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Tap the Crude Rally With These 3 Promising Upstream Firms

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The business environment for exploration and production activities has recovered massively as compared to last year, when the coronavirus pandemic had hit the energy market hard. Oil price has surged, brightening up the prospects for upstream energy players.

Oil Price Surges

The price of West Texas Intermediate (WTI) crude is approaching the $75-per-barrel mark again, highlighting a substantial improvement from the negative territory hit last April. Improving fuel demand, as coronavirus vaccines are being rolled out at a massive scale, is primarily aiding the rally in crude price.

Declining crude inventories are also backing the crude price rally. According to the U.S. Energy Information Administration (EIA), crude oil inventories for the week ending Sep 17 was recorded at 414 million barrels, marking the lowest level since October 2018.

With refiners returning to operations after getting hit by Hurricane Ida, and with the resumption of economic and social activities, the demand for oil will possibly rise further. There will not be enough supply of the commodity to meet that fuel demand since drilling activities have slowed down as upstream players are mainly focusing on stockholder returns rather than boosting output. Thus, improving fuel demand amid tight supply will continue to keep the crude pricing scenario favorable for exploration and production companies operating in the prolific U.S. resources.

3 Stocks in the Spotlight

Since selecting the right companies with promising upstream operations from the stock universe is not an easy task, we are employing our proprietary Stock Screener to zero down on three prospective names. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Magnolia Oil & Gas Corporation MGY has a strong footprint in the core of the low-risk and prolific Eagle Ford Shale and Austin Chalk formations. The company has set a 2021 production guidance, suggesting year-over-year growth of 6% to 9%. Thus, rising production amid favorable oil price will aid the bottom line of the upstream player. Owing to the positives, the company has gained 144.8% so far this year and is likely to increase further.

Whiting Petroleum Corporation WLL, with its footprint in prolific Bakken/Three Forks resource play in the Williston Basin, is among the largest upstream energy companies in the United States. The company has revised upward its oil production guidance for 2021. Thus, increasing production amid rising oil price will be aiding its bottom line. The leading exploration and production company, having gained 126% so far this year, is likely to gain further.

Headquartered in Dallas, TX, Matador Resources Company MTDR has a strong footprint in the liquid-rich Delaware Basin’s Wolfcamp and Bone Spring plays. The company has been ramping up production in the basin and has produced record daily barrels of oil equivalent volumes from Delaware in the recently concluded June quarter. By this year’s end, the company is expected to have 34 gross operated wells in progress in the Delaware basin.

Shares of this leading upstream energy player have gained 183.4% so far this year as the company expects its oil production to increase this year amid rising crude prices.


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Whiting Petroleum Corporation (WLL) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
Magnolia Oil & Gas Corp (MGY) : Free Stock Analysis Report
 
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