While oil prices have risen fallen dramatically over the past few months, one thing that’s remained steady is the growing domestic output of the United States.
Following President Trump’s mandate of moving the country to an independent energy stance, America has seen an explosion in natural gas and oil output, with the Permian Basin leading the way.
With international energy companies all jumping in to stake a piece of the basin for themselves, analysts have come together to pick the top five companies poised to explode thanks to this revival.
Goldman Sachs analyst Brian Singer singled out five of the top companies that he thinks are most likely to succeed. With the recent decline of oil prices, investors need to be particularly picky when it comes to their choices, as falling prices mean lower profit margins and less-efficient producers will struggle to see any sort of a bottom line.
With this in mind, Singer singled out a few companies as the best in this sector. Chevron (NYSE: CVX) was his top pick, alongside Pioneer Natural Resources (NYSE: PXD). Both companies have shown they can operate efficiently in the area, with Chevron saying it will still be profitable despite the recent decline in oil prices.
Pioneer, on the other hand, has remained one of the most cost-conscious oil producers in the area. Thanks to owning plenty of adjacent acreage, they can drill in “long laterals,” a technique that involves drilling sideways for thousands of feet to make extracting oil easier.
His other three picks were Diamondback Energy (NASDAQ: FANG), EOG Resources (NYSE: EOG) and Propetro Holding Corp (NYSE: PUMP).
The cost to break even in the Permian Basin has been estimated to be as low as $33 a barrel for some companies, well below the $53.87 and $62.74 West Texas Intermediate Crude and Brent Crude futures were selling at on Monday.
Advancements in drilling technology have also made shale drilling even more efficient, with producers are to drill at lower costs than ever seen before.
All of this points to a great opportunity for investors looking to cash in on this development. The Goldman Sachs analyst also expects more positive changes to come, with new pipelines clearing up bottlenecks that have hindered transporting of oil so far.
Chevron Company Profile
Chevron is an integrated energy company with exploration, production, and refining operations worldwide.
Chevron is the second- largest oil company in the United States with production of 2.9 million of barrels of oil equivalent a day, including 6.9 million cubic feet a day of natural gas and 1.8 million of barrels of liquids a day.
Production activities take place in North America, South America, Europe, Africa, Asia, and Australia. Its refineries are in the United States, South Africa, and Asia for total refining capacity of 1.6 million barrels of oil a day.
Proven reserves at year-end 2018 stood at 12.1 billion barrels of oil equivalent, including 6.8 billion barrels of liquids and 31.6 trillion cubic feet of natural gas. – Warrior Trading News
Pioneer Natural Resources Company Profile
Headquartered in Irving, Texas, Pioneer Natural Resources is an independent exploration and production company with operations throughout the southern and central United States.
Following planned divestitures, Pioneer will be exclusively focused on the Midland portion of the Permian Basin in Texas. At year-end 2018, Pioneer’s proven reserves were 977 million barrels of oil equivalent, or boe, with net production of 320 mboe per day.
Oil and natural gas liquids represented 80% of production and 77% of proven reserves. – Warrior Trading News
