Energy Business

4 Exploration and Production Stocks to Buy for Continued Oil Recovery

Marathon Oil

This company is a leading integrated oil and gas firm with extensive upstream operations. Marathon Oil Corp. (NYSE: MRO) operates through three segments. The North America Exploration and Production segment develops, explores for, produces and markets crude oil and condensate, NGLs and natural gas in North America.

The International Exploration and Production segment explores for, produces and markets crude oil and condensate, NGLs and natural gas in Equatorial Guinea, Gabon, the Kurdistan Region of Iraq, Libya and the United Kingdom, as well as produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol in Equatorial Guinea.

The Oil Sands Mining segment mines, extracts and transports bitumen from oil sands deposits in Alberta and Canada, and it upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.

Top analysts cite the company’s higher multiple businesses, and the upstream cash margins have room to move up as shale production increases and oil prices recover. They also point out the stock trades at a very attractive discount to net asset value relative to industry peers.

Marathon investors are paid a 1.61% dividend. The $18 Deutsche Bank target is well above the consensus target of $14.75, as well as the Thursday close at $12.33 per share.

Pioneer Natural Resources

Many Wall Street analysts love this stock for a pure crude oil play, and it recently was upgraded by Deutsche Bank and Citigroup. Pioneer Natural Resources Co. (NYSE: PXD) engages in the exploration and production of oil and gas in the United States. The company produces and sells oil, natural gas and NGLs. It has operations primarily in the Permian Basin, Eagle Ford Shale and West Panhandle field in Texas and in the Raton field in southeastern Colorado.

Pioneer is a huge player in the Permian and the Eagle Ford, and it owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. With a stellar balance and a reported $2.5 billion in cash on the balance sheet, the company is poised to remain the number one player in the Permian.

The company announced fourth-quarter results in April and posted an adjusted loss of $0.18 per share, which much better than Wall Street analysts’ consensus expectations. Revenues also came in slightly higher than street expectations at $790 million.

Pioneer investors are paid a tiny 0.07% dividend. The Deutsche Bank price target is a solid $180, and the consensus figure is set at $178.90. Pioneer closed trading on Thursday at $167.05 per share.

Needless to say, the energy sector could still be in for some very difficult times as the overall global production is still a little too much for the markets to absorb. That said, some of the Middle East countries are still running huge monthly deficits, even at current higher prices, and a definitive production cut may improve not only pricing, but get the huge short interest to continue loosening up.

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