13 Most Profitable Natural Gas Stocks
In this article, we discuss the 13 most profitable natural gas stocks in the world. To skip our detailed analysis of the gas and energy sectors, go directly to the 5 Most Profitable Natural Gas Stocks.
The energy sector is once more a focal point on the global stage as we approach the end of 2023. This renewed attention is driven by the COP28 climate conference held in Dubai, where governments from nearly every corner of the world reached a climate agreement following two weeks of intensive negotiations. The past couple of years have been marked by significant shifts for participants and investors in the natural gas and oil industry, especially as global demand rebounded in 2022, nearly two years after the onset of the coronavirus pandemic.
Focusing specifically on natural gas, the United States has witnessed a significant increase in natural gas production since the advent of the fracking boom in the mid-2000s. In October, U.S. liquefied natural gas (LNG) producers significantly increased exports to 7.92 million metric tons, marking the second-highest monthly level on record. Although slightly below the record of 8.01 million metric tons in April, the October figures showed an increase from 7.12 million metric tons in September, when plant maintenance led to a reduction in U.S. production. Europe remained the primary recipient of U.S. LNG, accounting for 60% of all exports last month—an increase of 8 percentage points. Asian customers constituted 20% of exports, down from 30% in September, while Latin America received 5% of cargo, down from 8% in the previous month.
According to the U.S. Energy Information Administration, the introduction of LNG supplies from new export projects, both those that came online this year and those scheduled to start service this winter, combined with increased output at existing facilities, particularly in the United States, is expected to contribute to balancing global natural gas markets. With Europe's natural gas storage inventories full at the commencement of the 2023–24 winter season, the EIA anticipates that, barring extreme weather conditions, there will be less demand for natural gas heating in Europe and limited growth in demand from Asia compared to previous years.
Despite facing downward pressure from various factors, natural gas is anticipated to continue playing a significant role in the energy industry until renewable energy fully displaces fossil fuels. The current low prices are impacting natural gas stocks, leading to a decline in their market values. Seizing this opportunity, investors may want to keep an eye on some of the most profitable natural gas stocks, which include Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and ConocoPhillips (NYSE:COP) for potential investment.
A sunset view of an oil and gas refinery located in the San Juan Basin, United States.
Our Methodology
To make our list of the most profitable renewable natural gas stocks, we narrowed down a list of energy companies that have operations involving natural gas, and ranked them according to their lates trailing twelve month net income. For these stocks we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13. Baker Hughes Company (NASDAQ:BKR)
Number of Hedge Fund Holders: 40
Latest TTM Net Income: $1.68 billion
Headquartered in Houston and incorporated under the Delaware General Corporation Law, Baker Hughes Company (NASDAQ:BKR) holds a prominent position as a global leader in oil field and gas services. The company offers a comprehensive suite of services, covering oil well drilling, formation assessment, completion, production, and reservoir advisory services.
In a notable development on October 26, Baker Hughes Company (NASDAQ:BKR) revised its full-year revenue projection upwards, citing strong demand for its LNG equipment. The company has capitalized on the growing global demand for LNG, driven by the competitive push to construct new export terminals and the post-COVID recovery in oilfield activities. The revised revenue estimate for the current year now ranges between $25.4 billion and $25.8 billion, compared to the previous projection of $24.8 billion to $26 billion, as communicated during an earnings call.
As of the end of Q3 2023, 40 hedge funds demonstrated keen interest in Baker Hughes Company (NASDAQ:BKR), revealing disclosed positions valued at $625.8 million. Notably, as of September 30, Millennium Management, led by Israel Englander, emerged as the leading investor in the company with a position valued at $124.13 million.
Much like Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and ConocoPhillips (NYSE:COP), Baker Hughes Company (NASDAQ:BKR) ranks as one of the most profitable natural gas stocks to invest in.
12. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 42
Latest TTM Net Income: $2.45 billion
Kinder Morgan, Inc. (NYSE:KMI) stands as a leading energy infrastructure company in North America, recognized for its proficiency in owning and operating oil and gas pipelines along with terminals. The company holds ownership interests in or manages an extensive network covering approximately 83,000 miles of pipelines and 143 terminals.
