Bet on These 3 Permian Stocks as Oil Price is Still Healthy – November 21, 2023

Bet on These 3 Permian Stocks as Oil Price is Still Healthy – November 21, 2023
Bet on These 3 Permian Stocks as Oil Price is Still Healthy – November 21, 2023

Crude oil price remains high, providing incentives to the exploration and production companies to increase drilling activities. Higher upstream operations are creating an urgency to build up a portfolio of energy companies like Matador Resources Company (MTDR Free Report), EOG Resources, Inc. (EOG Free Report) and Exxon Mobil Corporation (XOM Free Report).

Oil Price Remains High

West Texas Intermediate (WTI) crude price is trading at more than $75 per barrel, which is highly favorable for exploration and production activities. Oil price is expected to remain attractive in the upcoming months due to ongoing uncertainties surrounding Middle East tensions and the tight global supply of the commodity, which will support crude prices. In its latest short-term energy outlook, the US Energy Information Administration (“EIA”) predicts the average spot price of WTI crude at $85.93 per barrel in the December quarter, higher than $82.25 in the third quarter.

Permian Production to Rise

In December, combined oil production from shale resources in the United States will likely decrease by 1,000 barrels per day to 9,653 thousand barrels per day (MBbl/D), per EIA. The shale resources comprise Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian.

However, of all the resources, only Bakken, Permian and Niobrara will witness an increase in daily oil production next month, according to the EIA’s drilling productivity report. Of the three plays, the Permian will see the highest growth in daily oil production. In the Permian, the EIA projects oil production to rise by 5,000 barrels per day to 5,981 MBbls/D in December.

Permian Explorers in the Spotlight

It is clear that a favorable crude pricing scenario is backing higher production volumes. Improving Permian production amid healthy oil prices has raised the incentive to bet on stocks of companies operating in the most prolific basin.

3 Stocks to Buy

Solid oil prices are a boon for Matador Resources‘upstream operations. This is because the company has a strong presence in oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Favorable oil price is likely to aid it in increasing production volumes.

Matador, sporting a Zacks Rank #1 (Strong Buy), plans to turn to sales a net of 100 wells this year, including operated and non-operated wells. The prime priorities that the firm has set for this year are lowering debt levels, delivering free cashflows and maintaining or increasing dividends.

EOG Resources is gaining from strong executions in the Delaware Basin, sub-basin of the broader Permian Basin and Eagle Ford assets. The company, carrying a Zacks Rank #2 (Buy), boasted that in the prolific resources, it has numerous untapped high-quality drilling sites, securing a solid production outlook. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil continues to bank on its deep project pipeline across the Permian and offshore Guyana resources. Production costs in both resources are low, thereby having the capability to offer XOM, with a Zacks Rank of 2, lucrative returns even if oil prices decline considerably.

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