Diamondback Energy primarily focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin, as well as the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin. As of December 31, 2021, the company’s total acreage position was approximately 524,700 gross acres in the Permian Basin, and estimated proved oil and natural gas reserves were 1,788,991 thousand barrels of crude oil equivalent.
The company also holds working interests in 5,289 gross producing wells, as well as royalty interests in 6,455 additional wells. In addition, the company owns mineral interests in approximately 930,871 gross acres and 27,027 net royalty acres in the Permian Basin and Eagle Ford Shale, and it owns, operates, develops and acquires midstream infrastructure assets, including 866 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin.
Diamondback Energy stock investors receive an 8.40% dividend. Truist Financial says it is one of its top large-cap stock ideas, and its $203 target price is a Wall Street high. The consensus target is $173.59, and the final trade on Monday was for $139.46 a share.
Pioneer Natural Resources
Many Wall Street analysts love this stock as a pure crude oil play and, the company also employs a variable dividend strategy. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.
The company explores for, develops and produces oil, NGLs and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas, and it owned interests in 11 gas processing plants.
Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.
Pioneer is a huge player in the Permian basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth going forward.
Investors receive an 8.48% dividend, which as with the other two companies may vary from quarter to quarter. Piper Sandler’s $339 target price is well above the $282.35 consensus target. Monday’s $244.05 close for Pioneer Natural Resources stock was up close to 2% for the day.
It is very important to remember that variable dividend strategies can revert back to the lower payouts should the price of oil plummet. In 2020, at the height of the COVID-19 panic and lockdowns, oil crashed to below $20 a barrel level. While that kind of huge sell-off seems unlikely now, commodity prices have long been cyclical and prone to big moves.
With that caveat in place, these three exploration and production heavyweights all look poised for big total return potential in 2023. With benchmark pricing creeping higher, the big dividends look safe for now and the prices for all three have dropped dramatically since the summer.
Originally posted at 24/7 Wall St.
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