Oil prices have finally begun rebounding, and these mid- and large-cap upstream stocks are going to skyrocket in value through and potentially continue growing over the next five years thanks to unconventional oil and gas activity.
Don't be fooled by the temporarily downward trending stocks. These picks have strong footholds in the industry, and are selling at a bargain until oil prices fully recover.
Here's a few I'm keeping my eye on...
Market Cap (as of 07/27/17): $12.67 Billion
Dividend Yield: n/a
Continental is one of the top 10 largest independent oil producers and a leader in America's energy renaissance. Based in Oklahoma, the company is the largest leaseholder and one of the largest producers in the nation's premier oil field, the Bakken play of North Dakota and Montana.
Continental also has significant positions in Oklahoma, including its SCOOP Woodford and SCOOP Springer discoveries, and the STACK and Northwest Cana plays.
With a focus on the exploration and production of oil, Continental has unlocked the technology and resources vital to American energy independence and our nation's leadership in the new world oil market. This year, the company celebrates 50 years of operations.
The company announced in 2017 total proved reserves of 1.27 billion barrels of oil equivalent; which had a net present value discounted at 10% (PV-10) of $6.65 billion at the end of 2016.
Average FY2016 production was 216,900 barrels of oil equivalent per day. Looking to the current year, Continental expects to exit 2017 with fourth quarter production between 250,000 and 260,000 Boe per day, a 19% to 24% increase over the fourth quarter of 2016.
Continental expects to spend $1.95 billion in non-acquisition CAPEX in 2017; 32% of which will be dedicated to further development of the company's North Dakota Bakken projects.
Market Cap (As of 07/27/17): $47.51 Billion
Dividend Yield: $0.77 (4.96%)
International oil and gas company Occidental Petroleum — “Oxy” for short — is the fifth-largest U.S. oil and gas company by market cap and part of the S&P 500 index.
Oil and natural gas operations are the core of Occidental’s business. The company's exploration and production activities are concentrated in three geographic regions: the United States, the Middle East, and Latin America. In each of these regions, Oxy focuses on conventional and unconventional oil and gas assets where it can increase production by applying appropriate technology and advanced reservoir management practices.
Occidental invests in state-of-the-art equipment and tools to find, develop, produce, and deliver energy resources around the globe. Technology plays an integral role in every phase of this process, from exploration to field development to operations management.
A key example of Occidental's technological capability is the application of Enhanced Oil Recovery (EOR) techniques to generate growth of production and reserves. Occidental is a global leader in carbon dioxide (CO2) EOR technology and actively employs other EOR techniques to maximize production.
Market Cap (As of 07/27/17): $342.5 Billion
Dividend Yield: $0.77 (3.81%)
An American institution since the time of oil magnate John D. Rockefeller, ExxonMobil is the world's largest publicly traded oil company, and the world's thirteenth-largest public company altogether.
At YE2016, ExxonMobil's proved reserves totaled 20 billion oil-equivalent barrels. The company's reserves life at current production rates is 13 years.
Throughout 2016, low commodity prices reduced the company's proved reserves by about 3.3 billion oil-equivalent barrels. Though that oil and gas did not just disappear, lower prices pushed the company's spendable assets lower. As such, a portion of its reserves were qualified as no longer economically viable to extract, and fell from the proved reserves qualification.
As prices recover, however, this company's history of replacing reserves will prove to be a valuable asset to investors in the field.
Spectra Energy Partners LP
Market Cap (As of 07/27/17): $14.21 Billion
Dividend Yield: $0.70 (6.23%)
Spectra Energy Partners LP is a subsidiary of Spectra Energy Corp. and primarily works on the transportation of natural gas through pipelines and natural gas storage.
It has over 15,000 miles of transmission and pipelines, over 170 billion cubic feet of natural gas storage and about 4.8 million barrels of crude oil storage. They own and operate an interstate natural gas transportation system that's over 1400 miles long, extending through Tennessee, Virginia, North Carolina, and Georgia.
Spectra Energy Partners also owns interests in various other natural gas interstates, including a 50% interest in the 745-mile long Gulfstream pipeline, and a 77.53% interest in the U.S. section of the Maritimes & Northeast pipeline, which is also partially owned by ExxonMobil.
Market Cap (As of 07/27/17): $2.25 Billion
Dividend Yield: $0.06 (3.05%)
Nabors Industries deals with the entire life cycle of both onshore and offshore oil and gas wells; from drilling to completion, and stimulation to fluid management and servicing, to plugging and abandonment.
While most of the company's history is in drilling, Nabors is also a fracturing pioneer. It got into hydraulic slant drilling equipment and well site instrumentation in the late '90s, then added pressure pumping in 2010. It was the first company to create a hydraulic fracturing solution using 100% recycled water, and was also the first company to use micro-particle polymers.
Nabors has developed end-to-end frack solutions that recover the fluids it uses to mitigate environmental impact.
As a mid-cap company, however, Nabors has faced daunting competition from mega-companies such as Hallilburton in the domestic drilling market over the years, and it struggled to reach full utilization. Analysts expected that bigger companies would squeeze Nabors out of the domestic market.
But thus far, Nabors has persevered. The company's best-in-class rigs keep demand for its business high: in the first quarter of 2017, the company saw total rig utilization rise 29%, reaching a full 166% increase from its lowest point in May, 2016. Nabors' broad portfolio of products and services allows it to face much larger competitors within each respective sector.
Market Cap (As of 07/27/17): $17.6 Billion
Dividend Yield: $0.06 (0.72%)
Devon Energy is an independent energy company engaged in the exploration, development and production of oil, natural gas and natural gas liquids. The company’s operations are concentrated in various North American onshore areas in the United States and Canada.
Devon has more than doubled its onshore North American oil production since 2008 and has a deep inventory of development opportunities to deliver future oil growth with approximately (as of Dec. 31, 2016) 2.1 billion Boe proved reserves of oil, natural gas, and natural gas liquids. Devon produced about 244,000 barrels of oil, 1.2 billion cubic feet of natural gas, and about 90,000 barrels of natural gas liquids per day throughout 2016.
In 2014, the Oklahoma-based oil and gas company spent a whopping $6 billion to acquire 82,000 acres in the Eagle Ford shale from GeoSouthern Energy. Why was this acquisition so expensive? Because it contained some of the most productive wells in the entire play which offer the highest rates of return in the whole of North America.
Since then, the Eagle Ford has been one of the company's best-performing assets, helping Devon to increase its initial 90-day production rates for four straight years for an increase of more than 300% since 2012.
The Future of Oil
Despite what some people are saying, now is not the time to get out of oil, it's the time to dive back into it.
OPEC is losing power, and now that the the United States has taken its place as one of the swing producers of oil, we'll be able to direct oil prices and put them where we want them. Global oil demand isn't looking to slow down any either, offering U.S. producers a whole new avenue for sales.
The companies highlighted above are all are solid gas and oil stocks, sure to give you good returns when oil rises back to its former glory.