Its revenue streams consist of oil and gas royalties, easements, commercial leases, material sales and land sales. Texas Pacific Land Trust also provides water services such as water sourcing, water treatment, infrastructure development, water disposal and water tracking. Raymond James analyst John Freeman (Strong Buy) adds that the Biden administration’s recent approval of COP’s Alaska Willow Project is another long-term tailwind for the company. At its peak, Willow is expected to produce a sum of oil equivalent to nearly 40% of the state’s current oil production, Freeman writes. While the S&P 500 generated a total return of 7.5% in the first quarter, XLE’s total return amounted to -4.3%.
That means focusing on those with relative immunity to price fluctuations, such as E&Ps with ultra-low production costs and integrated oil giants. Another way to invest in the oil patch is to focus on using it to generate dividend income. The company launched an industry-first, fixed-plus-variable dividend framework in 2021. It pays out as much as 50% of its excess cash flow each quarter via variable dividend payments after funding its fixed base dividend and capital expenses.
Suncor Energy is a Canadian integrated oil company that produces crude oil by refining oil sands. The company is smaller than the other oil majors on this list, which also means its share price is more volatile than our other picks. The Texas-based giant shattered records during a bumper 2022 off the back of surging oil prices, banking $56 million in profits, the highest ever https://day-trading.info/ for a Western oil company. The global crude oil market has been on a rollercoaster ride over the last year. Oil hit a 14-year high of $120 in the wake of Russia’s invasion of Ukraine, but since then prices have steadily fallen below $80 a barrel. Meanwhile, the Street’s average price target of $172.97 gives FANG implied price upside of about 23% in the next 12 months or so.
Add in the generous dividend yield of 8%, and FANG’s implied total return comes to more than 30%. With an average price target of $130.42, Wall Street gives COP implied price upside of about 22% in the next 12 months or so. Add in the dividend yield, and the implied total return comes to about 25%. Indeed, the Energy Select Sector SPDR Fund (XLE), which is the largest and most widely traded oil exploration and production exchange-traded fund, generated a total return of more than 64%. Generally speaking, it is relatively risky to buy individual stocks rather than index funds that provide broader exposure to the market.
Pioneer Natural Resources Company (NYSE:PXD)
Although the company posted “slightly disappointing” fourth-quarter results by its own historical standards, Freeman stresses that EOG will have some of the largest production growth in his coverage area. It’s a good idea to read up on the stocks you want to buy before you dive in. Industry news coverage, analyst reports and company financial statements can help you get more comfortable with your decision. And note that it can be especially risky to purchase volatile investments using high-interest debt such as credit cards. If your investments decline in value, you’ll still owe interest on the price you paid for them — deepening your losses.
Perhaps the most problematic aspect when discussing debt is the relatively high cost of debt servicing the company has to handle. Throughout the years, Petrobras took out loans at what can be considered very high-interest rates as seen below. Last year, the company paid out more than $3 billion towards interest payments on the debt, meaning Petrobras is paying around a 5% interest rate on its debt. Management indicated that future interest payments https://forexbox.info/ should be in the range of $2 billion per year thanks to the recent financial results. Hopefully, the company can leverage the recent financial successes to handle this issue as well in the upcoming period. As defined within the company dividend policy, management is committed to paying out $4 billion in dividends for years in which Brent trades above $40/bbl, with several different predefined adjustments depending on business results.
Risk management in this sector
The same announcement from the second week of 2023 confirmed a $75 billion share repurchase program. A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. As a senior writer at AOL’s DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities. We believe everyone should be able to make financial decisions with confidence. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Specifically, ExxonMobil has increased its dividend payout to shareholders for 39 consecutive years. The company currently pays a quarterly dividend of 91 cents per share, and its yield stands at 3.3%. We used Insider Monkey’s collection of 943 hedge fund portfolios to determine which oil companies they had invested in as of the fourth quarter of last year.
Petrobras: Still The Best Oil Stock
The last time the company enjoyed this level of commodity prices, it found itself in a very different financial situation. The company carries 74% less gross debt while producing 158% more in operating cash flow. In terms of servicing its debts alone, Petrobras has to https://forexhistory.info/ deal with 65% fewer interest payments. We can see that the company has significantly improved its financial position. On the back of the ongoing hike in commodity prices, predominantly the high oil prices, Petrobras managed to deliver an incredibly strong quarter.
Its operations vary from processing and transportation to storing and marketing fuels. Meanwhile, the Street’s average target price of $144.87 gives EOG stock implied upside of about 23% in the next year or so. There are companies that find and pump oil, companies that provide oilfield services, companies that refine oil and integrated companies that do it all. In addition, there are some specialized companies that own and operate oil pipelines. When you see prices rising or falling at the gas pump, you might wonder how those market shifts are playing out with oil stocks on Wall Street.
Additionally, the companies performed well during the very favorable oil climate of the last year, while cash is on hand to help weather inevitable upticks in volatility in the industry going forward. Bursting cash reserves of $36 billion, equating to $10.35 per share, offer flexibility. TotalEnergies is a French integrated oil and gas company with a presence across the value chain. With Europe much more reliant on Russian energy supplies than the U.S., the crisis in Europe over the last year might not be over quite yet. Bulls cite FANG’s compelling valuation – as well as management’s commitment to returning cash to shareholders through buybacks and dividends – as just a few reasons to be constructive on the name.