We are upbeat about QEP Resources, Inc’s QEP prospects and believe that it is a promising pick at the moment.
The company currently sports a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.
Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.
Access to Permian & Haynesville Core Acres
The company is among the leading explorers and producers of oil and natural gas with focus on natural gas acres in Haynesville shale and oil resources in Permian and Williston basins.
Through third-quarter 2018, the company has drastically raised production from all the resources. In the Williston Basin, QEP Resources boosted production by 3%, while in the Permian basin production jumped more than 100%. The upstream energy player’s production in the Haynesville shale play surged 37% in the third quarter.
Low Lease Operating Cost & Breakeven Oil Price
Through the first nine months of 2018, the company lowered its lease operating expense (LOE) by 5%, boosting profit. Notably, in the Permian, the company managed to lower its third-quarter 2018 LOE by 31% year over year.
Moreover, although West Texas Intermediate (WTI) oil is trading significantly below $50 per barrel mark, the company’s Permian operations are still profitable given that the breakeven oil price in the resource has been estimated by Pioneer Natural Resources Company PXD at lower than $30 a barrel.
Moreover, with natural gas contributing significantly to total production, the company is well placed to capitalize on growing clean energy demand. Investors should know that through 2018, natural gas contributed to roughly 32% of the nation’s electricity generation, queuing ahead of coal, per U.S. Energy Information Administration.
Other Stocks to Consider
Other prospective players in the energy space are TC PipeLines, LP TCP, Enterprise Products Partners L.P. EPD and Unit Corporation UNT. While TC PipeLines carries a Zacks Rank #2, Enterprise Products and Unit sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
TC PipeLines beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 15.6%.
Enterprise Products will likely post earnings growth of 36.4% and 6.8% through 2018 and 2019, respectively.
Unit Corporation surpassed the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 21.3%.
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TC PipeLines, LP (TCP) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Unit Corporation (UNT) : Free Stock Analysis Report
QEP Resources, Inc. (QEP) : Free Stock Analysis Report
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
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