The most notable event of this year is that countries across the world have access to several coronavirus vaccines and treatments in COVID-19 arsenal. Energy investors have consistently been keeping an eye on vaccines and treatment options since these are the only way to beat the pandemic and hence strengthen economies.
With several options in hand to combat coronavirus, oil price and fuel demand have improved dramatically in 2021, which is getting reflected in the surging stock prices of oil and gas companies.
Oil Price Skyrockets
The price of West Texas Intermediate (WTI) crude has jumped massively to more than 76 per barrel from below $49 at the beginning of this year. The significant improvement in crude price is primarily owing to coronavirus vaccines that are being rolled out at a massive scale.
With more and more people getting vaccinated, countries across the world were relaxing lockdown and strict social distancing measures this year. With the necessary measures, more people preferred to socialize, travel and work from office. This improved fuel demand drastically, thereby backing the colossal rally in crude oil price. Also, WTI crude traded at more than $84 per barrel on Nov 1 backed by the same.
The price of natural gas has also improved. So far this year, natural gas price has improved more than 42%, highlighting high global demand for U.S. liquefied natural gas.
Rig Count Increases Dramatically
Improving oil and gas prices led to a considerable improvement in drilling activities in the United States. From the count of 360 rigs in the United States for the week ended Jan 8, the tally has increased to 586 in the week through Dec 23, per the rig count data provided by Baker Hughes Company (BKR). The rotary rig count, issued by Baker Hughes, usually gets published in major newspapers and trade publications.
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers to gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the prior-week figure indicate the trajectory of demand for Baker Hughes’ oilfield services from exploration and production companies.
4 Energy Stocks in the Spotlight
Favorable commodity pricing environment and ramped-up drilling operations clearly indicate that this year has witnessed a significant improvement in business activities associated with upstream operations. The downstream business has also observed a massive improvement, thanks to higher demand for gasoline and jet fuel.
Employing our proprietary
stock screener
, we have zeroed in on four oil and gas stocks that have more than doubled in 2021. Three of the companies sport a Zacks Rank #1 (Strong Buy), while one carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
PDC Energy, Inc.
PDCE
is focusing on significant value creation, with a strong presence in the Delaware Basin, a sub-basin of Permian, wherein the company’s operations are spread across roughly 25,000 net acres. PDC Energy has done pretty well this year despite the coronavirus pandemic and projects 2021 free cash flow of more than $900 million. So far this year, PDC Energy has gained 138.9%, outpacing the 104.8% improvement of the composite stocks belonging to the industry.
PDC Energy, sporting a Zacks Rank #1 (Strong Buy), also focuses on debt reduction. In order to further strengthen its balance sheet, PDC Energy is targeting to reduce its debt load by more than 40% in 2021.
Earthstone Energy, Inc.
ESTE
is a leading explorer and producer having a strong footprint in prolific resources like the Midland basin of West Texas and the Eagle Ford Trend of South Texas. A notable announcement that impressed investors this year is Earthstone Energy’s recent deal to acquire Northern Delaware Basin assets for roughly $604 million.
With the accord, as announced on Dec 16, Earthstone Energy will likely expand its presence in the Permian basin by more than 35% to 138,000 net acres. So far this year, Zacks #1 Ranked Earthstone Energy has gained 111.6%, outpacing the 104.7% surge of the composite stocks belonging to the industry.
Vermilion Energy Inc.
VET
is a leading energy player and is engaged in exploiting light oil and liquids-rich natural gas conventional resource plays in North America. Having a global presence, Vermilion Energy is also involved in developing conventional natural gas and oil resources in Europe and Australia.
High margin and low decline assets have positioned #1 Ranked Vermilion Energy to capitalize on the favorable commodity pricing environment in 2021. A noteworthy announcement that overwhelmed investors this year is Vermilion Energy’s agreement to acquire a 36.5% interest of Equinor Energy Ireland Limited in the Corrib offshore gas project in Ireland. So far this year, VET has gained 182.2%, outpacing the 107.1% surge of the composite stocks belonging to the industry.
TETRA Technologies, Inc.
TTI
, being a leading industrial and oil and gas products and services company, has been capitalizing on improving upstream activities in 2021. TETRA Technologies has consistently been involved in successfully executing strategies in a favorable oil and gas market.
TETRA Technologies, carrying a Zacks Rank of 2, will continue to bank on the completion fluids business segment. During the year, TTI was awarded three multi-year deep-water contracts. So far this year, TTI has gained 220.4%, outpacing the 24.5% rally of the composite stocks belonging to the industry.
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