With the price of crude consistently over the $100 mark this year, we wanted to find the companies that had increased their production the most. While simply increasing production does not guarantee a higher stock price, it typically signals higher earnings to come. What we found was an interesting combination of larger integrateds with very aggressive exploration and production companies.
Growing demand from emerging markets, geopolitical instability in the Middle East and an overall improving economy here and abroad have all contributed to the higher price of oil. With the U.S. poised to become a major oil exporter in the not too distant future, it makes sense that American companies raising their oil production may have a bright future. Here are the companies that increased their oil production the most in 2013. Obviously the balance of the year is estimated, based on production to date. Our data source is a new Deutsche Bank research report.
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Continental Resources Inc. (CLR) will raise its production a staggering 38% this year, continuing a string of double-digit increases over the past four years. The company engages in the exploration, development and production of crude oil and natural gas properties in the north, south and east regions of the United States. The company sells its crude oil production to end users, as well as to midstream marketing companies or oil refining companies at the lease. Deutsche Bank has a $105 price target for the stock. The Thomson/First Call estimate is $110.
Noble Energy Inc. (NBL) is expected to raise its production in 2013 by a stellar 15%. The company is expected to benefit when Mexico opens the door for exploration and production from outside companies for the first time in 70 years. We recently wrote about other companies also looking to cash in. Noble also is revving up the spending to take advantage of higher oil prices. The company is expected to spend $2.37 billion this year. Deutsche Bank has a $73 price objective, and the consensus price target for the stock is $70.50. Investors are paid a 0.5% dividend.
Concho Resources Inc. (CXO) is expecting a 14% rise in its production this year. The company is considered one of the top “pure-play” Permian Basin names, and analysts foresee a very bright future. The Deutsche Bank target for the stock is $118, and the consensus is posted at $110.
BP PLC (BP) is expected to increase production by an impressive 13% in 2013. With much of the Gulf of Mexico oil spill drama from the in 2010 behind it, much of the headline risk is gone as well. The Deutsche Bank price target for the stock is listed at a converted $50, and the consensus price target is $48.77. BP pays investors a very strong 5.2% dividend.
Southwestern Energy Co. (SWN) is expected to have a total production increase of an impressive 13%. The company operates through two segments: Exploration and Production, and Midstream Services. The former segment primarily focuses on the Fayetteville Shale, an unconventional reservoir located in the Arkoma Basin in Arkansas, and it is involved in the exploration and production activities in the Marcellus Shale play in Pennsylvania, as well as in Texas, Arkansas and Oklahoma. The Deutsche Bank target on this Hold-rated stock is set at $38, and the consensus target is $43.
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Royal Dutch Shell PLC (RDS-A) is looking at 10% production growth and is another stellar energy total return play for investors. The company recently bought back 785,000 of its B-class shares, and it looks to buy more in the future. Deutsche Bank also carries a Hold rating on Royal Dutch Shell with a converted $70 price target. The consensus target was not posted. The stock pays a very strong 4.8% dividend.
Marathon Oil Corp. (MRO) is looking for a 7% jump in production in 2013. The company announced yesterday it will be repurchasing $1 billion worth of stock according to its existing share repurchase plan, while it is selling additional assets off Angola and purchasing acres in the Eagle Ford in Texas. The Deutsche Bank target on this stock to buy is $40, and the consensus target is $42. Shareholders are paid a 2.1% dividend.
Production gains are critical for companies looking to grow revenues and earnings. With America poised to become a true player in energy production and exportation, it makes sense for investors to look at stocks of companies growing their production. In addition, with pricing expected to stay firm, the companies will be making the proverbial hay while the sun shines.