Recent hurricanes and rising COVID-19 cases have negatively impacted the oil & gas industry. However, the market remains bullish, as evidenced by the increase in oil prices for five straight days to near three-year highs today. Brent crude hit $79.52 per barrel.
Oil and natural gas exploration and production stocks PDC Energy, Inc. (PDCE), Magnolia Oil & Gas Corporation (MGY), and Oasis Petroleum Inc. (OAS) are expected to benefit from the surging oil prices and the bullish industry trends. Thus, we think these stocks could be worth betting on now.
PDC Energy, Inc. (PDCE)
PDCE is an independent exploration and production company that develops unconventional oil and natural gas resources and is focused mainly on the Wattenberg Field in Colorado and the Delaware Basin in West Texas. PDCE is based in Denver, Colo.
On August 25, PDCE declared a $0.12 quarterly dividend on its outstanding common stock, which was payable on September 22.
In its second fiscal quarter, ended June 30, PDCE’s total revenue increased 320.6% year-over-year to $228.87 million. Its adjusted EBITDAX rose 80.5% from the prior-year quarter to $358.30 million, while its adjusted EPS increased 1,085.7% from the same period last year to $1.66.
Analysts expect EPS to increase 51.9% year-over-year to $1.58 in the current quarter (ending September 2021). Likewise, the $558.78 million consensus revenue estimate for the current quarter indicates a 124.2% rise from the prior-year quarter. Furthermore, PDCE has an impressive surprise earnings history; has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 299.9% in price over the past year to close Friday’s trading session at $46.99.
PDCE’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.
PDCE has an A Momentum grade of A, and a Growth and Quality grade of B. In the 91-stock Energy – Oil & Gas industry, it is ranked #11.
Click here to see the additional POWR Ratings for PDCE (Value, Stability, and Sentiment).
Magnolia Oil & Gas Corporation (MGY)
MGY acquires, develops, and explores oil and natural reserves in the United States. The company is focused primarily on the Eagle Ford Shale and Austin Chalk formations. MGY is based in Houston, Tex. On September 24, MGY priced an underwritten block trade by affiliates of EnerVest, Ltd., of its Class A common stock. The trade generated gross proceeds to the selling stockholders of $122.85 million. The offering is expected to close on or about September 28.
MGY’s total revenue increased 202.7% year-over-year to $250.73 million in its second fiscal quarter, ended June 30. Its adjusted net income and adjusted net income per share came in at $98.23 million and $0.56, up substantially from their negative year-ago values. Its adjusted EBITDAX climbed 385.5% from the prior-year quarter to $195.07 million.
A $0.60 consensus EPS estimate for the current quarter (ending September 2021) reflects a 900% year-over-year increase. Likewise, the $271.88 million consensus revenue estimate for the current quarter indicates a 115% improvement from the same period last year. In addition, MGY beat consensus EPS estimates in three out of the trailing four quarters, which is impressive.
MGY’s stock has gained 202.7% in price over the past year and 135.4% year-to-date to close Friday’s trading session at $16.62.
MGY has an A grade for Momentum and Quality, and a B grade for Growth. It is ranked #20 out of the 91 stocks in the Energy – Oil & Gas industry.
To see the additional POWR Ratings for Value, Stability, and Sentiment for MGY, click here.
Oasis Petroleum Inc. (OAS)
OAS is an independent company for the exploration and production of oil and natural gas. It operates through two segments: Exploration and Production(E&P); and Midstream. The Houston, Tex., company went public on November 20, 2020 after financial restructuring.
On June 29, OAS closed an offering of common units by its Oasis Midstream Partners LP (OMP). Regarding the offering, Danny Brown, OAS’ Chief Executive Officer, said, “The OMP common unit offering accomplishes the mutually beneficial objectives of increasing OMP’s public ownership and liquidity while highlighting the value of Oasis’ ownership. Oasis will continue to evaluate strategies to increase visibility into its ownership in OMP and close the current sum of the parts discount imbedded in its stock price. As Oasis generates significant free cash flow, it remains committed to returning cash to shareholders.” The company also declared a $4.00 per share special dividend, payable on July 21, 2021.
For the three months ended June 30, OAS’ total revenue increased 136.3% year-over-year to $393.06 million. This can be attributed to a 172% year-over-year increase in oil & gas revenues to $255.23 million. Its net income attributable to OAS and EPS was $73.36 million and $3.52, respectively, representing a substantial increase from their negative year-ago values.
The Street’s $19.99 EPS estimate for the next year (fiscal 2022) indicates a 42.6% year-over-year increase, and the Street’s $1.34 billion revenue estimate for the coming year reflects an 11.9% increase from the current year.
OAS’s stock has gained 158.8% in price year-to-date to close Friday’s trading session at $95.90.
It’s no surprise that OAS has an overall rating of B, which translates to Buy in our POWR Ratings system.
OAS has a Momentum grade of A, and a Growth, Value, and Quality grade of B. It is ranked #7 in the Energy – Oil & Gas industry.
In addition to the POWR Rating grades we’ve stated above, one can see OAS ratings for Stability and Sentiment here.
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PDCE shares were unchanged in after-hours trading Monday. Year-to-date, PDCE has gained 147.06%, versus a 19.55% 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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