7 Sep

Analysts Still Bullish on Permian-Based Upstream Stocks

WRITTEN BY Kurt Gallon

Series overview

Upstream companies have been very volatile in recent weeks. That’s due to strong volatility in crude oil and natural gas prices. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which includes 56 exploration and production companies, saw a three-month low of $38.80 in August. It recovered significantly by the end of that month. However, most of the gains were eroded in the recent fall.

In this series, we’ll look at the top seven upstream companies that Wall Street analysts like the most. We’ve included companies that are covered by at least ten analysts. We’ll look at analysts’ recommendations, upside potentials, and outlooks for these companies.

Analysts Still Bullish on Permian-Based Upstream Stocks

Most ‘buys’

Viper Energy Partners (VNOM), Earthstone Energy (ESTE), and Ring Energy (REI) have the most “buys” among all the upstream companies. They have “buy” ratings from 100% of the analysts covering the stocks. Below are the remaining four:

  • WPX Energy (WPX): 94%
  • Diamondback Energy (FANG): 94%
  • Kosmos Energy (KOS): 80%
  • Pioneer Natural Resources (PXD): 79%

Bullish on Permian-focused upstream stocks

Wall Street analysts continue to be bullish on Permian-focused upstream stocks. Of the top seven upstream companies by analysts’ ratings, six of them have significant exposure to the Permian Basin. Analysts’ bullishness for these stocks despite pipeline constraints in the region and the high price differential reflects the region’s strong economics, lower break-even prices, and higher returns on capital employed. The pipeline constraints are expected to decline as some major pipeline projects come online by the end of next year.

In the next part of this series, we’ll look at analysts’ ratings for Viper Energy Partners (VNOM).

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