Since topping out at $120 a barrel back in the summer of 2022, the major oil benchmarks traded down every month until bottoming in the beginning of December. The decline from the top in June of 2022 was a staggering 40%, and while the oil majors still can make money at that level, with a declining price many opted to slow or halt production. Thanks to a move by the Russians last week, the party of higher oil pricing in 2023 may just be getting started.
Oil jumped last Friday when the Russian Deputy Prime Minister announced that the country would be cutting production by 500,000 barrels per day beginning in March. In response, OPEC said it had no plans at this time to respond to the very surprising move by Russia. The Russian production component is tied to the possibility of an increase in demand from China that could spike prices in a big way, especially with the impending peak usage and summer driving season.
We screened out 24/7 Wall St. energy research universe looking for stocks that were rated Buy, that come with large and dependable dividends, and that have solid upside to the posted price targets. Seven top companies came up, and all make sense for growth and income investors looking to add energy. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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.
The company 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.
Investors receive a 9.93% dividend. Mizuho’s $41 target price on Coterra Energy stock is well above the $30.79 consensus target. The shares closed on Friday at $25.07 apiece.
Devon Energy
This may be one of the best value propositions in the sector, and it was one of the first to utilize a variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and NGLs in the United States and Canada.
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