There are many worthwhile oil and gas stocks to buy currently available. Especially while the oil and gas sector enjoys several significant benefits. Firstly, this sector remains vital for meeting global energy demands reliably and efficiently, ensuring stability in energy supply. Secondly, high oil prices and strong cash flows support the industry’s financial resilience. This dual approach fosters long-term sustainability, allowing companies to navigate evolving energy transition trends while delivering attractive returns to shareholders. Additionally, the industry’s technological advancements continue to drive innovation and optimize resource extraction, enhancing its attractiveness as an investment opportunity.
The when the looming economic recession arrives it will cause oil and gas stocks to drop in value. However, prices will surely increase in the long run, as evidenced above. Oil and gas are crucial to our world, while prices may dip, they will always bounce back up. The global oil and gas market, valued at $6.6 trillion in 2022, is anticipated to expand to $8.6 trillion by 2030, representing a CAGR of 3.80%. When they dip, you need to invest in these oil and gas stocks to buy, and you will enjoy significant profits later.
ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) is a leading exploration and production company for oil and natural gas, and COP holds a diverse portfolio of global assets. After rising 26.05% in the past year, analysts indicate that it still has upside potential. They forecast a 12.59% increase, with a median price target of $140.
ConocoPhillips benefits tremendously from its scale and deeply diversified portfolio of low-cost oil production. For instance, the company has exposure in the Permian Basin, the highest-producing oil field in the U.S. ConocoPhillips reinforced its position after acquiring Concho Resources and Shell’s assets in the region in 2021. With a free cash flow breakeven average of $35 WTI, ConocoPhillips’ low-cost portfolio ensures the company can make money in almost any environment.
Additionally, ConocoPhillips showcases a robust balance sheet. Ending 2023 with $6.9 billion of cash and $1 billion worth of long-term investments, the company is in a solid financial position. Also, boasting a debt-to-equity ratio of 0.3984 and a debt-to-CFO of 0.5, its strong balance sheet is a key strategic advantage.
Recently, ConocoPhillips made the final investment decision to develop the Willow project, which will likely serve as a powerful catalyst for the company. After five years of rigorous regulatory review, ConocoPhillips began construction in Alaska. Over the expected 30-year lifetime of the project, Willow is projected to produce around 600 million barrels of oil.
Diamondback Energy (FANG)
Diamondback Energy (NASDAQ:FANG) is a hydrocarbon exploration company in the Permian Basin in West Texas. Its shares have climbed 27.90% YTD and hold “buy” ratings from 23 analysts.
In Q1 2024, Diamondback reported remarkable financials that exceeded expectations. The company saw a 9% YoY increase in EPS to $4.50, while revenue jumped 16% to $2.23 billion. FANG also brought in $768 million in net income and boasts a gross profit margin of 84.04%.
FANG’s planned merger with Endeavor Energy Resources is the most significant catalyst behind its growth. It will combine two of the most prominent players in the Permian Basin to create the region’s third-largest oil and gas producer. Following the deal’s completion, the combined company is expected to pump 816,000 barrels of oil and gas daily and generate around 10% free cash flow accretion in 2025. Furthermore, FANG anticipates significant operational synergies and will secure valuable future drilling inventory through the deal. FANG’s shareholders recently approved the $26 billion acquisition, and is expected to close in Q4 2024.
With robust financial growth and enhanced Permian Basin operations, expect profit to skyrocket for Diamondback Energy.
Shell (SHEL)
Centered in London, Shell (NYSE:SHEL) is an active contributor in every area of the oil and gas industry. According to 28 analysts, its 12-month median price forecast is $80.50, with 75% of analysts calling it a “buy.”
Compared with some of its biggest competitors, Shell has had the most considerable YOY growth of 17.92%, indicating promising future results. It also offers a dividend of $2.59 annually, with an increase of 24.67%, which shows stability in the company’s finances.
The company recently acquired the Brewer Oil Company, expanding its enterprise. The acquisition was so that Shell could expand the number of retail sites. The combined powers of the Brewer Oil Company and Shell can boost Shell’s customer base and improve its company-owned footprint.
Shell maintains a high portfolio compared to its competitors, making it one of the best oil and gas stocks to buy.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
