The oil market rebounded last week after the United States imposed sanctions on Iranian firms that help export petrochemicals. While the market remained focused on supply concerns, the International Energy Agency expects oil demand to rise further in 2023, expanding more than 2% to a record 101.60 million barrels per day.
Moreover, analysts are optimistic about the lifting of COVID-19 restrictions boosting Chinese oil demand. UBS analyst Giovanni Staunovo said, “With supply growth lagging demand growth over the coming months, we continue to expect higher oil prices.”
The Energy Select Sector SPDR Fund (XLE) has gained 32.4% year-to-date, significantly outperforming the SPDR S&P 500 ETF Trust’s (SPY) 23% decline.
Therefore, fundamentally strong energy stocks Western Midstream Partners, LP (WES), Birchcliff Energy Ltd. (BIREF), PrimeEnergy Resources Corporation (PNRG), and TransGlobe Energy Corporation (TGA), which have gained considerable momentum, could be solid investments. These stocks are rated ‘Strong Buy’ in our proprietary rating system.
Western Midstream Partners, LP (WES)
WES acquires, owns, develops, and operates midstream assets over the United States. The company engages in gathering, compressing, and treating natural gas, stabilization and transporting condensate, natural gas liquids (NGLs), crude oil, and disposal of produced water.
For the fiscal first quarter ended March 31, WES’ total revenues and others increased 12.3% year-over-year to $758.30 million. Net income attributable to WES rose 66.2% from the prior-year quarter to $308.72 million. Net income per common unit improved 70.5% from the same period the prior year to $0.75.
The consensus EPS estimate of $0.77 for the quarter ending June 2022 indicates a 40% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $813.18 million reflects an improvement of 19.3% from the prior-year period.
The stock has gained 8.9% over the past year and 17.3% over the past six months to close the last trading session at $23.22.
WES’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WES has a Quality grade of A and a Momentum, Stability, and Sentiment grade of B. In the 34-stock MLPs – Oil & Gas industry, it is ranked #2. The industry is rated A. Click here for the additional POWR Ratings for WES (Growth and Value).
Birchcliff Energy Ltd. (BIREF)
BIREF, headquartered in Calgary, Canada, is an intermediate oil and gas company. It develops and produces natural gas, light oil, condensate, and natural gas liquids (NGLs) in Western Canada. The company’s asset portfolio contains various properties.
On May 11, BIREF announced its plans to accelerate shareholder returns. The company declared a doubled quarterly common share dividend of CAD0.02 per common share for the quarter ending June 30. It also plans to increase its annual common share dividend to CAD0.80 per share.
BIREF’s revenue increased 89% year-over-year to CAD294.58 million ($226.66 million) in the fiscal first quarter ended March 31. Net income and comprehensive income improved 446.4% from the prior-year period to CAD126.84 million ($97.59 million), while net income per common share came in at CAD0.46, up 475% from the prior-year quarter.
Street revenue estimate for the fiscal second quarter (ending June 2022) of $298.45 million indicates a 92.7% year-over-year rise.
Over the past year, the stock has gained 121.3% and 42.4% year-to-date to close the last trading session at $7.26. It is trading higher than its 200-day Moving Average of $6.07.
It’s no surprise that BIREF has an overall A rating, which translates to Strong Buy in our POWR Rating system. The stock has an A grade for Momentum and a B for Growth and Quality.
BIREF is ranked #4 out of the 101 stocks in the Energy – Oil & Gas industry. The industry is rated B. To see the additional POWR Ratings for Value, Stability, and Sentiment for BIREF, click here.
PrimeEnergy Resources Corporation (PNRG)
PNRG operates as an independent oil and natural gas company that acquires, develops, and produces oil and natural gas properties. The company also engages in the acquisition of oil and gas properties through joint ventures with industry partners.
For the fiscal first quarter ended March 31, PNRG’s revenues increased 101.6% year-over-year to $26.21 million. Net income and earnings per common share came in at $11.14 million and $4.07, registering a substantial increase over their negative year-ago values.
The stock has gained 72.6% over the past year and 14.2% year-to-date to close the last trading session at $80.05. PNRG is trading higher than its 200-day Moving Average of $71.55.
This promising outlook is reflected in PNRG’s POWR Ratings. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
PNRG has a Momentum grade of A and a Growth, Sentiment, and Quality grade of B. It is ranked #2 in the Energy – Oil & Gas industry. Click here to see the additional POWR Ratings for Value and Stability for PNRG.
TransGlobe Energy Corporation (TGA)
TGA and its subsidiaries acquire, explore, produce and develop crude oil and natural gas in Egypt and Canada. It holds interests in four Production Sharing Concessions in West Gharib, North-West Gharib, West Bakr, and South Ghalazat in Egypt.
On March 16, TGA declared $0.10 per common share dividend, which was paid on May 12. This reflects upon the company’s cash generation ability.
TGA’s petroleum and natural gas sales net of royalties increased 193.3% year-over-year to $52.95 million. Net earnings and net earnings per share came in at $48.81 million and $0.66, up substantially from their negative year-ago values.
Street EPS estimate for the fiscal year (ending December 2022) of $1.23 reflects a rise of 710.5% year-over-year. Likewise, Street revenue estimate for the same period of $339.50 million indicates an increase of 100.9% from the prior year.
TGA’s shares have gained 108.2% over the past year and 25.9% year-to-date to close the last trading session at $3.79. It is trading higher than its 200-day Moving Average of $3.34.
TGA has an overall rating of A, which translates to Strong Buy in our POWR rating system. The stock has an A grade for Momentum and a B grade for Growth, Value, Sentiment, and Quality. In the 42-stock Foreign Oil & Gas industry, it is ranked #5. The industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see TGA’s rating for Stability here.
WES shares were trading at $24.18 per share on Tuesday afternoon, up $0.96 (+4.13%). Year-to-date, WES has gained 12.32%, versus a -20.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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