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Middle East Tensions Intensify: WMB, KMI, EOG & COP Stocks to Gain?
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The oil-energy sector is fraught with uncertainty as tensions between Iran and Israel continue to escalate. According to reports, eight soldiers, including a team commander, have been confirmed dead by the Israeli military during ground operations in southern Lebanon. This escalation comes in the wake of Iranian missile strikes aimed at Tel Aviv, prompting a warning from Israel's military chief about an imminent retaliation.
Amid these concerns, oil prices are rising as investors become increasingly worried that the escalating tensions in the Middle East could threaten supplies from key producers. While this dynamic prompts investors to reevaluate their positions in the sector, companies such as The Williams Companies Inc. (WMB - Free Report) , Kinder Morgan Inc. (KMI - Free Report) , EOG Resources Inc. (EOG - Free Report) , and ConocoPhillips (COP - Free Report) are in a stronger position.
How Can Midstream Firms Tackle Energy Market Uncertainty?
Midstream companies’ pipeline and storage assets are secured under long-term take-or-pay contracts. These contracts ensure that shippers pay for the capacity reserved, whether they utilize it or not, which provides a steady stream of revenues. This structure allows companies to generate stable earnings, insulated from fluctuations in the volume and prices of oil and natural gas transported, offering significant stability to their bottom line.
Thus, operations of midstream energy players have significantly lower exposure to oil and gas price volatility and the Middle East tension-induced energy market uncertainty.
Higher Oil Price to Aid Upstream Energy Players
West Texas Intermediate (WTI) crude is currently trading above $70 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the robust pricing environment remains advantageous for energy producers. 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 for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Image Source: Statista
Therefore, it's an opportune moment for investors to keep an eye on companies within the midstream and upstream energy space. Using our proprietary Stock Screener, we've identified four stocks that are well-positioned for growth. All of these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4 Energy Stocks to Keep an Eye on: WMB, KMI, EOG, COP
WMB's Leadership in Natural Gas Transport
The Williams Companies generates stable fee-based earnings since it transports one-third of the natural gas consumed in the United States. Having ownership and operating interests in pipeline networks spanning 33,000 miles, WMB transports natural gas from the prolific basins in the United States to the end market. The leading midstream player is thus well-positioned to gain from rising clean energy demand since the transported natural gas is used for generating electricity, heating rooms and cooking.
In recent years, WMB has consistently provided investors with higher dividend yields compared to the oil-energy sector, demonstrating the company's strong commitment to returning capital to shareholders.
KMI: Shaping the Landscape of Natural Gas Infrastructure
Kinder Morgan’s stable business model is reflected in its natural gas transportation activities, where its pipeline networks are responsible for transporting roughly 40% of the commodity produced in the United States. In North America, KMI’s pipeline network is spread over 79,000 miles, transporting natural gas, gasoline, crude oil, carbon dioxide and more, securing long-term, stable, fee-based earnings.
Most of the time over the past several years, Kinder Morgan has been rewarding investors with higher dividend yields than the oil-energy sector.
EOG Resources: Capitalizing on Strong Oil Prices & Reserves
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
Currently, the highly favorable oil pricing scenario is aiding the upstream energy company since the majority of the company’s production comprises oil.
Considering its production and reserves, ConocoPhillips is a prominent exploration and production company with a strong presence in oil and gas resources worldwide. The United States is responsible for significant production volumes of the company with a presence in prolific oil-rich resources like Eagle Ford, Bakken, and Permian shale plays. ConocoPhillips is thus also well positioned to gain from handsome oil prices.
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Middle East Tensions Intensify: WMB, KMI, EOG & COP Stocks to Gain?
The oil-energy sector is fraught with uncertainty as tensions between Iran and Israel continue to escalate. According to reports, eight soldiers, including a team commander, have been confirmed dead by the Israeli military during ground operations in southern Lebanon. This escalation comes in the wake of Iranian missile strikes aimed at Tel Aviv, prompting a warning from Israel's military chief about an imminent retaliation.
Amid these concerns, oil prices are rising as investors become increasingly worried that the escalating tensions in the Middle East could threaten supplies from key producers. While this dynamic prompts investors to reevaluate their positions in the sector, companies such as The Williams Companies Inc. (WMB - Free Report) , Kinder Morgan Inc. (KMI - Free Report) , EOG Resources Inc. (EOG - Free Report) , and ConocoPhillips (COP - Free Report) are in a stronger position.
How Can Midstream Firms Tackle Energy Market Uncertainty?
Midstream companies’ pipeline and storage assets are secured under long-term take-or-pay contracts. These contracts ensure that shippers pay for the capacity reserved, whether they utilize it or not, which provides a steady stream of revenues. This structure allows companies to generate stable earnings, insulated from fluctuations in the volume and prices of oil and natural gas transported, offering significant stability to their bottom line.
Thus, operations of midstream energy players have significantly lower exposure to oil and gas price volatility and the Middle East tension-induced energy market uncertainty.
Higher Oil Price to Aid Upstream Energy Players
West Texas Intermediate (WTI) crude is currently trading above $70 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the robust pricing environment remains advantageous for energy producers. 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 for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Therefore, it's an opportune moment for investors to keep an eye on companies within the midstream and upstream energy space. Using our proprietary Stock Screener, we've identified four stocks that are well-positioned for growth. All of these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4 Energy Stocks to Keep an Eye on: WMB, KMI, EOG, COP
WMB's Leadership in Natural Gas Transport
The Williams Companies generates stable fee-based earnings since it transports one-third of the natural gas consumed in the United States. Having ownership and operating interests in pipeline networks spanning 33,000 miles, WMB transports natural gas from the prolific basins in the United States to the end market. The leading midstream player is thus well-positioned to gain from rising clean energy demand since the transported natural gas is used for generating electricity, heating rooms and cooking.
In recent years, WMB has consistently provided investors with higher dividend yields compared to the oil-energy sector, demonstrating the company's strong commitment to returning capital to shareholders.
KMI: Shaping the Landscape of Natural Gas Infrastructure
Kinder Morgan’s stable business model is reflected in its natural gas transportation activities, where its pipeline networks are responsible for transporting roughly 40% of the commodity produced in the United States. In North America, KMI’s pipeline network is spread over 79,000 miles, transporting natural gas, gasoline, crude oil, carbon dioxide and more, securing long-term, stable, fee-based earnings.
Most of the time over the past several years, Kinder Morgan has been rewarding investors with higher dividend yields than the oil-energy sector.
EOG Resources: Capitalizing on Strong Oil Prices & Reserves
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
Currently, the highly favorable oil pricing scenario is aiding the upstream energy company since the majority of the company’s production comprises oil.
ConocoPhillips: Harnessing Shale Amid Oil Price Surge
Considering its production and reserves, ConocoPhillips is a prominent exploration and production company with a strong presence in oil and gas resources worldwide. The United States is responsible for significant production volumes of the company with a presence in prolific oil-rich resources like Eagle Ford, Bakken, and Permian shale plays. ConocoPhillips is thus also well positioned to gain from handsome oil prices.