Energy Business

6 Oil and Gas 'Survivors' That Are Incredibly Solid Contrarian Buys Now

EOG Resources

This leading energy company is also a top pick across Wall Street. EOG Resources Inc. (NYSE: EOG) is one of the largest independent exploration and production companies operating in the United States, Canada, Trinidad, the United Kingdom and China.

Despite some rough going over the past month, in February the company did post adjusted fourth-quarter earnings that beat consensus expectations on better realizations, lower operating expenses and depreciation, depletion and amortization. The company had $440 million of free cash flow generated after dividends.

Shareholders receive just a 0.95% dividend. The $49 Stifel price target was raised to $73, while the consensus target is only $39.52. EOG Resources stock closed at $16.83, up just over 13% on Tuesday.

Noble Energy

Noble Energy Inc. (NYSE: NBL) is an independent energy company engaged in the acquisition, exploration and production of crude oil, natural gas and natural gas liquids worldwide. Its principal projects are located in Denver-Julesburg Basin, Marcellus Shale, Eagle Ford Shale and Permian Basin of the United States, as well as in deepwater Gulf of Mexico, offshore Eastern Mediterranean and offshore West Africa.

The company has been in the process of a reset in operating cash flow toward gas in Israel, which trades at above two times U.S. gas prices and could substantially contribute to cash flow this year.

Stifel boosted the price target to $18 from $9, while the consensus target is $14.47. Noble Energy stock climbed over 13% on Tuesday and closed at $6.04.

Parsley Energy

This is another small-cap stock for aggressive investors to consider. Parsley Energy Inc. (NYSE: PE) is an oil and gas producer with 227,000 net acres in the Permian Basin. The majority of acreage sits on the Midland side of the basin, but the company also holds a small acreage position in the Delaware Basin. Through strategic acquisitions and acreage swaps, it has grown its acreage position since its initial public offering and has over 7,900 horizontal locations across multiple prospective zones

The company is catalyst rich and a Permian Basin pure play. Parsley Energy has some of the strongest wells in the basin, generating returns that are among the best in the industry. It is also rapidly de-risking its drilling inventory and is well positioned to continue to beat its strong growth projections.

The $11 Stifel price target was raised to $13, which compares to the $15.94 consensus price target and the most recent close at $5.73. Shares rose just under 20% on Tuesday.

PDC Energy

This is another smaller cap name, and another somewhat off-the-radar play, but it has tantalizing assets for a company looking to add growth potential. PDC Energy Inc. (NYSE: PDCE) is a diversified small-cap exploration and production firm with assets in the Rockies, Permian and Utica Shales. The company’s core position is in the Wattenberg, with 100,000 net acres alongside the recently acquired 55,000 net acre position in the Permian Basin.

The company was targeting 10% to 15% production growth in 2020, and operating progress continues with operating expenses improving and well cost declining in the Delaware with longer laterals and modified completion design.

Though upgrading it to Buy from Hold, Stifel dropped its price target to $11 from $14. The consensus target is $27.28, and the stock was last seen trading at $6.21, up over 8% on the day.

All these stocks have been eviscerated by the relentless and withering selling. However, the analysts have done their work by looking for companies that are poised to survive this year and hang around until prices improve. While these are not for conservative accounts, there could be some big money made on these names. In addition, it’s not out of the question that all could be ripe candidates if some of the expected massive industry consolidation takes place over the rest of 2020 and next year.

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