Despite the energy sector having been one of the worst-hit sectors during the COVID-19 pandemic due to the cessation of economic activity globally and travel restrictions, voluntary production cuts by OPEC+ eventually drove an increase in oil prices. While production cuts may not continue for much longer, rising demand due to reopening economic activities and increasing mobility should drive oil prices higher in the coming quarters. And despite decent progress on U.S.-Iran talks regarding the lifting of the sanctions, Goldman Sachs expects crude oil to rise to $80 per barrel by the end of the year.

Investors’ interest in oil energy stocks is evident in SPDR S&P Oil & Gas Exploration & Production ETF’s (XOP) 15.5% gains over the past month compared to the SPDR S&P 500 ETF Trust’s (SPY) 0.6% returns. According to ResearchAndMarkets, the global oil and gas pipeline market is expected to grow at a CAGR of more than 6% between 2021 – 2026.

Given this backdrop, we think it could be wise to bet on shares of oil energy companies Continental Resources, Inc. (CLR), Bonanza Creek Energy, Inc. (BCEI), Vista Oil & Gas, S.A.B. de C.V. (VIST), and SandRidge Energy, Inc. (SD).  They are expected to continue benefiting from rising oil prices.

Continental Resources, Inc. (CLR)

CLR explores for, develops, and produces crude oil and natural gas in the United States. The company sells its crude oil and natural gas production to energy marketing, crude oil refining, and natural gas gathering and processing companies. It’s proved reserves are 1,104 million barrels of crude oil equivalent (MMBoe) with proved developed reserves of 627 MMBoe.

The company has doubled its quarterly dividend to $0.11 per share, which was paid on May 24, 2021. This reflects its commitment to delivering strong shareholder capital returns. The company’s CEO, Bill Berry said, “Continental’s outstanding first quarter results and accelerated shareholder returns, which includes our reinstated dividend and exceptional progress on debt reduction, underscore Continental’s commitment to delivering strong cash flow generation, consistent asset performance and operational excellence.”

CLR’s revenue climbed 38% year-over-year to $1.21 billion for its fiscal first quarter ended March 31, 2021. Its operating income came in at $405.70 million compared to $193.59 million operating loss in the prior-year period. Its net income came in at $260.27 million compared to a $186.78 million net loss in the year-ago period. Also, the company’s EPS was $0.72 compared to a $0.51 loss per share in the prior-year period.

Analysts expect CLR’s EPS to increase 387.5% year-over-year to $0.46 for the quarter ending September 30, 2021. Its revenue is expected to increase 497.8% year-over-year to $1.05 billion for the current quarter ending June 30, 2021. The stock soared 127.5% over the past year to close yesterday’s trading session at $31.94.

CLR’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has an A grade for Momentum, and a B grade for Growth, Sentiment and Quality. Within the Energy – Oil & Gas industry, CLR is ranked #16 of 93 stocks. To see CLR’s ratings for Stability and Value, click here.

Bonanza Creek Energy, Inc. (BCEI)

Oil and natural gas company BCEI is engaged in the acquisition, exploration, development, and production of oil and related liquid-rich natural gas. Its primary oil and liquids-weighted assets are in the Wattenberg Field in Colorado and it has proved reserves of 118.2 million barrels of oil equivalent.

On May 10, BCEI and Extraction Oil & Gas, Inc. (XOG) announced an agreement to combine in an all-stock merger of equals. The combined company will be named Civitas Resources, Inc. BCEI also completed its merger with HighPoint Resources Corporation (HPR) on April 1, 2021. These mergers could help improve the company’s operations in the near- to mid-term.

The company’s oil and gas sales increased 22.8% year-over-year to $74.16 million for the first quarter, ended March 31, 2021. Its other income came in at $188,000 compared to a $1.67 million loss in the prior-year period.

For the quarter ending September 30, 2021, analysts expect BCEI’s EPS and revenue to increase 232% and 327.2%, respectively, year-over-year to $1.66 and $269.03 million. The stock soared 164.2% over the past year to close yesterday’s trading session at $42.99.

BCEI’s POWR Ratings reflect its solid prospects. The company has an overall B rating,  which translates to Buy in our proprietary ratings system. It has an A grade for Momentum, and a B grade for Growth and Quality.

To see the additional POWR Ratings for BCEI (Stability, Value and Sentiment), click here. It is ranked #8 in the Energy – Oil & Gas industry.

Vista Oil & Gas, S.A.B. de C.V. (VIST)

Based in Mexico, VIST together with its subsidiaries is engaged in the exploration and production of oil and gas in Latin America. With roughly 134,000 acres, its principal assets are in Vaca Muerta. The company has proved reserves of 128.1 million barrels of crude oil equivalent (MMBOE).

VIST’s revenue climbed 58% year-over-year to $115.90 million its fiscal first quarter ended March 31, 2021. Its adjusted EBITDA grew 131% year-over-year to $58.30 million. Its net profit came in at $4.90 million compared to a $21.30 million net loss in the prior-year period. Also, the company’s operating profit came in at $13.20 million compared to a $17.80 million operating loss in the last quarter.

Analysts expect VIST’s EPS to increase 67% year-over-year to $1.02 in its fiscal year 2022. Its revenue is expected to increase 80.4% year-over-year to $494.23 million in its fiscal year 2021. The stock has soared 27.7% so far this year to close yesterday’s trading session at $3.27.

It’s no surprise that VIST has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Momentum and Sentiment, and a B grade for Growth and Value.

Click here to see VIST’s ratings for Stability and Quality. VIST is ranked #13 of 52 stocks in the B-rated Foreign Oil & Gas industry.

SandRidge Energy, Inc. (SD)

An independent oil and gas company SD is engaged in the acquisition, development, and production of oil and natural gas. The company holds interest in roughly 380,000 net leasehold acres in Oklahoma and Kansas, as well as total proved developed reserves of 33.4 million barrels of oil equivalent.

On April 22, SD announced the acquisition of all the overriding royalty interest assets of SandRidge Mississippian Trust I. Carl Giesler, the company’s President and CEO said, “This Acquisition is a good example of the relatively low-capital, high-return, quick-payback, ‘small-ball’ investments.”

For its fiscal first quarter, ended March 31, 2021, SD’s income from operations came in at $35.06 million compared to a $12.76 million operating loss in the prior-year period. Its net income for the quarter came in at $35.04 million compared to a $12.67 million net loss in the year-ago period. Also, the company’s EPS came in at $0.94 compared to a $0.36 loss per share in the prior-year period.

Analysts expect SD’s EPS to increase at a rate of 5% per annum over the next five years. The stock gained 254.4% over the past year to close yesterday’s trading session at $5.21.

SD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Growth and Momentum, and a B grade for Value, Sentiment and Quality.

Click here to access SD’s rating for Stability as well. It is ranked #1 of 12 stocks in the Energy – Drilling industry.

CLR shares were trading at $31.40 per share on Tuesday afternoon, down $0.54 (-1.69%). Year-to-date, CLR has gained 93.36%, versus a 12.45% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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