While governments worldwide have been taking several measures to transition into a renewable-energy-driven sustainable future, crude oil and natural gas companies continue to witness increasing demand. As a result, OPEC and its allies reached a deal last month to increase overall production by 400,000 barrels per day monthly beginning this month.
The rapid spread of the highly contagious Delta variant of the coronavirus continues to worry investors about global oil demand. However, oil prices rose to $71 a barrel yesterday on rising Middle East tensions. Moreover, the International Energy Agency estimates a 1.5 million barrel per day shortfall for the second half of this year, indicating a tight market despite the gradual supply increase by the major oil-producing countries.
Amid this backdrop, it would be wise to bet on quality oil and gas stocks Continental Resources, Inc. (CLR), Cimarex Energy Co. (XEC), and National Fuel Gas Company (NFG) because of their solid financials and impressive growth estimates.
Continental Resources, Inc. (CLR)
Operating for more than five decades, CLR is a crude oil and natural gas company with properties in the North, South, and East regions of the United States. The company is the largest leaseholder and one of the largest producers in the nation’s premier oil field, the Bakken of North Dakota and Montana.
CLR declared a quarterly dividend of $0.15 per share payable on August 20, representing a 36.4% increase from the previous dividend. This represents the company’s commitment to return significant cash to shareholders and demonstrates its confidence in the quality and sustainability of its asset base.
For the second quarter ended June 30, 2021, CLR’s total revenue came in at $1.24 billion, up 603.1% year-over-year. The company’s total production averaged 338.70 MBoepd in the quarter, representing a 67% year-over-year rise. Its non-GAAP net income came in at $332.78 million compared to a loss of $255.70 million in the prior year period. Its non-GAAP EPS came in at $0.91 compared to a loss of $0.71 in the year-ago period.
CLR’s revenue is expected to increase 78.5% year-over-year to $4.62 billion in fiscal 2021. Its EPS is expected to come in at $0.67 for the quarter ending September 30, 2021, up 518.8% year-over-year. Over the past nine months, the stock has soared 162.1% to close yesterday’s trading session at $34.86.
It’s no surprise that CLR has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
Also, the stock has an A grade for Momentum and Quality, and a B grade for Growth and Sentiment. Click here to see the additional POWR Ratings for CLR (Value and Stability). CLR is ranked #4 of 92 stocks in the Energy – Oil & Gas industry.
Cimarex Energy Co. (XEC)
XEC operates as an independent oil and gas exploration and production company primarily in Texas, Oklahoma, and New Mexico. Most of its activities are currently based in the Permian Basin and the Anadarko Basin in Western Oklahoma.
On May 24, 2021, XEC and Cabot Oil & Gas Corporation (COG) announced that they have entered into a definitive agreement whereby the companies will combine in an all-stock merger of equals. The combination is expected to create a free cash flow-focused, diversified energy company with the scale, inventory, and financial strength to thrive across commodity price cycles.
XEC’s top line surged 185.7% year-over-year to $712.38 million for the second quarter ended June 30, 2021. The company’s NGL production from the Mid-Continent segment for the quarter totaled 20,531 Bbls per day compared to 20,068 Bbls in the prior-year period. Its adjusted net income came in at $215.58 million compared to a loss of $52.41 million in the year-ago period. Its adjusted EPS was $2.09 compared to a loss per share of $0.51 in the prior year quarter.
Analysts expect XEC’s revenue and EPS to increase 66.4% and 479.1% year-over-year to $2.59 billion and $8.05, respectively, in the current year. Over the past nine months, the stock has gained 140.9% to close yesterday’s trading session at $64.91.
XEC’s POWR Ratings reflect this promising outlook. The stock has an A grade for Momentum, and a B grade for Growth and Quality.
In addition to the POWR Ratings grades I’ve just highlighted, one can see XEC’s ratings for Value, Sentiment, and Stability here. Again, XEC is ranked #27 in the same industry.
National Fuel Gas Company (NFG)
Diversified and integrated energy company NFG has a complimentary mix of natural gas assets located in the prolific Appalachian basin and quality oil-producing assets in California. The company operates through four segments: Exploration and Production; Pipeline and Storage; Gathering; and Utility.
NFG’s Exploration and Production segment, Seneca Resources Company, LLC, and the U.S. Well, Services, Inc. (USWS) announced their collaboration last month on an upcoming field trial using USWS’ Clean Fleet technology to complete a six-well pad in Lycoming County, Pa., within Seneca’s Eastern Development Area. This is expected to help it reduce its carbon footprint using the best in class emissions reduction practices.
For the fiscal third quarter ended June 30, 2021, NFG’s operating revenues increased 22.1% year-over-year to $394.40 million. The company’s adjusted EBITDA from the Exploration and Production segment came in at $116.05 million, up 79.1% year-over-year. Its net income increased 109.6% year-over-year to $86.48 million, while its EPS came in at $0.94, representing a 100% year-over-year rise.
NFG’s revenue is expected to come in at $415.73 million for the quarter ending September 30, 2021, representing a 44.4% year-over-year rise. In addition, the company’s EPS is expected to increase 34.9% year-over-year to $3.94 in fiscal 2021. Over the past six months, the stock has rallied 23.1% to close yesterday’s trading session at $51.97.
NFG’s strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth and Quality. Click here to access NFG’s ratings for Value, Momentum, Stability, and Sentiment as well.
NFG is ranked #30 in the Energy – Oil & Gas industry.
CLR shares were trading at $35.19 per share on Friday afternoon, up $0.33 (+0.95%). Year-to-date, CLR has gained 116.70%, versus a 19.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More…
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