Perhaps our readers have seen the video of President Trump speaking at the United Nations a few years ago, and warning Germany and the rest of Europe that being dependent on the Russians for their natural gas supply was dangerous. In the video, the German delegation is seen snickering at his remarks. Likely, they are not laughing anymore, as Russia has cut off natural gas supplies to Europe, claiming the harsh and punitive economic sanctions imposed by the West are responsible for the indefinite halt to gas supplies via Europe’s main pipeline the Nord Stream 1.
Now Germany and the rest of Europe is scrambling to replace the Russian supply. With autumn arriving on Thursday, September 22, that means one thing for sure: winter and cold weather will not be far behind. Bad news for Europe is good news for U.S. energy companies, especially those who are significant producers of natural gas. We screened our 24/7 Wall St. looking for energy companies that are big natural gas producers that also pay strong and reliable dividends.
Seven companies fit the bill. While all are rated Buy across Wall Street, it is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
Cheniere Energy
This top liquefied natural gas (LNG) play has made a huge move off the October 2020 lows. Cheniere Energy Inc. (NYSEAMERICAN: LNG) is an energy company primarily engaged in LNG-related businesses. The company operates through two segments.
Cheniere’s LNG terminal segment consists of the Sabine Pass and Corpus Christi LNG terminals. Its LNG and natural gas marketing segment consists of LNG and natural gas marketing activities by Cheniere Marketing.
Cheniere Marketing is developing a portfolio of long- and medium-term sale and purchase agreements with professional staff based in the United States, the United Kingdom, Singapore, and Chile. The company conducts its business through its subsidiaries, including the development, construction, and operation of its LNG terminal business and the development and operation of its LNG and natural gas marketing business.
Cheniere Energy stock investors receive a 0.80% dividend. Barclays has a $186 price target, and the consensus target is $172. The shares closed on Wednesday at $155.67.
24/7 Wall St.Coterra Energy
This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
Coterra Energy also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities.
As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of NGLs.
Shareholders receive a 5.52% dividend. Wells Fargo’s $46 target price on Coterra Energy stock is a Wall Street high. The consensus target is $36.92, and shares closed on Wednesday at $29.10.
EQT
This company is the largest natural gas producer in the Appalachian Basin. EQT Corp. (NYSE: EQT) operates as a natural gas production company in the United States. It also produces NGLs and crude oil. As of December 31, 2021, it had 25.0 trillion cubic feet of proved natural gas, NGLs and crude oil reserves across approximately 2.0 million gross acres, including 1.7 million gross acres in the Marcellus play.
With more than 128 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.
EQT announced this week it will pay $2.6 billion in cash and about $2.6 billion in stock for THQ Appalachia, which is owned by privately held natural gas producer Tug Hill and has net production of around 760 million cubic feet per day. The deal will add an estimated 800 million cubic feet per day of gas equivalent production, EQT said, adding it also will acquire assets of XcL Midstream, a pipeline operator that moves THQ Appalachia’s gas to market, as part of the transaction. The transaction is expected to close in the fourth quarter of 2022, with an effective date of July 1, 2022.
The dividend yield is 1.3%. The Wells Fargo price target is $62, while the consensus target is $59.10. EQT stock closed at $46.00 on Wednesday.
Kinder Morgan
This is one of the largest natural gas infrastructure companies in the world. Kinder Morgan Inc. (NYSE: KMI) operates through the following segments.
The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipelines and underground storage systems; natural gas gathering systems and natural gas processing and treating facilities; NGLs fractionation facilities and transportation systems; and LNG liquefaction and storage facilities.
The Products Pipelines segment owns and operates refined petroleum products and crude oil and condensate pipelines, as well as associated product terminals and petroleum pipeline transmix facilities.
The Terminals segment of Kinder Morgan owns or operates liquids and bulk terminals that store and handle various commodities, including gasoline, diesel fuel, chemicals, ethanol, metals and petroleum coke. It also owns tankers.
The CO2 segment produces, transports and markets CO2 to recover and produce crude oil from mature oil fields, and it owns interests in or operates oil fields and gasoline processing plants, as well as operates a crude oil pipeline system in West Texas. It owns and operates approximately 83,000 miles of pipelines and 144 terminals.
Kinder Morgan stock comes with a 6.11% dividend. The $23 target price at TD Securities compares with the $20.41 consensus target and Wednesday’s closing print of $17.85.
ONEOK
The solid price of natural gas over the past year has helped to lift this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and NGLs gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying master limited partnership, ONEOK Partners.
The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.
Many on Wall Street remain positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.
Investors receive a 6.28% dividend. Raymond James has set a $75 price target. The consensus target for ONEOK stock is $69.19, and shares closed on Wednesday at $60.38.
24/7 Wall St.Ovintiv
This off-the-radar name has seen strong movement this year but has undeniable positive prospects going forward. Ovintiv Inc. (NYSE: OVV) engages in the exploration, development, production and marketing of natural gas, oil, and NGLs in the United States and Canada.
The company’s principal assets are in the Permian in West Texas, Anadarko in west-central Oklahoma and Montney in northeast British Columbia and northwest Alberta. Its other upstream assets are in the Eagle Ford in south Texas, Bakken in North Dakota, Uinta in central Utah, Duvernay in west central Alberta, Horn River in northeast British Columbia, and Wheatland in southern Alberta. The company was formerly known as Encana.
Shareholders are paid a 1.96% dividend. Ovintiv has a $77 price target at Truist Financial. The consensus target is the lower at $68.17. Wednesday’s closing share price was $50.11.
Williams Companies
This top energy company is a solid pick for investors who are more conservative and looking for exposure to LNG. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States.
Its Transmission & Gulf of Mexico segment comprises Transco and Northwest natural gas pipelines, as well as natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio.
The West segment comprises gas gathering, processing and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana and the Mid-Continent region, which includes the Anadarko, Arkom, and Permian basins. It also includes NGL and natural gas marketing operations, as well as storage facilities.
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