstock.comWhile oil stocks face challenges from debt incurred during acquisitions, higher crude prices may benefit Baytex Energy (NYSE:BTE). The Canadian energy firm operates in the Permian basin and enjoys lower-cost oil production than its peers. Notably, the debt assumed through its acquisition of Ranger Oil (NASDAQ:ROCC) in 2023 presents risks in the current economic environment. However, the company expressed interest in paying down debt while maintaining low leverage with a mindful maturity schedule.\nDespite its cost position, Baytex trades at a modest forward price-to-earnings (P/E) ratio of 6.8x. Should crude oil prices remain elevated, the company is well positioned to direct increased free cash flow (FCF) toward reducing debt. The company has forecasted that free cash flow would reach $388 million at a WTI price of $73 per barrel. However, $81 per barrel could exponentially increase FCF by 63% to $635 million.\nWith outsized leverage to higher commodity prices, Baytex may be able to accelerate debt repayment and return capital to shareholders through share buybacks, representing potential upside for investors in oil stocks.\nDiamondback Energy (FANG)\nSource: Pavel Kapysh / Shutterstock.comDiamondback Energy (NASDAQ:FANG) could gain significant advantages in the Permian Basin by acquiring Endeavor Energy, the region’s largest privately held oil producer. The transaction will combine Diamondback’s low-cost production capabilities with Endeavor’s operational expertise and acreage. The company plans to finance a portion of the deal with cash on hand, minimizing debt while also using its own stock as consideration. The company announced a senior notes offering of $5.5 billion could attract investors looking for stability and growth potential as oil prices remain supportive.\nNotably, market participants have already factored the anticipated dilution from the deal’s stock component into Diamondback’s share price. Analysts have also revised EPS up nine times in the last 30 days alone while the oil stock trades at a reasonable P/E of 11.8x relative to its peers. FANG also offers investors a strong dividend yield of just under 4%, providing an attractive total return profile within the volatile energy sector.\nShould the acquisition close as planned, the combined entity will be well-positioned to generate value for shareholders through the optimized development of its Permian Basin assets.\nExxon Mobil (XOM)\nSource: Harry Green / Shutterstock.comThe major publicly traded international oil and gas company, Exxon Mobil (NYSE:XOM), also stands to benefit from higher crude oil prices. The company holds a strategic advantage through its 45% stake in the Stabroek block offshore Guyana. Stabroek, which remains under development, contains an estimated recoverable resource of approximately 11 billion barrels of oil. Exxon’s most recent approval to develop the Whiptail offshore oil field in Guyana is expected to increase Guyana’s oil production capacity by 250,000 barrels per day by 2027. Exploration activities continue across the block.\nExxonMobil is also a significant player in the Permian Basin of New Mexico and West Texas. The company expects Permian production to reach approximately 2 million oil-equivalent barrels per day by 2027. Trading at a P/E ratio of approximately 13.2x, analysts forecast a price target of $125 per share in the near future. This represents a 7% upside from current levels.\nHigher oil prices position XOM well to capitalize on supply concerns in the current market environment for oil stocks, especially as the WTI peak could occur any month from now.\nOn the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.\nStavros Tousios, MBA, is the founder and chief analyst at Markets Untold. With expertise in FX, macros, equity analysis, and investment advisory, Stavros delivers investors strategic guidance and valuable insights.Energy, OilGrowth Stocks\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/04/three-oil-stocks-primed-to-pump-as-prices-peak/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2428487320"}