ConocoPhillips (COP Quick QuoteCOP - Free Report) , a leading upstream energy firm in the world in terms of production and reserves, is well-positioned to capitalize on handsome crude prices.  Currently, the firm carries a Zacks Rank #3 (Hold).

Factors Working in Favor

West Texas Intermediate crude price, trading above $75 per barrel, is highly favorable for upstream activities.

ConocoPhillips has secured a solid production outlook thanks to its decades of drilling inventories across its low-cost and diversified upstream asset base. The resource base represents the company’s strong footprint in prolific acres in the United States, comprising Eagle Ford shale, the Permian Basin and Bakken shale. COP has boasted that its drilling and completion activities are increasingly becoming efficient in all the key U.S. basins.

Compared to composite stocks belonging to the industry, the leading upstream energy company has considerably lower exposure to debt capital. This reflects that COP is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.

Risks

However, being an upstream energy player, the company’s overall operations are exposed to oil and natural gas price volatility. Other exploration and production players that are also exposed to commodity price volatility are EOG Resources (EOG Quick QuoteEOG - Free Report) , Diamondback Energy, Inc. (FANG Quick QuoteFANG - Free Report) and Matador Resources Company (MTDR Quick QuoteMTDR - Free Report) .

In the United States, EOG Resources, with Zacks Rank of 3, is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad.

Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the #3 Ranked exploration and production company will likely continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources recently entered into a $1.91 billion agreement to expand its footprint in the prolific Delaware Basin. With the deal expected to close in the late third quarter of 2024, the Zacks #3 Ranked company is projected to have more than 190,000 net acres in the Delaware Basin on a pro forma basis.