This company has very large exposure to crude oil. Continental Resources Inc. (NYSE: CLR) is primarily a producer of onshore U.S. oil and has positioned itself in two growing hydrocarbon discoveries in the country: 1) the Bakken oil play in Montana and North Dakota, and 2) the SCOOP/STACK in Oklahoma, giving the company good growth opportunities for years to come.
Many on Wall Street feel that the company’s investment thesis is virtually unmatched. Investors get core Permian-like acreage at a non-Permian valuation. Of greatest importance, Continental is one of few diversified large-cap stocks that offers investors exposure to low-cost oil outside of the Permian. With current capacity and distribution issues in the Permian, this is another solid reason to own shares.
Driven by significantly better 2016 and 2017 results when utilizing the high-intensity completions, and having an unhedged 2018 and 2019 oil production profile, the company is estimated to generate a 5.4% and 5.6% free cash flow yield at the strip. Toss in an expansive low-cost oily resource inventory, which could provide decades of drilling locations with a reasonable valuation, and the shares are compelling.
The $72 RBC price target compares with the consensus target of $74. Shares closed Monday at $63.43. Look for the earnings report on August 7.
This company is expected to have a stunning percentage of its production come in as natural gas. EQT Corp.’s (NYSE: EQT) superior cost structure and above-average growth may help it exploit stable and rising natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years, the company exhibits industry-leading organic growth momentum.
With more than 125 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology. This technology is designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint.
Second quarter 2018 adjusted earnings per share beat the consensus estimate and also improved from the prior-year level. Surging profit from the EQM Gathering segment primarily contributed to the strong second-quarter earnings that were somewhat negated partially by lower natural gas equivalent prices.
The stock was hammered on the results despite total operating revenues jumping 53.1% year over year as the top line numbers missed estimates. This is offering investors a very good entry point on the shares.
Investors receive a 0.24% dividend. RBC has set its price target at $74. The consensus target is $69.06, and shares closed at $49.69 on Monday.
Pioneer Natural Resources
Many Wall Street analysts love this stock for a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) operates a modern fleet of more than 24 top performing drilling rigs throughout onshore oil and gas producing regions of the United States and Colombia. Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.
Pioneer is a huge player in the Permian Basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian as it expects to deliver solid production growth in 2018 and beyond.
The company’s unmatched depth of low-cost inventory and balance sheet allow it to compete favorably in both mild and moderate recovery case scenarios. In addition to asset and financial strength, many analysts feel that Pioneer offers the second highest multiple contraction among the large-cap Permian pure-play peers, as well as the highest free-cash-flow yield.
Investors receive a 0.05% dividend. The RBC price target is $226. The consensus target is $243.72, and pioneer closed on Monday at $191.27. Its report is expected August 7.
These top energy companies are all large cap leaders that give investors the liquidity and strength many are looking for. Those wanting to play it safe may want to go with the companies that have already reported for the second quarter.