For Immediate Release
Chicago, IL – May 20, 2013 – Today, Zacks Equity Research discusses the U.S. Oil & Gas, including Chevron Corp. (CVX), SM Energy Co. (SM), EPL Oil & Gas Inc. (EPL), Halliburton Co. (HAL) and CNOOC Ltd. (CEO).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at
Considering the turbulent market dynamics of the energy industry, we always advocate the relatively low-risk conglomerate business structures of the large-cap integrateds, with their fortress-like balance sheets, ample free cash flows even in a low oil price environment and growing dividends.
Our preferred name in this group remains Chevron Corp. (CVX). Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.
Within the domestic exploration and production (E&P) group, we like SM Energy Co. (SM) and EPL Oil & Gas Inc. (EPL). Supported by attractive oil and gas investments, balanced and diverse portfolio of proved reserves, together with development drilling opportunities, we expect the companies to sustain their production growth and profitability over the foreseeable future.
Further, we remain optimistic on the near-term prospects of Halliburton Co. (HAL). The oilfield services behemoth -- among the top three players in each of its product/service categories -- is enjoying strong demand for its services in international markets and expects the trend to continue in the coming years. Additionally, the company remains in excellent financial health and has recently announced a 39% increase in its quarterly dividend.
China's CNOOC Ltd. (CEO) is also a top pick. CNOOC remains well-placed to benefit from the country's growing appetite for energy and the turnaround in commodity prices. In particular, the company enjoys a monopoly on exploration activities in China 's very prospective offshore region in addition to having a growing presence in the country's natural gas and liquefied natural gas (LNG) infrastructure. The recent acquisition of Canadian energy producer Nexen Inc. will further improve CNOOC’s growth profile by augmenting proven reserves by 30%, while helping it to vastly expand its holdings in Canada.
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