It is no secret that oil prices are having a major affect on the global economy.
The commodity that once commanded $110 per barrel in 2014 just settled for October 2015 delivery at $38.85 per barrel, which is 71 cents lower than the month before – and significantly lower than the previous year.
The decline in oil prices has caused somewhat of a panic across the market however according to some, things may not be as bad as they seem.
“This is precisely what we might have hoped for, as this market collapse does present an enormous opportunity to buy some great oil stocks at bargain prices,” explained Daniel Dicker for TheStreet.com.
RELATED TOPIC: 3 energy stocks owned by billionaires to invest in right now
“Stocks are beginning to reach the equivalent value of their commodity counterparts. That means that opportunities are beginning to emerge in stocks that rely upon their underlying commodity prices.”
With that in mind, here are 10 stocks that we recommend looking into during this time of “panic”: Each has seen a high percentage return over the past few months, and each has at least one industry-impacting project either in the works on or the horizon—not to mention what may be the lowest open price the market will likely see for quite some time.
10. Marathon Petroleum Corporation (MPC)
Open price: $46
Although Marathon Petroleum Corporation has one of the lower percentage returns on this list (11 percent since May 2015), the 127-year-old company is also one of the most stable.
As one of the largest independent petroleum product refining, marketing, retail and transportation businesses in the United States, the company owns and operates seven refineries in the Gulf Coast and Midwest regions and maintains in-house means of product distribution, reducing costs and further ensuring quality control.
9. Pioneer Natural Resources Company (PXD)
Open price: $108
Although the open price is one of the highest on this list, Pioneer Natural Resources is a Fortune 500 company that shows a lot of promise for current and future investors.
The Texas-based oil and gas exploration and production company has seen a 29 percent return over the past three months and is heavily involved in the continued development of oil-rich shale plays throughout the state.
Specifically, Pioneer is the one of the largest producers in the Spraberry/Wolfcamp in the Permian Basin and a top operator at the Eagle Ford Shale. These projects alone give investors a reason to keep Pioneer at the top of the list.
8. Southwestern Energy Company (SWN)
Open price: $15
With a low open price and a high amount of potential, Southwestern Energy Company is another stock to consider adding to the portfolio. The company has been in business for more than 80 years and is the fourth largest producer of natural gas in the U.S. today.
Primarily focused on natural gas and crude oil exploration, development and production, the majority of the company’s resources are spent on the development of natural gas in the Fayetteville Shale in Arkansas and the Marcellus Shale in Pennsylvania. In addition, investors have seen a 44 percent return over the past three months.
7. Chesapeake Energy Corporation (CHK)
Open price: $6.33
Recently listed as No. 17 on Fortune’s list of fastest growing companies by revenue over the past 10 years, Chesapeake Energy is the second-largest producer of natural gas, and the 11th largest producer of oil and natural gas liquids in the United States.
In a recent press release, CEO Doug Lawler commented, “Despite the [recent downturn in commodity prices], we remain focused on lowering costs and improving operational efficiencies in our portfolio of high-quality assets.”
And it seems to be working: Chesapeake’s stock delivered a 57 percent return over the last three months.
6. ONEOK, Inc. (OKE)
Open price: $33
ONEOK, Inc. is the sole general partner and 37.8 percent owner of ONEOK Partners (NYSE: OKS), which owns a premier natural gas liquids system that allows the connection of NGL supply in the Mid-Continent, Permian and Rocky Mountain regions with key markets throughout the country.
According to the company’s 2015 SEC file, this partnership allows ONEOK Partners to focus on applying its “core capabilities of gathering, processing, fractionating, transporting, storing and marketing natural gas and NGLs through the rebundling of services across the energy value chains, primarily through vertical integration, to provide its customers with premium services at lower costs.”
ONEOK stocks had a 28 percent return since May 2015.
5. Cabot Oil & Gas Corporation (COG)
Open price: $22
Also based out of Texas, United States, Cabot Oil & Gas Corporation focuses on the exploration and production of oil and natural gas. Experiencing 37 percent return since May 2014, the company’s proactive planning as to how it would navigate industry ups and downs is proving to be successful.
Notably, the following the points were made outlined by the corporation in its 2015 SEC filing:
1. Disciplined Capital Spending Focused on Organic Projects
2. Low Cost Structure
3. Conservative Financial Position and Financial Flexibility
With focus like this – and numbers that don’t lie – Cabot Oil & Gas is another stock to look into.
4. Helmerich & Payne (HP)
Open price: $68
As the largest land driller in the U.S., Helmerich & Payne provides rigs to producers within the oil and gas sector. And although the company’s stocks have witnessed a 30 percent decline over the past six months, CEO John Lindsay was quick to point out the obvious: a “rapidly deteriorating energy market.”
While this is certainly no secret—Helmerich & Payne even expects drilling activity and rates for its rigs to continue to decline—as anyone who has been monitoring the market can attest, Helmerich & Payne know how to navigate the turmoil: The firm used the last downturn in oil prices to bolster market share from 9 percent in October 2008 to 16 percent by the end of 2014.
3. First Solar, Inc. (FSLR)
Open price: $46
A globally-recognized leader in PV solar systems, First Solar’s main focus is to provide financially-beneficial and environmentally-sound alternative solutions to electricity generation. The company’s integrated power plants utilize advanced technology to maintain at the forefront of the industry. Total return since May 2015 has been 22 percent and the stock’s growth doesn’t appear to be slowing down anytime soon.
In the company’s second quarter financial results, CEO Jim Hughes said: "We achieved significant financial and technological milestones this past quarter with the IPO of 8point3 Energy Partners and a new record module conversion efficiency of 18.6 percent.
“In combination with year-to-date bookings of 1.4GW and full year earnings guidance of over three dollars per share, we continue to execute across all elements of our business."
2. Range Resources Corporation (RRC)
Open price: $35
An independent oil and gas exploration company based out of Texas, United States, Range Resources Corporation recently released its second quarter financial report, indicating that while total spend for the company was approximately $700 million less than 2014, annual production growth increased 20 percent.
Chairman, President and CEO Jeff Ventura commented on the company’s performance: "Operational results in the second quarter continued to be excellent, as we lowered costs, improved capital efficiencies, exceeded production guidance and achieved great drilling results, especially in the dry gas area.”
Additionally, the company’s stock yielded a 43 percent return in the last three months, and Range is expanding its portfolio within the ethane market, further hinting that the time to buy may be now.
1. Chevron (CVX)
Open price: $73
Although the global oil giant’s earnings dropped a hefty 30 percent in the fourth quarter 2014, its refining operation were profitable, thus carrying the weight of losses felt in other parts of the business—and this is a good sign for investors.
While focused on the gamut of power and energy services, Chevron is currently spending billions of dollars each year to replace depleted wells across the globe.
According to company reps, the aggressive goal of boosting oil and gas production by 21 percent is right on-track for completion by 2017, as initially predicted. If this is indeed true, the supply-and-demand issue being experienced sector-wide – particularly with oil supply – may no longer exist—and investors will more than likely reap the benefits.
And even though it is reported that Chevron recently reduced its capital budget and suspended share buybacks, the company has maintained protection of its $1.07-per-share quarterly dividend and has made no indication of changing that fixed rate.
Note: All stock prices as of 9/1/2015
Energy Digital and WDM Group have no affiliation with any of the companies listed in this article.The information given in this article is for informational purposes only and should not be considered as financial advice.
Click here to read the October 2015 edition of Energy Digital magazine!
Sources used for this article include: