Following a short dip in oil prices below $70 per barrel due to a coordinated release of strategic reserves, Brent Crude once again crossed the $80 per barrel mark. OPEC’s tight supply policies amid recovering demand pushed the oil prices to seven-year highs earlier in 2021.
However, oil prices retreated on Thursday amid fears of U.S. interest rate hikes. Brent crude futures fell 0.2% to $84.47 a barrel, while United States West Texas Intermediate (WTI) crude futures were down 0.6% to $82.12 per barrel. Furthermore, the U.S. Energy Information Administration (EIA) has predicted Brent Crude prices will average $75 per barrel in 2022 and will fall to $68 per barrel in 2023 because inventories are expected to increase.
Given this backdrop, we think the dividend-paying oil and gas stocks of EOG Resources, Inc. (EOG), National Fuel Gas Company (NFG), and California Resources Corporation (CRC) might be reasonable additions to one’s investment portfolio to ensure a stable income stream. These stocks are trading near their 52-week highs and have more upside potential.
EOG Resources, Inc. (EOG)
EOG in Houston, Tex., explores for, develops, produces, and sells crude oil, natural gas, and NGLs. The company’s primary producing areas are New Mexico, Texas, the United States, the Republic of Trinidad and Tobago, China, and Oman.
On October 5, EOG published its 2020 Sustainability Report, which highlighted its commitment to the environment and social engagement. The company reported a reduced emission intensity rate, increased water reuse, its plans for zero routine flaring by 2025, and net-zero ambitions.
On November 4, EOG announced a $0.75 per share dividend, payable on Jan.28, 2022. The new dividend reflects an 82% rise from the previous dividend to an indicated annual rate of $3.00 per share. EOG also declared a special dividend of $2.00 per share payable that was to be paid December 30. Its $3.00 annual dividend yields 2.94% at the prevailing share price. The company’s dividend payouts have increased at a 34.9% CAGR over the past three years and a 24.3% CAGR over the past five years. It has had four years of consecutive dividend growth.
EOG’s total operating revenue and other increased 112.2% year-over-year to $4.77 billion in its fiscal third quarter, ended September 30. Its operating income was $1.47 billion, up considerably from its negative year-ago value. And its adjusted net income and adjusted net income per share rose 401.6% and 402.3%, respectively, from the same period last year to $1.26 billion and $2.16.
Analysts expect EOG’s EPS to increase 352.1% year-over-year to $3.21 for its fourth fiscal quarter. The Street expects its revenue to rise 99.6% from the prior-year quarter to $5.92 billion for the same quarter. Also, EOG has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
Over the past year, EOG’s shares have gained 68.7% in price to close yesterday’s trading session at $102.00. It has gained 15.9% over the past month. It is trading just 1.4% below its 52-week high of $103.50. Wall Street analysts’ $117.06 median price target indicates a 14.8% potential upside. The price targets range from a low of $105.00 to a high of $130.00.
EOG’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. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
EOG has an A grade for Momentum and a B grade for Growth and Quality. In the 77-stock Energy – Oil & Gas industry, it is ranked #12. The industry is rated B. To see the additional POWR Ratings for Value, Stability, and Sentiment for EOG, click here.
National Fuel Gas Company (NFG)
NFG is a Williamsville, N.Y.-based diversified energy company that operates through the four broad segments of Exploration and Production; Pipeline and Storage; Gathering; and Utility. The company sells gas to industrial, wholesale, and commercial customers.
On January 11, Seneca Resources Company, LLC, the Exploration and Production segment of NFG, announced that it had received certification of 100% of its Appalachian natural gas production, which covers more than 1 billion cubic feet of daily gross production. The certification is expected to expand the company’s certified natural gas supply and cater to market demand.
On December 3, NFG approved a regular quarterly dividend of 45.5 cents per share on its common stock. The company’s $1.82 annual dividend yields 2.91% on current prices. NFG’s dividend payouts have increased a CAGR of 2.3% over the past three years and 2.4% over the past five years. The company has a record of eight consecutive years of dividend growth.
For its fiscal fourth quarter, ended September 30, NFG’s operating revenues increased 23.6% year-over-year to $355.99 million. Its operating income came in at $132.27 million, up substantially from its negative year-ago value. Its adjusted operating results and adjusted operating results per share improved 140.6% and 137.5%, respectively, from the prior-year quarter to $87.27 million and $0.95, respectively.
The $5.17 consensus EPS estimate for its fiscal year 2022 indicates a 20.5% year-over-year increase. And the $2.17 billion consensus revenue estimate for the same period reflects a 24.6% rise from the prior year. In addition, NFG has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 42.4% in price over the past year and 21.2% over the past six months to close yesterday’s trading session at $62.58. It is currently trading 5.1% below its 52-week high of $65.95. The $65.67 12-month median price target indicates a 4.9% potential upside. The price targets range from a low of $62.00 to a high of $69.00.
It is no surprise that NFG has an overall B rating, which translates to Buy in our POWR Rating system. NFG has a Growth and Quality grade of B. It is ranked #4 in the Energy – Oil & Gas industry. Click here to see the additional POWR Ratings for NFG (Value, Momentum, Stability, and Sentiment).
California Resources Corporation (CRC)
CRC is an independent oil and natural gas company in Bakersfield, Calif., that is focused on energy transition in the sector. The company explores for, produces, processes, and markets crude oil, natural gas, and natural gas liquids (NGLs) for marketers and refineries in California, and other buyers.
On December 9, CRC announced that it had received an A- from CDP for its 2021 climate disclosure. The company attained the highest position among all U.S. oil and gas companies, tying with one other. Regarding this, Mac McFarland, CRC’s President, and CEO stated, “Achieving a leadership level ranking for three years in a row validates CRC’s consistent approach to Environmental, Social and Governance (ESG) matters, as well as our emphasis on fostering a culture of safety and transparency. We remain focused on safely, responsibly and sustainably meeting California’s energy demand today, and leveraging our position to contribute to decarbonizing California in the future.”
On November 11, CRC declared a quarterly dividend of $0.17 per share of common stock, which aggregates to $0.68 annually. The dividend payout totals approximately $14 million, which was to be paid in the fourth quarter.
CRC’s total operating revenues increased 43.8% year-over-year to $588 million for its fiscal third quarter, ended September 30. Adjusted net income stood at $151 million, up substantially from its negative year-ago value, while adjusted net income per share rose 8.9% from the prior-year quarter to $1.83. Its adjusted EBITDAX improved 135% from the same period prior year to $242 million.
The Street’s $1.36 EPS estimate for its fiscal quarter ending March 2022 reflects a 950% improvement from the prior-year quarter. And the Street’s $536.98 million revenue estimate for the same period indicates a 36.6% year-over-year rise. In addition, CRC has beaten consensus EPS estimates in each of the trailing four quarters.
CRC’s shares have gained 75.3% in price over the past year and 52.9% over the past six months to close yesterday’s trading session at $44.34. The stock is currently trading 6% below its 52-week high of $47.18. The 12-month median price target of $56.50 indicates a 27.4% potential upside. The price targets range from a low of $49.00 to a high of $64.00.
This promising outlook is reflected in CRC’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. CRC has an A grade for Momentum and Quality and a B grade for Sentiment. It is ranked #8 in the Energy – Oil & Gas industry. In addition to the POWR Rating grades we have stated above, one can see CRC ratings for Growth, Value, and Stability here.
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EOG shares were trading at $105.30 per share on Friday afternoon, up $3.30 (+3.24%). Year-to-date, EOG has gained 19.41%, versus a -2.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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