After catching some decent inflation data last week, the Federal Reserve probably could have had a better start to this week than receiving the news that OPEC in a very surprising move cut oil production by an additional 1.16 million barrels per day. Saudi Arabia will lead the charge by cutting 500,000 barrels per day. Some across Wall Street feel that the production cut could lift benchmark prices by as much as $10.
The surprising OPEC move comes after oil plunged last month, back down near $70 per barrel, which was the lowest close in 15 months. Yet, virtually none of the energy analysts we cover across Wall Street felt that there would be an additional cut to go with the 1 million barrel per day cuts that were implemented late last year.
Warren Buffett took advantage of the financial contagion worries that hammered oil in early March. The famed investor added an additional 5.8 million shares of Occidental Petroleum at prices ranging between $59.85 to $61.90 a share. He bought 8 million more between March 23 and March 27. It was reported last Friday that he added an additional 3.7 million shares last week. The “Oracle of Omaha” now owns a stunning 211 million shares, which is about a 23.5% stake in the company.
Given that many of the top oil stocks were mauled during the first quarter of 2023, after being the leading sector in 2022, investors can get some great value with the mega-cap dividend-paying integrated majors. Seven stocks are rated Buy on Wall Street, and all have big and dependable dividends.
BP
This is one of the premier European integrated oil giants, and top Wall Street analysts are quite positive on the shares. BP PLC (NYSE: BP) engages in the energy business worldwide. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to wholesale and retail customers, convenience products, aviation fuels, and Castrol lubricants. It is involved in refining, supply and trading of oil products, as well as operation of electric vehicle charging facilities. In addition, it produces and refines oil and gas, and it invests in upstream, downstream and alternative energy companies, as well as in advanced mobility, bio and low carbon products, carbon management, digital transformation and power and storage areas.
The company posted record 2022 earnings, along with the biggest profit in the 114-year history of the company. In addition, management announced a 10% increase in the dividend and an extra $2.75 billion of buybacks to an already big scheduled program.
Shareholders receive a 3.81% yield with the coming increase. Bernstein has a $53 target price on BP stock, much higher than the $44.32 consensus target. Monday’s closing share price of $39.74 was up close to 5% on the day.
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