As oil and natural gas prices remain robust, energy companies across the value chain are set to reap the rewards. Upstream players stand to gain from strong crude pricing, driving increased exploration and production, while midstream firms benefit from rising demand for transportation and storage assets. With disciplined strategies, operational excellence and expansion initiatives, EOG Resources EOG and Enterprise Products Partners EPD are poised for a significant upside in this thriving energy landscape.
The price of West Texas Intermediate (WTI) crude oil is closely approaching the $70 per barrel mark, presenting a favorable landscape for exploration and production. According to the U.S. Energy Information Administration (“EIA”), the commodity's price will likely be $70.62 per barrel this year, which is still handsome. This is because the U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players to continue profiting from the advantageous commodity pricing environment.
Per EIA, the pricing scenario of natural gas will also be favorable. It projects the price of the commodity to be $3.93 per thousand cubic feet (Mcf) this year, higher than last year’s $2.28 per Mcf.
The handsome oil and gas prices will likely aid exploration and production players in increasing activities. With higher production of oil and natural gas, there will likely be increased demand for transportation and storage assets of the commodities, which will aid the bottom line of the midstream energy companies.
Employing our proprietary stock screener, we have identified a standout upstream and a promising downstream company, both poised for significant gains. Both companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources
EOG Resources stands out as a premier exploration and production company positioned to capitalize on a favorable crude pricing environment. With a disciplined capital program, EOG is enhancing efficiency through cost reductions and productivity improvements. Its 2024 strategy achieved 201% reserve replacement at a competitive $6.68 per barrel of oil equivalent, highlighting its industry-leading asset development. EOG’s diversified multi-basin portfolio and innovation in drilling and completion technologies ensure sustainable, high-margin growth. As crude oil prices remain strong, EOG’s operational excellence and shareholder-friendly capital returns position it as an attractive investment.
Enterprise Products Partners
EPD stands to benefit significantly from the continued strength in oil and gas prices, driving increased production and, in turn, greater demand for midstream infrastructure. In the fourth quarter of 2024, EPD moved 13.6 million barrels of oil equivalent per day and exported more than 70 million barrels of hydrocarbons in December alone. With expansion projects like the Bahia NGL pipeline and Neches River terminal enhancements, EPD is well-positioned to meet surging transportation and storage needs. Its extensive asset base and export growth initiatives reinforce its status as a premier midstream investment.???
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.