Oil prices have rallied to multi-year highs, with U.S. Crude trading at its highest level since 2014. Rising demand amid supply restraints is the driving force behind the price rally.
Furthermore, in the World Oil Outlook (WOO) report, OPEC projects that oil’s share in world energy consumption will increase to more than 31% by 2025, while 80% of the incremental demand might materialize within 2023. Also, the United States Energy Information and Administration (EIA) anticipates world energy consumption to increase by 50% over the coming 30 years and petroleum and other liquid fuels to remain the primary energy source. Given the unprecedented demand amid an ongoing supply crunch, analysts anticipate that oil prices could top $100 per barrel.
Occidental Petroleum Corporation (OXY)
OXY in Houston, Tex., is an oil and gas exploration company that operates primarily in the United States, the Middle East, Africa, and Latin America. The company operates through three segments: Oil & Gas; Chemical and Marketing; and Midstream.
On July 28, OXY declared a $0.01 regular quarterly dividend per share of common stock payable on October 15, 2021, to stockholders of record as of September 10, 2021.
In June, OXY entered a definitive agreement with a Colgate Energy Partners III, LLC affiliate to sell OXY’s non-strategic acreage in the Permian Basin for $508 million. The sale is expected to generate a significant cash inflow, which should improve the company’s financials.
In its second fiscal quarter, ended June 30, its total revenues increased 101.9% year-over-year to $6.01 billion. This can be attributed to a 103.5% year-over-year rise in net sales to $5.96 billion. OXY’s net income came in at $103 million, up substantially from its negative year-ago value.
A $1.36 consensus EPS estimate for the current year (fiscal 2021) indicates a 134.8% increase from the prior year. Likewise, the $24.59 billion consensus revenue estimate for the current year reflects a 51.2% year-over-year improvement.
OXY’s POWR Ratings reflect this positive outlook. The stock has an A Momentum grade, and a B Sentiment grade. In the 89-stock Energy – Oil & Gas industry, it is ranked #24. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Click here to see the additional POWR Ratings for OXY (Growth, Value, Stability, and Quality).
Continental Resources, Inc. (CLR)
CLR is an independent oil producer that is focused primarily on the United States premier oil field in the Bakken of North Dakota and Montana. The Oklahoma City, Okla.-based company sells its products to energy marketing companies and crude oil refineries.
On July 30, CLR increased its quarterly dividend to $0.15, which was to be paid on August 20, 2021. The company’s decision to increase its dividend by $0.04 reflects its commitment to pay back shareholders and its confidence in its asset base.
CLR’s total revenues increased 603.1% year-over-year to $1.24 billion in its second fiscal quarter, ended June 30. Its non-GAAP EBITDAX rose 2,651.6% from the prior-year quarter to $990.94 million. Its non-GAAP net income and non-GAAP EPS stood at $332.77 million and $0.91, respectively, representing a substantial increase from their negative year-ago values.
Analysts expect CLR’s EPS to improve 639.1% year-over-year to $1.24 in the current quarter (ending December 2021), while the Street’s $1.39 billion revenue estimate for the current quarter indicates a 65.5% rise from the same period last year. Moreover, CLR has an impressive earnings surprise history; it has topped consensus EPS estimates in three out of the trailing four quarters.
CLR’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 stock has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality. It is ranked #8 in the Energy – Oil & Gas industry. To see the additional POWR ratings for Value and Stability for CLR, click here.
Ovintiv Inc. (OVV)
OVV operates as an oil, natural gas, and natural gas liquids exploration company focused on developing its multi-basin portfolio. The company owns principal assets in locations such as Permian in West Texas and Anadarko in west-central Oklahoma. OVV is headquartered in Denver, Colo.
On September 28, OVV announced its share buy-back program, which is expected to increase shareholder returns and generate free capital by efficiently allocating capital.
Also in September, OVV announced a new capital allocation framework that might increase returns to shareholders and facilitate the generation of greater capital returns. Regarding this initiative, OVV President and CEO Brendan McCracken said, “We will generate superior returns and free cash flow by continuously improving capital efficiency and expanding margins while driving down emissions. We will deliver that value to our shareholders through disciplined capital allocation.”
For its fiscal second quarter, ended June 30, OVV’s total revenues climbed 133.1% year-over-year to $1.69 billion. Its non-GAAP cash flow rose 141.1% from the prior-year quarter to $733 million, while non-GAAP operating earnings stood at $290 million, up substantially from its negative year-ago value.
The Street’s $1.77 EPS estimate for the current quarter (ending December 2021) reflects a 152.9% year-over-year rise, while the Street’s $1.92 billion revenue estimate for the current quarter indicates a 25.4% improvement from the prior-year quarter. In addition, OVV has beaten consensus EPS estimates in three out of the trailing four quarters, which is impressive.
It’s no surprise that OVV has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has an A Momentum grade, and a B Growth and Value grade. It is ranked #20 out of the 48 stocks in the Foreign Oil & Gas industry. This industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see OVV ratings for Stability, Sentiment, and Quality here.
Note that OVV is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
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OXY shares were trading at $31.96 per share on Thursday afternoon, down $0.32 (-0.99%). Year-to-date, OXY has gained 84.83%, versus a 19.48% 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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