In a strategic move on November 6, Kinder Morgan, Inc. (NYSE: KMI) finalized an agreement to acquire NextEra Energy Partners LP’s South Texas natural gas pipeline assets for $1.815 billion in cash. The STX Midstream pipeline system connects the Eagle Ford Basin to markets in both Mexico and the U.S. Gulf Coast. The assets involved in this acquisition include a 90% ownership stake in the NET Mexico pipeline and a 50% interest in Dos Caminos LLC. Significantly, this marks the sixth acquisition by Kinder Morgan in the past three years.
As of the end of the September quarter of 2023, 42 hedge funds, as tracked by Insider Monkey, reported having stakes in Kinder Morgan Inc. (NYSE: KMI), reflecting an increase from 36 in the previous quarter. The combined value of these stakes approaches $769.6 million.
11. Halliburton Company (NYSE:HAL)
Number of Hedge Fund Holders: 41
Latest TTM Net Income: $2.63 billion
Halliburton Company (NYSE:HAL) operates as a prominent oilfield service provider, specializing in serving the upstream oil and gas sector throughout the entire reservoir lifecycle. The company offers a diverse range of services, covering activities from hydrocarbon discovery, geological data management, drilling, formation assessment, well construction, completion, to production optimization.
On October 4, Citigroup raised its stock target for Halliburton Company (NYSE:HAL) from $42.00 to $46.00, aligning with analyst Scott Gruber’s optimistic outlook on future earnings and operational efficiency. Gruber’s "Buy" rating is based on the expectation that Halliburton's investments in electronic fracking, coupled with efficient execution, will lead to market share expansion and improvements in Completion and Production (C&P) margins.
Insider Monkey's analysis of the third quarter 2023 investment activities of 910 hedge funds identified 41 funds with investments in Halliburton Company (NYSE:HAL). The top shareholder in Insider Monkey’s database is Pzena Investment Management, managed by Richard S. Pzena, holding 3.56 million shares valued at $144.49 million.
10. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 35
Latest TTM Net Income: $3.05 billion
Enbridge Inc. (NYSE:ENB) is a multinational energy and pipeline corporation headquartered in Calgary, Alberta, Canada. The company operates an extensive network of pipelines that traverse Canada and the United States, facilitating the transportation of diverse energy resources, including crude oil, natural gas, and LNG.
On November 3, Enbridge Inc. (NYSE:ENB) reiterated its interest in smaller acquisitions while progressing with the finalization of a $14 billion agreement to acquire three U.S. gas utilities from Dominion Energy, expected to conclude in 2024. Additionally, the company announced agreements to increase its ownership in German offshore wind projects for 625 million euros ($668.7 million) and to acquire seven U.S. renewable natural gas facilities for $1.2 billion.
According to our hedge fund data for the third quarter, 35 hedge funds held stakes in Enbridge Inc. (NYSE:ENB), with a total stake value of $401.46 million. Zimmer Partners emerged as the leading shareholder in Enbridge Inc. (NYSE:ENB) at the end of the third quarter, holding 4.1 million shares in the company.
9. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 52
Latest TTM Net Income: $3.79 billion
Devon Energy Corporation (NYSE:DVN) is a company focused on hydrocarbon exploration primarily in the United States. Incorporated in Delaware, its main corporate headquarters is situated at the Devon Energy Center, a 50-story skyscraper located in Oklahoma City, Oklahoma.
On December 11, Morgan Stanley upgraded Devon Energy Corporation (NYSE:DVN) stock from Equal Weight to Overweight and increased the price target to $52, up from $48. The firm cited its anticipation of improved capital efficiency for the company in 2024.
Among the 910 hedge funds monitored by Insider Monkey, 52 of them held stakes in Devon Energy Corporation (NYSE:DVN). The largest stake in Devon Energy Corporation (NYSE:DVN) was held by Donald Yacktman’s Yacktman Asset Management, which possesses a $145.2 million stake in the company.
8. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 75
Latest TTM Net Income: $4.45 billion
Occidental Petroleum Corporation (NYSE:OXY) is a U.S.-based company focused on hydrocarbon exploration in the United States and the Middle East. Furthermore, the company is involved in petrochemical manufacturing operations in various locations, including the United States, Canada, and Chile. Incorporated in Delaware, Occidental Petroleum Corporation (NYSE:OXY) has its corporate headquarters in Houston.
Within the pool of 910 hedge funds monitored by Insider Monkey, 75 held positions in Occidental Petroleum Corporation (NYSE:OXY). The primary stakeholder in the company was Warren Buffett's Berkshire Hathaway, possessing a stake valued at $13.2 billion.
7. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 45
Latest TTM Net Income: $5.36 billion
Established in 1989, Chesapeake Energy Corporation (NASDAQ:CHK) is committed to the exploration and responsible development of key assets located in three prominent U.S. oil and gas regions: the Eagle Ford, Haynesville, and Marcellus Shales. The company's headquarters are situated in Oklahoma City, recognized as a major hub for the natural gas and oil industry. Throughout 2022, Chesapeake Energy Corporation (NASDAQ:CHK) achieved a daily production rate of approximately 4.0 billion cubic feet equivalent (bcfe) per day, consisting primarily of approximately 90% natural gas and 10% total liquids.
On November 22, Wells Fargo analyst Roger Read revised the price target for Chesapeake Energy Corporation (NASDAQ:CHK) stock, lowering it to $88 from $89 while maintaining an Overweight rating.
As of the end of the third quarter of this year, Insider Monkey’s survey of 910 hedge funds identified 45 that had invested in Chesapeake Energy Corporation (NASDAQ:CHK). Among these, the largest stakeholder is Oaktree Capital Management, led by Howard Marks, with holdings valued at $603.6 million.
Chesapeake Energy Corporation (NASDAQ:CHK) joins the ranks of Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and ConocoPhillips (NYSE:COP) as one of the most profitable natural gas stocks.
6. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 62
Latest TTM Net Income: $11.16 billion
Headquartered in Houston, Texas, ConocoPhillips (NYSE:COP) operates as an independent exploration and production (E&P) company, engaging in the global exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, natural gas liquids, and liquefied natural gas.
On November 2, ConocoPhillips (NYSE: COP) exceeded Wall Street's third-quarter profit expectations and announced a 14% increase in its quarterly dividend. This announcement resulted in a more than 5% surge in the company's shares. ConocoPhillips (NYSE:COP) highlighted its ability to sustain this enhanced dividend level through 2024, subject to the dynamics of oil and gas prices.
A total of 62 hedge funds tracked by Insider Monkey had stakes in ConocoPhillips (NYSE:COP) as of the end of the third quarter of 2023. The biggest stakeholder of ConocoPhillips (NYSE:COP) was Natixis Global Asset Management’s Harris Associates which owns a $1.61 billion stake in the company.
Oakmark Select Fund made the following comment about ConocoPhillips (NYSE:COP) in its second quarter 2023 investor letter:
“ConocoPhillips (NYSE:COP) is one of the largest and most efficient exploration and production companies in the country. The company has an extensive resource base of high-quality drilling inventory in the U.S. and various international locations as well as a growing liquified natural gas business. In our view, the depth and quality of ConocoPhillips’s inventory is a competitive differentiator that is not fully captured in today’s share price. Over the next 10 years, we believe ConocoPhillips will be able to return more than 100% of its current market cap to shareholders via dividends and share repurchases while growing its production at a mid-single-digit annual pace. We believe ConocoPhillips is also among the best managed companies in the oil and gas industry and we are impressed by its history of accretive capital allocation under CEO Ryan Lance. The stock has meaningfully underperformed the broader market year-to-date and is an attractive addition to our portfolio.”
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Disclosure: None. 13 Most Profitable Natural Gas Stocks is originally published on Insider Monkey.
